Legal Report - Councils join together to deliver regional recovery

The Local Democracy, Economic Development and Construction Bill has reached its final parliamentary stages. Among other objectives, the bill seeks to strengthen local authorities' role in promoting and delivering economic development.

The bill is part of the implementation process for the sub-national review of economic development and regeneration, which identified an increased role for local authorities in supporting delivery. Over the next five years, the effectiveness of delivery arrangements will be crucial to recovery from the recession. But will councils have the necessary tools and will the demands of the process get in the way of tangible results?

Local assessments required

The bill requires county and unitary authorities to prepare local economic assessments (LEAs) to feed into regional and local delivery strategies. LEAs will identify the strengths, weaknesses and specialisms of local economies, key spatial linkages and obstacles to sustainable growth and regeneration. They will provide an evidence base to inform local area agreements, local delivery plans and multi-area agreements.

But LEAs will be of limited use unless they are linked to delivery mechanisms. Effective delivery is very challenging in current economic circumstances and things may get worse as public spending is squeezed. Reviews of public sector investment plans and project priorities will be important in ensuring effective allocation of limited capital funding.

In such a difficult climate, a convincing evidence base that is consistent across boundaries and with the regional strategy is essential. There must be clear links between the needs and opportunities identified by the evidence base and the key initiatives proposed to promote economic development and renewal.

These initiatives must be of sufficient scale to produce the kind of outputs and outcomes that the evidence base shows are needed. Infrastructure requirements must be clearly identified and investment prioritised to ensure that the most important elements come first. Funding mechanisms must be identified to deliver the infrastructure.

There are gaps in this chain. For example, there is often very little information on expected outcomes from initiatives, or their scale is nowhere near sufficient to tackle the problems identified. Investment requirements, even where accurately specified in the infrastructure plans councils are required to produce in support of core strategies, are often insufficiently prioritised. There is a great deal of wishful thinking about how initiatives will be funded.

So how can all the required steps, from evidence base to implementation, be brought together? A working example is to be found in the integrated development programmes (IDPs) promoted by the East of England Development Agency and Regional Cities East.

IDPs focus on capital spending, so they complement local and multi-area agreements. A tool kit has been developed to help local authorities and partners prepare IDPs and it is being updated to take account of new realities. IDPs have generally been produced for functional economic areas through partnership working between different local authorities and local delivery vehicles.

Main contribution identified

Their key contribution has been to strengthen the causal link between development and regeneration goals and investment plans and to influence a degree of prioritisation. Public agencies will be left in little doubt over what is expected of them if growth and renewal plans are to be realised. With these clear statements of public sector ambition and intent, private investors can make decisions with greater clarity and confidence.

Funding for delivery is the big challenge. IDPs and infrastructure plans provide an essential evidence base to support development plan documents and will be a vital tool for assessing tariff or community infrastructure levy rates. While the levy will provide a substantial contribution, it is unlikely to bridge the gap between requirements and ever-diminishing amounts of public sector funding.

Innovative approaches are needed involving cocktails of funding sources and measures such as local asset-backed vehicles, tax increment financing and regional infrastructure funds to help local authorities overcome this minefield on the path to supporting the delivery of economic development and regeneration.

- Dr Christine Doel is a director at SQW Consulting. Anita Rivera is an associate in the planning and public law team at Denton Wilde Sapte LLP.

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