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Local Enterprise Partnerships hold key to devolution, say manufacturers

Manufacturers’ lobby group EEF calls for Devolution Bill to strengthen business’ voice in the regions and give greater powers to Local Enterprise Partnerships.

Chancellor George Osborne’s radical plan to devolve £26bn in business rates to local authorities, must be underpinned by new legislation to strengthen the local business engagement, according to the EEF, body representing Britain's manufacturers.

In a new report "Devolution in England:  the business plan" published this week, EEF says that giving business a greater role in plans for English devolution is critical to boosting private sector growth, investment and job creation.  

In particular, EEF raises concerns over the impact of devolution in England on smaller companies who, it says, “have historically been the most disengaged, but who potentially have the most to gain from the new process”.

"To date, however, business has felt disengaged from the process of devolution. If it is to succeed, business must be fully signed up as partners," Terry Scuoler, chief executive of EEF.

“The devolution of power to local areas in England must not be seen as an end in itself but a process aimed at tailoring local business environments to make them better places for business growth,” said Terry Scuoler, chief executive of EEF.

“Ultimately, local decision makers and businesses will need a sustained dialogue on how they can make their local areas places in which businesses can prosper.”

He added: “To date, however, business has felt disengaged from the process of devolution. If it is to succeed, business must be fully signed up as partners in the negotiation and delivery of devolution deals. This must include a key role for LEPs and a focus on areas where tangible outcomes can be delivered in the near term, especially in transport infrastructure.”

The recommendations by EEF come as Parliament prepares to debate the Cities and Local Government Devolution Bill this week. The relationship between business and local authorities, it warns, remains weak and the speed of the move to devolving power in England has left the business voice behind. 

According to recent EEF surveys, infrastructure was fourth on the list of factors determining where manufacturers invest, whilst the poor state of local transport networks was the top business challenge in their local area for almost 40% of companies.

Chancellor George Osborne last week promised the “biggest transfer of power to our local government in living memory” by allowing local councils to keep control of all £26bn of business rates collected rather than having to pass passing revenues to Treasury. 

Small businesses “have historically been the most disengaged, but who potentially have the most to gain from the new process”. EEF

In his speech to the Tory conference in Manchester he declared: “We are the builders,” as he set out his plans for a new National Infrastructure Commission to be led by former Labour minister Lord Adonis, adding that “£26bn of business rates will be kept by councils instead of being sent up to Whitehall”, as key to driving forward devolved investment in critical national infrastructure. 

EEF calls for amendments to the Bill to provide for “independent, business-led, overview and scrutiny of combined authorities and their plans for local growth through an enhanced role for Local Enterprise Partnerships (LEPs)” – which it adds should remain business rather than politically-led.

Local authorities should also prioritise the devolution of transport and use investment powers to boost productivity and rebuilding of trust with local businesses, says EEF. Devolving these powers, it adds, will boost investment by enabling authorities to borrow against the fare box and so make businesses are also more likely to support extra taxes.

However, the report raises concerns over the capacity of local authorities, faced with spending cuts of up to 40%, to deliver the necessary changes required to benefit from devolution and urges that the initial focus be placed on areas where the most successful outcomes could be delivered fastest.

Full details of the report are here

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.