Dear Dr Lloyd

Economic Development

On 17 May, the Association of North East Councils (ANEC), representing all twelve of the strategic local authorities in the North East, and the Northern Business Forum (NBF), embracing all of the major business organisations in the North East, wrote to the Secretaries of State for the Department for Business Innovation and Skills, and the Department for Communities and Local Government.  This letter requested that the Government consider the creation of a strategic economic body for the North East of England which reflects the distinctive economic circumstances and potential of our area. The region’s universities supported this view in their letter of 28 May 2010.

Subsequently, the Secretaries of State for the Department for Business Innovation and Skills, and the Department for Communities and Local Government, have set out plans for Local Enterprise Partnerships and the abolition of the Regional Development Agencies (RDAs).  This document represents the next stage of engagement with Government to expand upon the proposals outlined in the letter of 17 May 2010.

We welcome the proposition for Local Enterprise Partnerships and see these as being important in shaping and delivering the functionality the Government has described for them – which, in the North East, has been identified as sub-regional/local.  Local authorities and business in the North East are currently discussing the number, form and content of Local Enterprise Partnership propositions in the sub regions/localities.

This work forms an important part of our co-ordinated proposition for the North East economy, which will set out how we are approaching the opportunities presented by Local Enterprise Partnerships and how we would wish to ensure that in the areas seen by the Government as being led nationally (which had been identified in our letter of 17 May as being particularly important to this area), the North East is able to influence policy and assist in delivery through a non-bureaucratic organisation which has functionality complementary to, but different from that of LEPs, which will be slim and deliver exceptional return on investment with significantly less public resource.

As stated in the letter of 17 May, local authorities and business organisations have reached an agreement on six strategic areas where the natural functional economic geography for delivery in our area is across the North East.  These are:

  • promotion of productivity, enterprise and business growth through developing innovation and exploiting research and development capabilities;
  • the development of sectors that are strategic to the UK and are clustered in the North East, such as low carbon vehicles, offshore wind, chemicals and process industries;
  • account managing and supporting enquiries for new investment from both existing businesses and inward investors;
  • bidding for and programme managing the European Regional Development (and successor) funds;
  • the development and delivery of new approaches to financing and supporting business growth; and
  • providing strategic input on other key related areas linked to economic growth such as integrated transport and energy investment.

The business community and the twelve local authorities of the North East agree that the North East represents the natural economic geography to deliver the functions described above through an economic body for the area dedicated to delivery and achievement of outcomes.  The North East represents 3.2% of the UK economy, is home to 2.6m people and comprises just twelve local authorities.

While the North East represents a critical mass for important elements of national strategic economic development, this must complement the areas at which other elements of cooperation and coordination must exist.  For this reason, this proposal is seen as part of a coordinated and integrated approach, of which the emerging discussions around LEPs at a sub-regional/local level are very important.  There will be a clear demarcation of responsibilities but a common accountability to the local authorities and the business community.

Through the development of our proposition, we consider that we can:

  • ensure a continued focus on the rebalancing of the NE economy towards the private sector to improve the locality’s contribution to UK plc;
  • ensure that our economic activities take place at the appropriate functional economic geography (and that there is linkage but no duplication);
  • underpin the activities of Local Enterprise Partnerships at the appropriate functional economic geography;
  • support the transition from the RDA structure;
  • maintain essential delivery of BIS functions locally; and
  • maximise the value for money of investment.

The objective would be, amongst other things, to articulate and deliver actions in support of:

  • the strategic priorities for our economy, in the context of how best we can contribute to the prosperity of the UK as a whole;
  • ensuring how existing infrastructure, and demands for new infrastructure, will support innovation, business growth and inward investment;
  • ensuring that the shape of the local economy and industry agglomeration impacts on key sectors for the national economy that are located in the North East, and how we can best develop those sectors;
  • prioritised economic interventions and investment that would deliver the greatest economic benefit and be most effective, within the organisation’s remit; and
  • the use of venture capital loan funds, and business support, in a way which reflects intelligence about growth sectors and prospects for firms.

We believe it will also be important to have a democratically accountable and business-led NE partnership contributing to national thinking and achieving on the ground and accessible delivery which would be well placed to support your objectives of growing the UK economy through the economic development of the North East.  This organisation (a non-statutory company limited by guarantee) represents a true partnership between business and all 12 authorities through ANEC.  The governance structure would reflect and embed democratic accountability, business leadership and the role of other key players such as the Universities, as well as giving an opportunity for the Department for Business, Innovation and Skills to participate.  It would work directly with individual local authorities and LEPs when developing proposals affecting their geographic area.

Our proposals reflect the key principles promoted by the Coalition Government including:

  • a commitment to locally designed solutions which are not ‘one size fits all’;
  • a recognition of the need to rebalance the North East and UK economy;
  • strong democratic accountability;
  • a clear Partnership approach;
  • powerful business leadership;
  • leanness and efficiency of structures with clear demarcation of function;
  • involvement of, and collaboration, with universities and other educational organisations
  • underpinning support for Local Enterprise Partnerships;
  • a commitment to subsidiarity; and
  • a recognition of the need to look to new ways of financing growth.

This is of course our initial thinking on these issues.

We would like to start this discussion with you now in the context of the overall policy to be set out in the forthcoming White Paper on sub-national economic growth.

With best wishes

Councillor Paul Watson                                     John Cuthbert
Chair, Association of North East Councils             Chair, Northern Business Forum
on behalf of                                                   on behalf of

Darlington Borough Council                               BT
Durham County Council                                    CBI
Gateshead Council                                           EEF
Hartlepool Borough Council                               Federation of Small Businesses
Middlesbrough Council                                      North East Chamber of Commerce
Newcastle City Council                                     North East Process Industry Cluster
North Tyneside Council                                    Northumbrian Water
Northumberland County Council                        Service Network
Redcar & Cleveland Borough Council
South Tyneside Council
Stockton on Tees Borough Council
Sunderland City Council

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