prt research city of liverpool lep

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Response of Liverpool City Region to the Consultation on

Local Enterprise Partnerships/Regional Growth

Fund 1.0 Introduction 1.1 The City Region Cabinet on 30th July 2010 agreed that:

• The City Region Cabinet approves the establishment of a single Local Enterprise Partnership (LEP) for the Liverpool City Region.

1.2 Consultation with private sector partners, particularly Liverpool City Region

Business Leaders, Chambers of Commerce and Mersey Partnership has strongly supported the proposals contained within our response. There are already a large number of senior business leaders who work across a variety of boards across the whole of the City Region. The introduction of a Local Enterprise Partnership will bring together the business acumen of some of the country’s top performing companies, the democratic mandate and the resources of Higher and Further Education (Appendix 1).

1.3 We are committed to developing our status as a thriving international City

Region, which supports international and national investment and business growth. Liverpool City Region has developed, over a period of time, a strong evidence base (Appendix 2), which supports the need for economic growth and which identifies those areas of opportunity to create business growth and jobs. Our priority is to move from a Public Sector dominated economy to a Private Sector based economy.

1.4 We believe that Local Enterprise Partnerships will play an important role in

developing the conditions for economic growth and will work with key partners in Business, Universities and Social Enterprise to transform the local economy and to determine key priorities for action and investment (Appendix 3).

1.5 We are strongly committed to working with Government to drive economic growth

and to ensure that we deliver economic prosperity and opportunity for all.


2 Background - Functional Economic Area - Sub Regional Profile and Evidence Base

2.1 Liverpool City Region has a population of 1.5m covering the boroughs of

Halton, Knowsley, Liverpool, Sefton, St Helens and Wirral and 49,000 local businesses. The City Region generates GVA of £19bn, which is 17% of the North West total. Liverpool City Region is closely related economically to the wider functional area of Warrington, Cheshire West and Chester, Ellesmere Port, North East Wales and Lancashire.

2.2 Economic activity is widely spread across the City Region:

• Liverpool as the commercial, cultural and transport hub and world-class city for business and knowledge.

• Sefton as the base of the primary port at Seaforth and the classic tourist resort of Southport.

• Halton has chemicals and the science and technology base of Daresbury, together with a significant logistics and distribution base for the City Region at 3MG.

• Knowsley, St Helens and Wirral provide key business locations for advanced manufacturing and logistics for the City Region.

2.3 The Liverpool City Region has enjoyed significant successes in recent years

with the value of the City Region economy increasing by 4.8% in the period 2006 to 2009 - a faster rate of growth than the rest of the North West (4.6%). The business base also grew over the same period from 45,900 to 49,000 businesses. The employment rate and the number of self employed individuals also increased. The City Region’s business density (VAT registered businesses per 1000) has risen but needs to grow further and faster.

2.4 The Liverpool City Region has benefited from improved economic

performance, greater utilisation of indigenous assets and improved city region working in recent years. The City Region nonetheless acknowledges that a step change is necessary to close the considerable gap in economic value, size of business base and skill levels between the city region and the North West and UK. The LEP will focus on functions such as key infrastructure projects, housing and transport that will provide the conditions for business growth and ensure that businesses are supported to deliver their growth ambitions.

2.5 There is much evidence of long lasting transformation of assets and physical

improvement. There has been significant private and public sector investment. For example Grosvenor’s £1bn investment in Liverpool ONE, and other property developments, Getrag, investment in Jaguar Landrover, Vauxhall, Stobarts and Pilkington have all created business confidence.


2.6 Many homes have been refurbished and transport links improved between

deprived communities and work opportunities. The Liverpool City Region has developed a single housing investment plan for housing renewal and growth, which underpins our economic priorities. Liverpool City Region is well supported by our joint transport planning, working in collaboration with Halton and delivery through the Integrated Transport Authority. LEPs will be required to identify transport interventions, to facilitate and help unlock potential economic growth and rebalance the economy. Transport is important in terms of actively supporting the connectivity of people with work and the delivery of efficient infrastructure to support key investment drivers such as the Port of Liverpool, John Lennon Airport, Mersey Gateway and new rail infrastructure.

2.7 As a result of our increased economic activity:

• Output per person is rising at a faster rate. • Our working population is growing. • Business start ups are growing at a faster rate. • Business density is increasing. • Self employed people are increasing. • GVA is growing despite the impact of the recession.

2.8 GVA per head, however remains low at £14,155 compared to the UK average of

£19,551. Over the 10 years to 2008 the total number of jobs in the City Region increased by 6%. The number of working age people in employment has shown encouraging growth in recent years, but we still have a high level of dependency on benefit and in part time employment. An additional challenge we face is the forecast by The Office for Budget Responsibility, which expects some 600,000 jobs to be lost in the public sector over the next 6 years. The North West has the second largest public sector workforce in the country and the Liverpool City Region is heavily dependent upon public sector employment. Liverpool employs the largest number of civil servants in the North West, with 39.1% of all its jobs in the public sector, similarly for Sefton with a figure of 39.3%, and Wirral has a figure of 37.2%. National cuts in public expenditure could significantly impact upon the Liverpool City Region’s employment.

2.9 A recent study by Pion Economics and Cambridge Econometrics, forecast that

recovery will return more quickly in the core of the Liverpool City Region and that other areas would continue to display high levels of productivity, reflecting the mix of industries. National projections are of a slow and fragile recovery due to the predominance of low added value industries and the relative shortage of leading edge businesses and corporate headquarters. Liverpool City Region supports the Government’s intention to reduce its reliance upon London and the south east but recognises that if this is to be achieved, significant measures need to be introduced to continue to stimulate enterprise and economic growth in the North West of England.


2.10 Liverpool City Region has an active Voluntary Sector, which is a significant and growing employment sector in its own right. There are 5,600 organisations, which employs 20,500 individuals. The Sector holds a significant asset base and recognise that such community assets can help support locally based economic activities. The development of social enterprise is actively promoted and supported across the City Region and Voluntary Sector providers have strong relationships with Local Authorities. LEP’s will be expected to promote the benefits of social enterprise across the City Region.

3 Growth Opportunities, Priorities for Investment and Economic Potential 3.1 The Liverpool City Region supports the Government’s commitment to rebalancing

the economy from public sector to private sector, from service sector to manufacturing and from south to north. The Liverpool City Region LEP will have the responsibility for creating the right conditions for private sector investment. We believe that we have the assets, capacity, skills and commitment to deliver this agenda for Government. Working with our private sector we have developed our key economic priorities, which builds on our competitive advantages.

3.2 In accordance with Government policy a successful Big Society will deliver

economic prosperity and opportunity for all, strong families and communities, and a thriving democracy characterised by real power in the hands of every citizen. We believe that our LEP will provide evidence of how localism can drive economic growth that specifically protects the most vulnerable in society.

3.3 Our priority is to move from a Public Sector dominated economy to a Private

Sector based economy. We are committed to establishing the Liverpool City Region as a top international and national investment location, with global trade, knowledge, manufacturing (TATA, Unilever, Pilkington, Getrag) and tourism relationships. We will enhance our status as a thriving International City Region by developing the long-term sustainability of the economy through;

• Accelerating the creation of new business. • Supporting growth and improving productivity in local small and

medium sized businesses. • Making best use of public sector funds to induce private sector

business investment and to maximise private sector leverage. • Delivering a step change in our economic performance by prioritising

our investment activity in transformational areas, such as the Visitor Economy; Knowledge Economy; Liverpool SuperPort and the Low Carbon Economy.

• Increasing the number of residents who are in work. • Increasing the scale of economic activity and developing global

markets. • Working with business to produce a demand led programme of

investment in skills and learning. • Promoting economic growth and meeting the demands of the low

carbon agenda. • Supporting all potential investors with planning, access and

infrastructure, sites availability and finance. • Atlantic Gateway development including Wirral and Liverpool Waters


3.4 The Liverpool City Region also recognises the need to grow, attract and retain its

share of higher value added businesses, including advanced manufacturing and higher value service sector activity.

3.5 We have developed strategic intelligence across the Liverpool City Region to

enable us to prioritise key interventions in the economy, which will underpin the work of the Local Enterprise Partnership.

3.6 Liverpool City Region has recognised the need to focus on the growth of SME’s

and on key sectoral development and to deal with low productivity. We have identified parts of our economic activity where there are opportunities to make step-changes in performance in the Visitor Economy, Knowledge Economy, Low Carbon Economy and Liverpool Superport. ‘Transformational’ teams led by business and university leaders are already working on these opportunities. They are focusing on specific opportunities that make use of existing assets, levering private sector investment and will create a significant number of new jobs in the short term.

3.7 As part of the Knowledge Economy, Liverpool City Region is committed to

developing our competitive advantage for advanced manufacturing using our considerable knowledge, science and innovation assets. The Liverpool City Region’s knowledge based sector is an important component of our economic growth and is continuing to grow.

3.8 There is strong support for exploiting renewable energy opportunities including

offshore wind and Smart Grid technologies and our proximity to the River Mersey offers us the potential to benefit from tidal power.

3.9 The work of our Universities, together with business in terms of life sciences,

creative and digital industries are taking full advantage of next generation technologies in driving job creation. Innovation funds currently held by NWDA are important to support this work and we would request that LEP’s should be given devolved responsibility to deliver this programme locally.

3.10 Within the Liverpool City Region there are 3,150 companies involved

in manufacturing employing over 37,000 people. Manufacturing companies such as automotive, aerospace, chemicals, solar power, engineering and nanoscience engineering are continuing to develop overseas markets in India, China and South America. Daresbury Science and Innovation Campus is one of only two, Government funded, Science and Innovation Campuses in the UK. It is a focal point in the UK for multi partner projects involving universities, business and Government departments. The Campus is a centre of outstanding scientific excellence of National and International importance and offers the opportunity to become a major catalyst for economic growth by attracting new, emerging and established companies into the City Region.

3.11 Liverpool City Region is committed to addressing the critical

infrastructure challenges to growth potential and recognises the importance of tackling the region’s below average employment rate and high levels of social exclusion, through job creation and addressing worklessness.


3.12 There is already considerable successful joint work in place across the Liverpool City Region in terms of identifying its spatial plans and priorities for economic development, housing, transport and skills. The establishment of a LEP will allow us to build on the current Liverpool City Region working and provides us with a unique opportunity to further integrate business support and sub regional innovation, which is crucial to the Liverpool City Region Economy. By strengthening innovation in the Liverpool City Region and working through our universities we have a real opportunity to continue to develop new technologies, which results in employment in many of the emerging sectors, which will be key markets for the UK and in the globalised economy. In particular, innovation in science and technology is a key opportunity.

3.13 There is also the added opportunity through collaborative working, for

the public sector to move towards a more strategic approach to procurement, which in turn could benefit businesses within the Liverpool City Region. Liverpool City Region Cabinet is committed to drive efficiency across the six local authorities by removing duplication, sharing services and driving public sector reform.

3.14 As part of the development of the Regional Spatial Strategy we

developed a Spatial Plan for the City Region, which supports our transformational actions and the key economic drivers. We have produced integrated action plans for employment and skills, housing and transport in order to support sustainable economic growth across the City Region. We are committed to continuing to work together to develop our longer term Spatial Plan for Liverpool City Region.

3.15 We are continuing to develop our joint investment planning, agreeing

investment locations and institutional delivery arrangements. We have a good base from which we can develop the LEP. However, we will need the right mix of powers, levers, assets and finance to address effectively the issues and priorities identified.

4 Remit and Proposed Functions of the Liverpool City Region LEP – (Our Asks)

4.1 The Liverpool City Region Economic Partnership has carefully considered

those functions best delivered locally. We are seeking from Government the freedom to make evidence based decisions, arising from a robust cost benefit analysis, over the deployment of public sector resources. There are a number of key enterprise/economic growth functions for the Liverpool City Region that are currently supported by the NWDA and delivered through a combination of national, sub regional and local partners. We would like to see extensive powers given to the Liverpool City Region LEP, in relation to enterprise and business development, inward investment, skills, housing and transport, the transition to a low carbon economy and promoting tourism and the cultural sector.

4.2 We believe that business support, inward investment and science and

innovation should not be centralised in London. These functions all require, in our experience, a detailed knowledge and understanding of the relevant area in order to operate successfully.


4.3 We recognise that nationally driven programmes which are not able to adapt and flex significantly at the local level, often produce poor and wasteful results for Government. In some areas, there may be merit in retaining a national programme, but only if it is capable of local delivery and a tailored and integrated fashion through a LEP.

4.4 There should not be a prescriptive set of issues that a LEP may or may not

include and it should be for local partners to determine priorities in each case, recognising that they will contribute in some way to delivering the primary outcome of economic growth and jobs. We already have an agreed City Region Plan of priorities for both housing and transport, which are based upon improving connectivity and ensuring a choice of quality and affordable housing. For example, housing and attendant population growth provides employment and demand for products and materials during the construction stage, increases consumer demand, to an extent, in line with increased occupancy and potentially increases the skills base across wider urban areas by creating more balanced and mixed communities, that need to be sustainable for the long term. In relation to transport, the two Local Transport Plans that serve the Liverpool City Region and the sub regions RFA transport allocations, illustrate the interconnection between effective transport links and economic prosperity. It is likely that LEPs in major urban areas will need to include some or all of the following; planning; housing; local transport; infrastructure development; employment, worklessness and skills; enterprise and innovation; culture and creative industries; tourism and the transition to a low carbon economy. It would be beneficial to the Liverpool City Region to have budgets devolved for economic development, housing, environment and transport and to ensure that the LEP has sufficient freedom to leverage growth and enhanced investment from our assets.


4.5 Enterprise and Business Support 4.5.1 For a LEP to be truly effective some of these activities need to be delivered

locally and tailored to meet the needs of the local economy. The expansion of small businesses within the Liverpool City Region has been a key strength of the last decade. Publicly funded business support programmes are essential to accelerating growth and creating employment through; • The start up of new businesses. • The expansion of small businesses. • Supporting international trade. • Supporting skills development. • Supporting access to finance. • Improving productivity and efficiency. • Removing barriers to growth.

All of the above require local access to information and advice. Many SMEs initially do not have the capacity or the finance to buy in proper advice. Evidence from the Local Enterprise Growth Initiative shows that good local business support leads to sustainable business and a growth in GVA. Our Chambers of Commerce and other business support services have good, close relationships with SMEs in the Liverpool City Region and have the ability to deliver large scale, low cost business support programmes and the ability to develop the local supply chains. We will work to support the third sector in terms of developing social enterprise and developing access to finance. Liverpool City Region would ask Government to devolve the remit of developing small business support to the LEP. We are already delivering strong output in all these areas. With greater autonomy we believe we can achieve even more.

4.6 Asset Management 4.6.1 The North West Development Agency and the Homes and Communities

Agency each hold physical assets that are part of the Liverpool City Region. This asset base is an important recourse for the City Region particularly in providing match funding for the JESSICA regeneration fund. The strategic management of the se assets should be aligned closely with the development of the LEP and we would urge Government to agree to an active dialogue on the transfer of such assets, to a separate holding company, where appropriate, controlled by the LEP. The creation of a land bank or asset bank as part of the LEP arrangements, in addition to the planning powers held by the local authorities, would make the LEP a powerful regeneration vehicle. Land holdings are key to future economic development.

4.7 Tourism

4.7.1 Nationally tourism is the country’s third highest export earner and provides

unique economic opportunities within the domestic market. Tourism presents a huge economic opportunity within the Liverpool City Region.


4.7.2 The Liverpool City Region Visitor Economy is responsible for 23,000 jobs. Economic growth in tourism has transformed the City Region in recent years and has been identified as one of the four transformational areas with the most significant potential for growth and job creation. Benefiting from our experience of delivering a successful Capital of Culture in 2008, we are clear what more needs to be done to improve the sub regional offer and grow the sector.

4.7.3 The Liverpool City Region benefits from good connectivity, which is central to

the Visitor Economy, and development of the airport, trains, road connections, ferries and local transport is a City Regional issue. The Tourist Board focuses on connectivity/route development to benefit the whole sector and we have close working with our Integrated Transport Authority.

4.7.4 The tourism sector is projected to grow by 60% in the next 10 years, creating 14,000 new jobs (evidenced in the Liverpool City Region, Visitor Economy Strategic Plan to 2020 published last October). Many of the jobs will be low entry requiring a low level of qualifications and skills but others will be highly specialised eg in music, sport, hospitality or curatorial. We forecast that 2,000 new jobs will be created in the next three years.

4.7.5 Significant public and private sector investment has been made in the sector

in the last 5 years and its growth is fragile given the economic climate. The sector has been heavily dependent on public sector investment. It needs to go through a short/medium term transition over the next 2/3 years so that development and marketing is private sector led. We believe that this should be a function of the LEP.

4.7.6 The Liverpool City Region Visitor Economy is retaining wealth and investment in the UK by attracting visitors for short leisure breaks in the UK rather than overseas and by attracting conferences and events to the UK. The Liverpool City Region Visitor Economy has leading edge cultural opportunities and builds on a number of key assets including: • UNESCO World Heritage site that encompasses the City Centre,

commercial and maritime areas • Finest collection of museums and galleries outside of any capital city • World famous for music and sport (football, golf, horseracing, rugby,

Beatles) • Finest stretch of championship golf courses in the world • Strong sense of identity and heritage • The return of the Open Golf Championship to Royal Liverpool in 2014

With the demise of the Regional Development Agency and the decline in both national and European funds, the Tourism offer in the Liverpool City Region is likely to face significant resource pressures over the next few years.


4.8 Inward Investment 4.8.1 Inward Investment is hugely important to the Liverpool City Region economy.

We believe that this should be delivered sub regionally, as a function of the LEP, working closely with UKTI. Our experience shows that this approach is the most efficient and effective, by marrying the international reach and networks of UKTI with local expertise and knowledge of the Liverpool City Region.

4.8.2 The Liverpool City Region has a good inward investment track record

In the 3 year period from 2007-10 Liverpool City Region has:-

• Generated 524 Inward Investment enquiries • Handled 202 Inward Investment projects • Securing 110 Inward Investment completions • Creating 5131 jobs and safeguarding 5408 jobs Foreign Direct Investment in Liverpool City Region accounts for: • 55,000 jobs • £2bn GVA • It pays 51% more per worker than UK owned companies • It generates 48% greater GVA per worker than UK owned companies. Source: The Role of FDI in NW – Ekosgen 2009 Liverpool City Region is keen to exploit all business opportunities with China and our attendance at the Shanghai Expo has both encouraged and supported businesses wishing to export to China and helped to further develop tourism.

4.8.3 Whilst inward investment projects may be originated nationally and internationally, they are ultimately always delivered locally, and evidence suggests that they are most effectively handled this way. They typically require:

• Detailed business case evidence • Local demographic intelligence • Detailed land, property and planning information • Local skills and training resources • Micro-location advice • Local Authority engagement • Access to local supply chains and business networks

4.8.4 The Liverpool City Region would urge Government to consider inward investment to be a key responsibility of the LEP. International and national marketing of the Liverpool City Region, as a potential investment location, is currently undertaken jointly at national level (UKTI), regional level (RDA), and local level by The Mersey Partnership.


4.8.5 Through sub regionally delivered inward investment support we can offer UKTI a fully developed and articulated business case for investment, in specified sectors and target markets. We are concerned that the North West would find itself seriously disadvantaged in comparison with Scotland, Wales and Northern Ireland if inward investment was to be handled nationally.

4.8.6 UKTI has originated only a small number of welcome projects to Liverpool City Region over the past 3 years. Approximately 50% of all UKTI projects go to London and the South East. Having a local partner in Liverpool City Region identifying and informing real inward investment opportunities in target sectors and markets will enable UKTI to become a truly national inward investment agency.

4.9 Employment and Skills Function of the Local Enterprise Partnership 4.9.1 The Liverpool City Region has a track record of working together on

Employment and Skills strategy and implementation across the functional economic area, evidenced by the Liverpool City Employment Strategy pathfinder and more recently by the Employment and Skills Board. Both have sought to align employment and skills services and support with the current and future requirements of business. This commitment will be continued in the LEP and developed more thoroughly, in order that "employers are able to shape the skills system to meet their needs and are able to access high quality labour market information about their sectors" (Paragraph 39, Skills for Sustainable Growth, BIS, 2010).

4.9.2 The LEP will seek to give a greater role to the private sector in determining

the training needs of the sub region to ensure that training is demand led, not supply led.

4.9.3 The existing strategic framework provided by the Liverpool City Region

Employment and Skills Strategy and the clear priorities that underpin is widely supported, not only by the local authorities but by all key business and public sector partners.

4.9.4 These priorities have created their own distinctive work programmes,

involving Employment and Skills Board business champions, the Employer Coalition and partners such as Jobcentre Plus and the Skills Funding Agency at a sub regional level and with local authorities and their partners at the local level.

4.9.5 The LEP provides an opportunity to build on this as it will champion the

Liverpool City Region’s long held ambition for the delivery of an employment and skills system that prepares people for work and then to progress.


4.9.6 We would seek that Government will involve local partners through existing Liverpool City Region arrangements in the deployment of all Skills Funding Agency investment in the Liverpool City Region and in the process of developing a competitive market of providers. This will drive up quality; enable greater freedom and flexibility for local colleges and providers to better meet learner and employer need. This would further build a platform for genuine localisation of skills need responses across the Liverpool City Region. Working in partnership with businesses, HE Institutions, FE Colleges and training providers we will be looking towards:

• Driving a more collaborative and coordinated approach, creating stronger

links between learning and skills and the capacity of employers and individuals for business/enterprise development and innovation.

• Supporting providers from across the skills sector to radically simplify and flex up the delivery of learning and skills system for local people and businesses.

• Facilitating progression pathways from 14-19 education into further and higher education.

• Empowering consumers to make informed choices about learning and skills programmes and services that best meet their need.

• Promoting the demand for and the value of learning and skills particularly within deprived communities and from vulnerable groups.

4.9.7 A key priority will be to ensure providers understand the importance of the

delivery of skills and learning that will help us to re-balance our local economy; we are working with private sector partners in all transformational areas, to identify skills and training needs to support future job growth.

4.9.8 The LEP will be seeking funding from the Regional Growth Fund for specific

activity, and we will also need to enact links that allow providers to keep a track of these developments to enable them to align and make an appropriate and timely learning and skills response to the plans for a private sector-led economic renewal of the area.

4.9.9 In terms of skills priorities, the LEP will seek to collaborate and work with

employers, HE Institutions, FE Colleges and training providers to bring together a clear and common understanding of local learning, skills and employment priorities thus supporting and enabling these organizations to deliver to identified demand.

4.9.10 For example, it is envisaged the LEP will have a role in supporting the co-

ordination of employment and skills responses to inward investment opportunities, strategic sites and the needs of business and individuals arising from large scale redundancies. The LEP would propose to work with the National Apprenticeship Service to encourage take-up of Apprenticeships, providing a fast-track relationship for providers with local employers, and agreeing action to ensure that training provision meets demand.


4.9.11 There will be significant services delivered within the Liverpool City Region which have been commissioned by Government at wider spatial levels, including the Work Programme. The Liverpool City Region wishes to work with Government to seek the agreement to support a single sub regional employment and skills plan to stimulate the market and we would see the LEP as the single conduit to establish this. In addition, the Liverpool City Region would urge Government to consider involving the LEP in the commissioning arrangements and tender evaluation for the Work Programme.

4.9.12 The LEP would also seek to scrutinise the effectiveness of learning, skills and

employment services and provision in meeting the economic needs of the Liverpool City Region through a process of provider engagement; this would support Government locally in driving up performance of all local delivery through real co-commissioning arrangements.

4.9.13 Other areas that the LEP would wish to discuss with Government include;

longer term policy development for an independent all age careers service; influence over ESF and ERDF investments and allocations for Merseyside; and longer term, a share in DEL/AME switch savings where the activities and investments of the partnership are demonstrated to have resulted in benefit savings, for use as the as transformational investments for the Liverpool City Region.

4.9.14 Implementation of these proposals will capture significant added value as

individual local authorities working with partners tackle more effectively some of the key Liverpool City Region employment and skills priorities, co-ordinate business engagement and secure the maximum value from resources deployed within the functional economic area.

4.9.15 The Transformation Teams (3.6) are already identifying opportunities for

short/medium term jobs and the relevant skills required.

4.10 Innovation and Science 4.10.1 We share with our Universities and the North West Business Leadership

Team, a serious concern over the extent to which vital collaborative working, in areas such as industrial and scientific research may be adversely affected. The loss of funding and support for the North West Science Council, for major centres of shared excellence such as the Daresbury Science and Innovation Centre and for University led innovation funded projects with industry, across aerospace, science and energy innovation and digital projects. We believe that the LEP should take responsibility for all locally delivered innovation projects, which support economic growth

4.11 European Funding 4.11.1 As a former Objective One area, European funding has played an important

role in terms of supporting the economic growth of the Liverpool City Region. We are looking ahead to the next EU programme period post 2013 and the European themes are likely to reflect EU2020 targets (knowledge economy, skills, climate change, energy etc)


4.11.2 The use of financial instruments such as JESSICA will be an important consideration for the LEP in delivering sustainable economic growth for the Liverpool City Region. We are currently working with a private sector lead consortia to create a new investment model to support strategic projects that are critical to the City Region’s economy. JESSICA provides the Liverpool City Region with an opportunity to develop a “revolving door” investment fund by investing in projects that will provide a future return to the fund to re-invest in long-term economic transformation. The use of existing NWDA/HCA assets to lever in private sector, and other funding through innovative partnership models will become even more important as public sector funding diminishes. It is intended that the LEP will play a significant role in the future development of the JESSICA fund and will be seeking to align potential JESSICA investments with Regional Growth Funding, ERDF and other private sector investment.

4.11.3 The LEP could play a significant role in the future development of the

JESSICA fund, and could also support a Regional Growth Fund bid to provide the gap funding required to make the identified Liverpool City Region projects deliverable. The LEP Board will need to review strategies to ensure that the ERDF and ESF funding is closely aligned with emerging economic growth areas.

4.11.4 We recognise the need to retain expertise locally that has supported the

running of European programmes in the Liverpool City Region. We would wish to open up dialogue with Government to discuss how European programmes will be managed in future given the demise of both NWDA and The Government Office for the North West. Scope for LEPs (or groups of LEPs) to take on delegated EU funds post 2013 to deliver local priorities against agreed targets and themes.

5 Governance Structure/Composition of Board and Linkages to other LEPs 5.1 Liverpool City Region Cabinet, supported by the private sector, has agreed a

LEP to cover the geographic areas of Halton, Knowsley, Liverpool, Sefton, St Helens and Wirral. Public accountability for the LEP will be vested in the Liverpool City Region Cabinet.

5.2 Liverpool City Region has long advocated devolution and decentralisation to real

economic geographies, the places that drive sub national economic growth. Government suggest that LEPs should create the right “environment” for business and growth in their areas. A LEP is therefore not necessarily about direct delivery, but more about creating the environment for growth and the LEP will be the mechanism through which the private sector influences the shape and future direction of Local Authority policy and services to deliver the growth agenda.

5.3 Governance arrangements for LEPs should be permissive and evolve bottom up,

as they have in the economically focussed partnerships that the Liverpool City Region has already developed. We recognise that governance arrangements must be fit for place and fit for purpose. Government should not impose governance arrangements on LEP areas, but should recognise the considerable and detailed progress that has already been made.


5.4 Liverpool City Region is committed to building on the experience from our already established Liverpool City Region Economy Board by establishing a strong, private sector led LEP, chaired by a prominent business leader. The level of private sector engagement in the LEP needs to be of sufficient stature and experience to exert real influence over policies and priorities. We are fortunate that within the Liverpool City Region we already work with a number of capable, influential business leaders across a number of partner organisations. We also work closely with our Universities and feel that University representation could help provide additional valuable and relevant expertise within the LEP Board.

We have the ability to create a strong private sector led LEP for the Liverpool City Region by combining private sector representatives from a number of existing partnership bodies. We are in a position to deliver immediately a strong shadow LEP to work with Government through the legislative period. We have the ability to bring together some of the Directors of the country’s top performing companies who are based in the Liverpool City Region. The LEP will be private sector led and we have sought recommendations from the private sector as to who should be on the shadow LEP. Our shadow LEP nominations are attached at appendix 1 to this report together with the accountable body structure at appendix 2.

5.5 The LEP Board will provide strategic direction for the Liverpool City Region

economy and will fulfill a performance management role to drive key ambitions in such areas as employment and skills; business support; inward investment and international trade; marketing and tourism. It will be supported by an Advisory Panel, which will give an opportunity for many groups to contribute to the wider agenda. We recognise that there needs to be a strong communications strategy between the LEP Board and wider organisations.

5.6 The Liverpool City Region LEP will be a partnership board with responsibility for

stimulating the market and commissioning relevant economic activity. All delivery bodies will be expected to demonstrate clear outcomes, fitness for purpose and value for money.

5.7 The LEP will be accountable to the Liverpool City Region Cabinet. 5.8 The LEP will be supported by a streamlined policy and intelligence function to

support the development and implementation of a coherent and focussed economic growth strategy for the Liverpool City Region.

5.9 The transition arrangements from our current arrangements to the LEP Board

and the identification of private sector projects, would also be supported by the Liverpool City Region, Transport, Skills, Low Carbon, Housing and Planning and Health Boards, together with the ITA. The Liverpool City Region will develop additional capacity through improved joint working and recognises the need to rationalise and streamline current support activities.

5.10 The LEP will also be supported by the existing Transformation Teams (3.6),

led by the private sector and Universities, that are focused on specific opportunities for economic growth.


5.11 LEPs should be considered as statutory consultees on major Government strategies, such as that for; airports; national rail; motorway and waterways infrastructure; cultural and creative industries infrastructure; the development of the higher education sector; innovation strategy and tourism development.

5.12 For LEPs to be effective, Government will need to ensure that they have

access to finance, or the ability to raise finance, for infrastructure, transport and other economically transformational programmes. This might include any residual Regional Funding Allocation together with Regional Growth Fund and other sources such as Technology Strategy Board funding.

5.13 Government should, through appropriate forms of joint investment planning,

agree to align its investment across Government departments, with the locally identified priorities of the LEP, at that spatial level. This could be supported by a similar duty upon other national agencies charged with delivering priorities relevant to a LEP. These arrangements and priorities will be different in each LEP area, but the principle is the same - real devolution for real growth.

5.14 Working with Government we would support Government Policy of exploring

place-based budgeting within LEP areas, in a way, which created greater alignment, efficiency and facilitated positive public sector reform.

6 Regional Growth Fund Consultation Response and link to the LEP 6.1 The core principles underpinning the Liverpool City Region response to

regional growth fund are as follows:

• The North West is well placed to maximise the RGF’s objectives – having an excellent track record in engaging the private sector whilst appreciating acute levels of deprivation mean we have disproportionate amounts of residents reliant on public sector employment and support.

• Liverpool City Region is an assisted area and it is important that

Regional Growth Fund is used to support General Business Investment and gap funding in order to support the private sector to grow.

• The RGF is primarily allocated to projects and proposals that are

aligned with the region’s Local Enterprise Partnerships (LEPs) priorities and which allow the region to stimulate private sector led economic growth.

• A proportion of the RGF should be allocated to the individual LEPs

and awarded on the basis of an agreed and transparent formula relating to GVA growth potential, population and levels of deprivation.

• LEPs should then have the ability to ‘top up’ their funding by bidding

for additional resource on a competitive basis.

• An emphasis should be placed on programmes of investment that do not simply focus on traditional ‘gap’ financing, but which demonstrate significant potential for the leverage of monies from other sources; generating returns on public sector investment and creating a sustainable funding source for economic growth moving forward.


• We would like to see priority given to projects that demonstrate real

economic growth potential. As such the focus on funding transformational projects is welcome although we would see value in increasing the £1m lower threshold for the competitive bids to safeguard this.

6.2 Proposed Consultation Response to Regional Growth Fund 6.2.1 Authorities in the Liverpool City Region and across the North West welcome

the opportunity to respond to the Government’s consultation on the Regional Growth Fund (RGF) and welcome the RGF as a clear signal that the Government is committed to investing in the economic growth and prosperity of the English regions. We also welcome the dual focus of the RGF and believe we are well placed to maximise its objectives – we have an excellent track record in engaging the private sector in the encouragement of enterprise and economic growth whilst appreciating that within the Liverpool City Region and the North West we still have acute levels of deprivation and as such a disproportionate amount of residents heavily reliant on public sector employment and support.

6.2.2 Given the financial limitations of the RGF we would suggest that the fund is

primarily allocated to projects and proposals that are aligned with Local Enterprise Partnership (LEP) priorities and which allow us to stimulate private sector led economic growth and sustainable employment growth. We would advocate that a proportion of the RGF is allocated to LEPs on the basis that they are able to demonstrate a clear strategy for economic growth and have secured private sector engagement. The RGF will need to be allocated on the basis of an agreed and transparent formula relating to a range of factors including population and levels of deprivation and the funding should be deployed by LEPs in accordance with their agreed strategies for economic growth. We would want to see the development of any deprivation related index linked to RGF, reflected in a fair share of resources to areas across the North West.

6.2.3 LEPs should then have the ability to add to this their funding through

applications for additional resource, whether from RGF, or other Government funding streams, including on a competitive basis. All proposals submitted to the LEP Board should be assessed against their synergy with LEP strategies and their ability to contribute to both increasing productivity (GVA) and increasing the scale of activity in the economy by creating more jobs and growing business. A formula to assess the impact of these outputs on public sector spend (i.e. number of residents moved from employment support) could also potentially feature in project assessment. We would also welcome emphasis on programmes of investment that do not simply focus on traditional ‘gap’ financing but which demonstrate significant potential to leverage monies from other sources and to generate returns on public sector investment, thereby creating a sustainable funding source for economic growth moving forward.


6.2.4 We welcome the focus given by the Government to the development of LEPs

and the role they are expected to play in defining the economic growth strategy for their areas and for bringing forward bids for RGF. LEPs need to provide an effective link between the private sector and local authorities in order to effectively integrate economic development, planning, housing and transport investment to deliver growth for their area and we agree that any application for the competitive element of RGF funding will need to be assessed against LEP strategies and plans.

6.2.5 We would like to see priority given to projects that demonstrate real economic

growth potential. As such the focus on funding transformational projects is welcome although we would see value in increasing the £1m lower threshold for the competitive bids to safeguard this.

6.2.6 Finally, the appointment of Lord Heseltine as chair of the funding approval

panel is welcome given his knowledge and experience of urban policy. We feel this appointment also demonstrates the importance the Coalition government are placing on the RGF. Allied to this we would propose that his involvement is complimented by that of senior professionals that have a specialist knowledge, insight, experience and success in delivering transformational change in the private and public sectors.

6.3 Q1. Are there benefits to be had from allocating different elements of the

fund in different ways?

We see LEPs as playing a critical role in defining their local strategies and taking the lead in the definition, delivery and evaluation of RGF funded programmes and projects. We recognise the importance of allocating a proportion of RGF to individual LEPs and believe that this should be done where LEPs can demonstrate the existence of an agreed strategy and private sector engagement and on the basis of an agreed formula which takes into account key factors including population and levels of deprivation. It should be for individual LEPs to control and evaluate how this funding is deployed in relation to their agreed strategy for economic growth.

We believe that LEPs should also be allowed to seek on a competitive basis additional RGF funding for LEP programmes which can clearly demonstrate consistency with locally defined economic growth strategies which should be strongly linked to the RGF priority of increasing private sector led economic growth. LEPs should also be able to demonstrate the ability to utilise the funding in a renewable way by using the funding to leverage in additional funding or assets, which in turn generate a return on public investment. If Government decides not to restrict bidding to LEPs then any bidding not submitted through the LEP should be subject to having been supported by the LEP.


6.3.1 Q2. What type of activities should the fund support and how should the

fund be best designed to facilitate this?

All private sector jobs are important to Merseyside whether they are created by SME’s or large companies. We believe that the Regional Growth Fund should support both activities. The RGF should focus on programmes of investment that are consistent with LEP strategies and which can deliver significant and sustained long-term economic growth. Special attention should be given to the development of talent and skills to support economic growth and key business investments and to enable people to participate in the economy, supporting the development of businesses up the value chain, ensuring greater internationalisation of business, fostering and supporting innovation and ensuring we provide the right infrastructure to enable local economies to diversify and grow. A proportion of funding should also be targeted towards developing innovation through proof of concept and robust evaluation methodologies, which allow us to more effectively plan for sustained economic growth. We should not lose sight of the lessons learned from previous investment streams – particularly about leveraging additional investment at the spatial level for optimal interventions. Regional Growth funding may be required for facilitation/co-ordination of business support, inward investment, supply chain development and targeted sector activity.

We recommend that priority should be given to bids that demonstrate new and innovative partnership models between the public and private sector, which are capable of levering in additional investment, which generates a return to the growth fund and places it on a self-sustaining footing. Consideration should also be given to bids that demonstrate the ability to link together cross-cutting government projects (e.g. linking the RGF to the Work Programme to maximise size and impact of a project). Bids should be able to demonstrate a strong record in delivering through partnerships and in innovative ways.


6.3.2 Q3. Do you think that these are the right criteria for assessing bids to

the Regional Growth Fund?

Given the relative scarcity of resource we would argue that the focus on economic growth should be the prime driver and should be firmly linked to the ability to generate sustained increases in GVA and jobs. The fund should also service national growth priorities whilst maintaining a keen focus on locally defined priorities as identified by the respective LEP. With one of the objectives of the fund being to encourage private sector growth and prosperity in communities typically reliant on the public sector the development of alternative, innovative growth models could also be prioritised – e.g. the promotion of franchising and social enterprise.

There does appear to be some tension between the stated requirement to demonstrate the ability to lever in private sector investment and the need to demonstrate market failure. It might be that an RGF funded project does not address a complete market failure but rather it expedites the market, which is operating in a challenging economic environment. Indeed we believe that LEP and RGF funding should only be used to address market failure where we are clear that there is the real opportunity to address this. We would also argue that, with the appropriate checks and balance in place, funding should also be directed towards seizing new opportunities rather than simply addressing market failure. In our view all projects funded by Regional Growth Fund need to be linked to a clear, evidence based strategy to bring forward private investment, delivering major growth opportunities and providing jobs to rebalance the economy.

6.3.3 Q4. Do you think we should operate a two-stage bidding process?

If clear criteria are outlined then all bidders into the fund should be clear on what is required to ensure any submission receives full consideration – negating the need for a two-stage process.

6.3.4 Q5. Should a Regional Growth Fund become a long-term means of

funding activity that promotes growth?

Yes. Whilst the focus of this first round of the RGF should be on delivering GVA growth and employment growth in the private sector, it should not just been seen as conventional gap financing and should be deployed to support new partnership models involving the private and public sectors to lever investment with a return to the RGF. Over the longer term, we believe Government should be seeking to decentralise funding mechanisms as far as possible, in accordance with its localism agenda. This will allow maximum alignment of resources against key growth opportunities, and would include LEP control over mainstream economic development related budgets (particularly in respect of skills, employment, transport, science and innovation, investment and business support.) We support the principle of Regional Growth Funding providing a useful model to pilot a devolved model of funding.


6.3.5 Liverpool City Region will be in a position to respond positively to the initial

bids for the Regional Growth Fund. We are currently considering a number of priorities that deliver key economic impacts in terms of GVA and employment and that have a high level of private sector leverage. We are mindful of the need to ensure that all bids are State Aid compliant.

7.0 Maintaining a relationship with other LEPs in the North West 7.1 The Liverpool City Region is working to support Government along with all of

the sub regions in the North West to promote the orderly and structured transition to the new LEP arrangements, as a consequence of the abolition of both the RDA and GONW and 4NW will cease to operate with effect from 30th September 2010.

7.2 We recognise the wider North West Economy – opportunities and challenges,

which are aimed at simultaneously securing economic recovery by reviving the enterprise culture, private sector job creation and a rebalancing of the economy by developing a stronger manufacturing base.

The North West as a whole is essential to this agenda because:

• It is a key driver of the country’s competitiveness – accounting for 11% of

England’s GVA (£120bn) and with the smallest reduction in GVA per head in 2008.

• Competitiveness has been increasing – rising from 8th in the UK Competitiveness Index to 4th.

• It is the largest manufacturing region in the country, accounting for nearly £20bn of output (15% of England’s total output).

• It has the largest and increasing share of Foreign Direct investment outside London and the South East.

• It has a strong social enterprise and volunteering sector able to meet the challenge of the ‘Big Society’.

• It has the ability to deliver low carbon and nuclear energy solutions and technologies for the country, with the potential for the Mersey, the Solway Firth and other estuaries to contribute as much as the Severn Estuary.

7.3 However, the North West still faces a number of challenges, which LEPs

working together, with Government support, can help to overcome.

• The Independent North West Regional Economic Forecasting Panel believes that recovery in the region will remain weak until 2013.

• The North West has 28% of all its employment in the public sector compared to 26% in England as a whole.

• Based on OBR’s projections the North West would need to create 200,000 private sector jobs over the next 5 years to meet its share of the UK projection, compared with a loss of 20,000 private sector jobs over the past 5 years.

• The North West has 284,000 people unemployed (8.3% compared to 7.8% nationally) and a further 387,000 people on Severe Disablement Allowance (18.3% of the England total).


7.4 We need to address these issues across the whole of the North West Region

in the context of economic competitiveness and the need to strengthen labour market productivity and efficiency. This means tackling worklessness, skills development, deprivation, and reducing the demand for dependency-related services. The latter is central to restoring a long term fiscal balance. Specific economic priorities, which require consideration across each of our LEPs, are:

• Capitalising on our world class research, science and

innovation capability. • Secure next generation access. • Improve rail connectivity across the North West, especially the

Northern Hub and securing High Speed Rail access. • Improve international connectivity via Manchester Airport,

Liverpool Airport and Liverpool Super Port, together with the Mersey Gateway multi modal link.

• Enhance our natural environment and resolve emerging pinch points in our critical and green infrastructure.

• Support for advanced manufacturing. 7.5 It will be important for LEPs to work together across the North West in a

voluntary arrangement and to maximise efficiencies and avoid duplication of functions, when dealing with those functions that will remain following the closure of GONW and NWDA.

• Any residual regional arrangements should be tightly focussed on

those matters, which extend beyond the influence of a single LEP.

• Any activity undertaken at regional level should be the subject of a value for money test, and following a detailed assessment of whether such activity could reasonably and more cost effectively be undertaken by one of the LEPs on a partnership basis.

• LEP Chairs should in addition be invited to discuss with the

Regional Leaders Forum matters of mutual concern.

• We must maximise all opportunities to secure central government, European or private sector resources into the North West that any one LEP acting alone could not secure.

8 Issues for discussion with Government


8.1 North West LEPs will work collectively with NWDA, GONW, and CLG, BIS

and HMT to support government to make orderly transition arrangements. It is proposed that each sub region and other stakeholders will work together on a project board for each designated work area to support Government throughout the transitional period. However clarity is required in respect of:

- Management of RDA assets and liabilities: we need a clear

assessment of what these are, and the development of clear proposals for their future management within a regional context and in ways which safeguard political accountability. The Homes and Communities Agency also holds property assets in the Liverpool City Region. The ownership of these assets will need careful consideration and are important since they could help to unlock additional private sector financial resources.

- Business Support: local involvement in the delivery of business

support is regarded as important to growing and expanding SMEs. We are concerned that business support should not be centralised in London and should be delivered locally.

- Civil Contingencies: this is important to both public and

private sector and business continuity should be considered as part of business support arrangements. We are interested how Government intends to deal with business continuity as part of future arrangements.

- ERDF and ESF: we wish to ensure that the management of this

programme remains in the region. We are currently working across the region to produce for Government management options and a clear understanding of commitments, spend and priorities still to be delivered.

- Planning: we would wish to understand further the Government’s

intentions on the role of the LEP, to provide advice to the Secretary of State on significant planning proposals prior to their determination or the exercise of call-in powers.

- Research and Intelligence: it will be necessary to determine

arrangements for how the Region as a whole avoids duplication in terms of access to intelligence and research. We would wish to work with Government to ensure that some of the existing capacity vested in GONW and NWDA, is retained in the region.

- Sectoral Development: In some cases it would make sense for LEPs

to work across the region to consider work on Sector Development in order to avoid unnecessary duplication: these include science, nuclear, advanced manufacturing, and climate change priorities. We would wish to discuss the potential for developing multi area LEP funding bids for Regional Growth Fund for sector development.


- Inward Investment: while individual sub-regions and ultimately LEP's will have their own priorities and delivery aspirations based upon capacity and local ambition, we need an analysis of what form partnership arrangements with UKTI might take.

- Bids for Regional Growth Fund outside the control of LEP:

We are concerned that the current guidance allows for bids to Regional Growth Fund to be made by any individual organisation outside of the LEP mechanism. We are concerned that the Secretary of State will receive large numbers of bids for funding that do not align with Liverpool City Region key priorities and may not have been properly vetted in terms of validated outcomes. We would ask Government to consider only accepting bids that have been supported by the LEP.

8.1 It is important for us to support Government by having an agreed strategy,

which will deliver the orderly transition of functions to new structures as soon as circumstances permit. The economic challenges facing the region underline the importance of achieving this. We should develop a detailed Transition Plan to deliver the objective of orderly transition of functions to new structures as soon as circumstances permit.

9 Conclusions 9.1 We believe that our LEP working with the Liverpool City Region Cabinet will

provide evidence of how localism can actively support the private sector, drive economic growth and reduce public spending in a way that specifically protects the most vulnerable in society.

9.2 We wish to enter into negotiations with Government for the devolution of all

budgets to the Liverpool City Region for economic development, housing, environment and transport and to request that the LEP has sufficient freedom to leverage growth and enhanced investment from Liverpool City Region assets.

Contact Officer for this report is Carole Hudson, Chief Executive of St Helens Council


Proposed Shadow Board Appendix 1

Sir Terry Leahy - Chief Executive of Tesco Rod Holmes - The Mersey Partnership Asif Hamid - The Contact Company Peter Nears - Peel and Superport Chair Michael Straghan - Managing Director, Jaguar Land Rover Mike Blackburn - Chairman of BT North West Steve O Connor - Managing Director, Stobarts Alistair Poole - NGF/Pilkington Vice Chancellor - Liverpool University Chamber of Commerce rep for small business and third sector social enterprise Leaders of Local Authorities


Index of Evidence Base

1 Evolution of Liverpool City Region Multi Area Agreement ( July 2010)

Professor Richard Evans and Professor Michael Meegan

European Institute for Urban Affairs

Liverpool John Moores University 2 Liverpool Economic Briefing – Summary (May 2010) 3 Study by Pion Economics and Cambridge Econometrics (2010) 4 GONW Information and Analysis Team – Small Government (July

2010) 5 Liverpool City Region, Visitor Economy Strategic Plan to 2020 published

Oct 09 6 The Role of FDI in NW Ekosgen (2009) 7 Employment and Skills Strategy (updated 2010) 8 Core Cities Group Submission to the BIS Select Committee on Local

Enterprise Partnerships. (August 2010) 9 Chambers of Commerce Proposal for Business Support Services in LEP

and Transition from Current Arrangements to LEP Delivery – (August 2010) 10 The House of Commons Business Innovation and Skills Select

Committee on Local Enterprise partnerships - Written evidence from North West Business Leadership Team - (August 2010)

11 Greater Merseyside Change -Up - Contribution of the Voluntary,

Community and Faith Sector (VCFS) in the Liverpool City Region to the Economic Agenda – Written by Colette Turner. (June 2010)

12 Merseyside Economic Review (2009)

Appendix 2


1. Proposed Shadow Board

2. Proposed Shadow Board

City Region Cabinet Accountable Body

Supported by City Region Sub

Board

Supported by

Transport

Employment & Skills

Housing & Planning

Environment

Health

Local Enterprise Board

Business

Chambers of Commerce

The Mersey Partnership

Voluntary, Community

& the Faith Sector Change-Up Consortium

HE and FE

Appendix 3

prt research city of liverpool lep

Documents

city of

city region cabinet

business growth

economic growth

business acumen

local economy

partnerships resources

key business locations