Business must be given a greater role in plans for devolution in England if the process is to result in genuine localism and a boost to private sector growth, investment and job creation, according to EEF.
This role is set to become even more critical in light of the Chancellor’s recent announcement that local authorities will be given the right to set their local business rates.
In a paper published today ahead of a key debate on the Cities and Local Government Devolution Bill this week, EEF outlines how the relationship between business and local authorities is currently weak while, to date, the hurtling speed of the move towards devolving power in England has left the business voice behind.
It raises particular concerns about smaller companies who have historically been the most disengaged, but who potentially have the most to gain from the new process.
In response, EEF is calling for greater efforts to improve relationships between business and local authorities.
A first step should be 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).
It says that LEPs should remain business rather than politically-led and should be part of the governance framework to ensure that devolution delivers for local businesses.
EEF is also calling for local authorities to prioritise the devolution of transport in their negotiations with Government. Transport investment powers will boost productivity, deliver financial returns and support the rebuilding of trust with local businesses.
Chief executive of EEF, Terry Scuoler commented: “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.
“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.”
“To date, however, business has felt disengaged from the process of devolution, which. For it in England 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.”
According to EEF, the historical relationship between business and local authorities has been weak and transactional with business traditionally being involved on company-specific issues, such as planning. There is currently also a lack of clarity on the reasons local authorities are asking for devolution and a feeling it is more to do with power and control than growth.
Business also fears that local authorities have a limited capacity to deliver and, together, these factors may lead to unnecessary duplication and higher costs for business, especially in areas such as innovation, adult skills and apprenticeships.
The paper also calls for the initial focus of devolution to be on areas where successful outcomes can be delivered in the near term, especially transport infrastructure.
According to EEF surveys, infrastructure availability and quality was fourth on the list of factors determining where manufacturers would make their next global investment, whilst the poor state of local transport networks was the top business challenge in their local area for almost 40% of companies.
Devolution of transport power is also important as it provides access to the public transport fare box which could be borrowed against for additional infrastructure investment. Businesses are also more likely to support extra taxes, such as the supplementary business rate levy, where they know funding will be directed into an infrastructure investment programme.