meets on

Thursday October 17
at County Hall 2.15 pm

(public may attend but not speak) to consider, amongst other things, a review of its own scrutiny performance and how it could be improved. This Joint Scrutiny Committee is the nearest thing we have to democratic oversight of our Local Enterprise Partnership (LEP), HoTSW. Judge how good it is for yourselves. The Joint Committee comprises 17 councillors drawn from just nine of the 17 odd Devon and Somerset local and unitary authorities. Political proportionality only applies to the four nominees from each of the two County Councils.

https://democracy.devon.gov.uk/documents/g3572/Public%20reports%20pack%2017th-Oct-2019%2014.15%20Heart%20of%20the%20South%20West%20HotSW%20Local%20Enterprise%20Partnersh.pdf?T=10

FIRST A RECAP & SOME SCENE SETTING.

In 2010 the government started approving bids from self-selecting, business led, Local Enterprise Partnerships. LEPs were encouraged to make ambitious plans to run their local economies and bid for central government growth development funds, effectively kick starting English Devolution. HotSW is the selected LEP covering Devon and Somerset. By 2014 HotSW had agreed, in secret and with no scrutiny, a growth strategy with government. Nothing was openly published until 2015. This growth strategy is built around doubling the local economy in 20 years (3.53% annual growth rate) by increasing productivity and population growth. The targets are wildly unrealistic and therefore undeliverable.

This government devolution experiment has come in for severe criticism from the Public Accounts Committee (PAC) (e.g. 2016): “It is alarming that LEPs are not meeting basic standards of governance and transparency, such as disclosing conflicts of interest to the public….LEPs are led by the private sector, and stakeholders have raised concerns that they are dominated by vested interests that do not properly represent their business communities.”

As a result, the Department for Communities and Local Government commissioned a “Review of Local Enterprise Partnership Governance and Transparency”, Led by Mary Ney. This review made 17 recommendations (2017) to improve governance, accountability and scrutiny of LEPs. Although the Department accepted these recommendations, they adopted a “light touch” approach, leaving LEPs and Local Authorities to work out the details for themselves.

Not surprisingly the PAC concluded this year (June 2019):

“We welcome the improvements to LEP governance and transparency since we last examined these issues, but there is still a long way to go for all LEPs to reach the rigorous standards we expect. We remain concerned that LEP boards are not yet representative of their local areas and business communities and that local scrutiny and accountability arrangements are not strong enough considering the significant sums of public funding that LEPs manage.”

NOW TO THE HOTSW SCRUTINY REVIEW ITSELF.

First thing to note is that of the 17 members of this Joint Scrutiny Committee, only eleven attended the very first scrutiny meeting last November. This attendance dropped to ten in February and then to just five in June, with Devon County Councillor R Bloxham for Broadsclyst, being amongst the absentees. This is the bare minimum for a quorum. This scrutiny committee has all the appearance of being in crisis. Perhaps members feel out of their depth scrutinising regional economic issues? Perhaps members feel inhibited from diving deep where all past HoTSW decisions have been rubber stamped? Maybe they have been warned not to undermine the LEP for fear of losing central funds? Could HotSW be confusing them with detail (oldest administrative trick in the book)? There is a plea for shorter presentations up for discussion.

Scrutiny Committee Members have canvassed views from other County and Unitary Authorities to try to understand their Scrutiny arrangements for LEPs, and have concluded that the HotSW arrangements are “more developed than in many authorities”. “Current arrangements are having some impact but have further to go.” A report proposes some changes to strengthen the transparency and quality of scrutiny (e.g. to adopt the Devon County practice for public participation, web casting, public attendance and speaking) and minor tinkering with the Terms of Reference to allow them to be more pro-active.

For discussion is this list of how to judge their Scrutiny success over the next year, with only three meetings to do it in:

1. Positive and impactful relationship between Scrutiny and the LEP, evidenced by change or amendments to policy or decisions.
2. Being cited in advance of priorities, decisions and strategy arising for the LEP
3. Clarity on the Chair of the Board and LEP’s ambitions and how Scrutiny can add value particularly to investment strategy.
4. Representing the ambition and concerns of the South-West’s residents
5. Demonstrable contribution to productivity and growth by the LEP
6. Increasing democracy in regional government
7. Scrutiny to build a culture of learning and improvement, taking account of best practice nationally

THERE IS NO SHORTAGE OF THINGS TO SCRUTINISE.

At the February 2019 meeting the annual HotSW performance review, commissioned from Ash Futures, was presented to this Scrutiny Committee. It gave an early view of progress already faltering.

https://democracy.devon.gov.uk/documents/g3570/Public%20reports%20pack%2014th-Feb-2019%2014.15%20Heart%20of%20the%20South%20West%20HotSW%20Local%20Enterprise%20Partnersh.pdf?T=10

“…….the review of economic data leads to the overall conclusion that the HoSW economy, at best, continues to track the ‘baseline’ growth scenario. That is, there is no firm evidence that it is achieving either ‘strong’ or ‘transformational’ growth as aspired to in the Strategic Economic Plan.” [Baseline – continuing to fall behind UK average].

“The plan outcome measures and objectives in the current economic environment do not currently look achievable, certainly in the short-term. …..It is our view that some of the outcome targets, particularly those associated with the ‘transformational’ target, now look very aspirational in their nature.”

“Currently, there is no ‘feedback loop’ back to the Strategic Investment Panel to develop its understanding of ‘what has worked well, and what not’ with investments made….. A better understanding of how investments have developed would lead to better long-term decision-making.”

Following that, the LEPs covering Cornwall, Devon and Somerset had an opportunity to submit evidence at the beginning of August to the Treasury Committee Inquiry into regional imbalances in the UK economy:

The preface to the evidence reads: “We have put forward two submissions; one on behalf of Cornwall Council and Cornwall and the Isles of Scilly Local Enterprise Partnership and another on behalf of the Heart of the South West Joint Committee and the HotSW Local Enterprise Partnership representing Devon, Plymouth, Somerset and Torbay.”

“We are submitting this joint letter as being neighbouring areas we have similar policy asks which the committee might find helpful to have highlighted as well as the nuances that are described in our two responses. There is no clear definition of what constitutes a region and we believe these two documents provide detailed insight into the complexity of this subject.”

Cornwall then followed this introduction with a detailed response for their part of the region comprising 4,342 words and four graphs but the detailed HotSW response was left blank. My understanding is that Local Authorities decided/were instructed to feed inputs to HotSW, stand back and let HotSW take the lead. Unfortunately, any County inputs have got “lost in the post” and the only organisation that took the time, trouble and effort to answer questions raised in the Inquiry terms of reference from the perspective of Devon’s economy was the East Devon Alliance.

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/regional-imbalances-in-the-uk/written/103800.html

WHY DOES THIS MATTER?

Philip Aldrick, economics editor The Times, summarised why the Treasury will become more interested in regional funding in an article he wrote in 2018:

“….One theory doing the rounds is that the Treasury wants to know if its business support schemes are working. A crunch is coming. England’s 39 local enterprise partnerships [now reduced to 38- one went rogue], designed to boost growth, are funded largely with EU grants. For 2014 to 2020, they secured €6.51 billion of European Structural and Investment funds. Of that, €2.5 billion was allocated to “enhancing the competitiveness of small and medium enterprises”, about a tenth of which went to less developed regions.”

“After Brexit, now formally delayed until 2021 after yesterday’s transition deal, the money will no longer make the round trip via Brussels. It will come directly from Westminster, bringing with it more political accountability. If the money is not driving productivity, which it patently isn’t, the Treasury may decide the financial medicine could be administered more effectively.”

And the PAC in the 2019 report (referred to above) picks up the same theme:

“Despite spending up to £12 billion of taxpayers’ money [between 2015/16 and 2020/21], the Department has no real understanding of the impact which the Local Growth Fund has had on local economic growth. The Department chose not to set quantifiable objectives for Growth Deals. Its assertion that every £1 of local growth funding could generate £4.81 in benefits is an unsubstantiated estimate. Despite receiving quarterly performance data from LEPs, the Department has not used this to build up an understanding of the impact that local growth funding has had nationally, nor has it measured what value for money LEPs have delivered so far.”