Business members of Local Enterprise Partnerships (LEPs) are the right people to decide on the planned new infrastructure levy, the central support body for the 39 partnerships has said.
Under new plans unveiled by chancellor George Osborne at the Conservative Party conference, directly elected mayors could add a premium to business rates to pay for new infrastructure provided it is supported by a majority vote of the business members of the LEP.
In a strong defence of the local public and private partnerships, James Newman, chair of Sheffield City Region LEP argued that LEPs did not lack the transparency or accountability necessary to make decisions about the new levy.
And while he conceded LEPs operated on a ‘patchwork’ system, with different partnerships working in different ways, he rejected the idea that government should step in with more formal rules now the bodies handle not only billions of pounds through the local growth fund, but are also in line for a fiscal veto over the levy.
He added that ‘LEPs probably do more consultation than local councils on business growth issues’.
His comments come after Transport Network revealed concerns within the local infrastructure sector about a 'democratic deficit' and that LEPs lacked the transparency to be placed in charge of such key decision-making.
Mr Newman told Transport Network: ‘I welcome the chancellor’s statement and his confidence in the private sector to assist their local authority colleagues in making the right decisions on all matters related to economic growth. The private sector are interested in influencing decisions not controlling them and his proposals on the additional business rate levy mirror that.
James Newman: 'Influence not control.'
‘If businesses are going to be asked to pay more for infrastructure projects, which are supposed to support business growth, it is perfectly reasonable that business leaders should be given the opportunity to influence the decisions and eventual outcomes.
‘The private sector are much more likely to take a commercial, focused and non-partisan approach to deciding which infrastructure projects are the most important and deserving of any additional levy.’
He added: ‘The vast majority of LEPs appoint their private sector members by open advertisement so anybody from any organisation, large or small, can apply. A good chairman will ensure that there is an appropriate spread of geographical and sector representation.
'Most LEPs also have a structure of involving and communicating with all its business sectors, representative organisations and the third sector on a regular basis and, as such, probably do more consultation than local councils on business growth issues.’
In Mr Newman's LEP, a private sector representative is appointed by other private sector colleagues linked to or on the LEP, with their position reviewed every two or three years.
Mr Newman said private sector members had to be appointed by other private sector members to ensure equality and balance between the public and private halves of the LEP.
However it is by no means clear that all LEPs follow the same process. The Government left the organisation of LEPs largely in local hands.
In its LEP Assurance Framework, which came out in December 2014 more than three years after the first LEP was established, it states: ‘LEPs will have considerable freedom to determine how to implement the key practices and standards articulated in this national framework through their own local assurance framework.
‘LEPs have rightly established and structured themselves in very different ways, reflecting the differing needs and demands of each area, and we are not seeking to change that.’
The few rules set down for LEP board membership include the requirement for a private sector chair with the board made up of at least 50% private sector members, and public sector members drawn from local authority leaders and other relevant public sector organisations.
Mr Newman suggested there was no need to change the governance of LEPs now, stating there should only be reform ‘if someone can demonstrate what is happening now in practice isn't working; why legislate when you don’t need to?’
Mr Newman argued that a range of areas could be included under the umbrella of the infrastructure levy, including roads, transport, housing, broadband and schools but stopped short of suggesting non-physical infrastructure like skills should be included.
‘It’s a question of whether the infrastructure directly affects the economy, whether it’s an enabler of economic growth’ he said, before adding that other less business-orientated infrastructure demands, such as social care homes for instance, should not come under the infrastructure levy’s banner.
He also went on to say that projects for the levy's cash should have to follow the same value for money guidelines as used for the local growth fund, for transport this would include WebTAG compliance - government guidance on transport modelling and appraisal.