Small businesses have the most to gain from England’s devolution plans but need a bigger voice, says manufacturing body EEF.
The UK’s largest sectoral employers’ organisation has called for businesses to be given a greater role in plans for devolution in England.
EEF, which represents Britain’s manufacturing businesses, said giving more powers to Local Enterprise Partnerships (LEPs) will provide a boost in private sector growth, investment and job creation, and will enable the localism the government is trying to achieve.
The comments follow the Chancellor’s recent announcement that local authorities will be given the right to set their local business rates.
In a paper published ahead of a key debate on the Cities and Local Government Devolution Bill this week, EEF called relationships between businesses and local authorities ‘weak’ and claimed the former is being left behind in devolution plans.
EEF said it is particularly concerned about smaller companies, which have historically been the most disengaged but have potentially the most to gain from the new process.
In response, the organisation is calling for amendments to the Bill to give an enhanced role for LEPs and allow independent, business-led overview and scrutiny of combined authorities and their plans for local growth.
According to the paper, LEPs should remain business led rather than politically led, and should be part of the governance framework to ensure that devolution delivers for local businesses.
It 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.
‘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,’ says Terry Scuoler, chief executive at EEF. ‘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. 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, there is 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.
There is also a fear that local authorities have a limited capacity to deliver and, together, these factors may lead to unnecessary duplication and higher costs for businesses, especially in areas such as innovation, adult skills and apprenticeships.
The paper calls for the initial focus of devolution to be on areas where successful outcomes can be delivered in the near term, especially transport infrastructure.
In one EEF survey, infrastructure availability and quality were fourth on the list of factors determining where manufacturers would make their next global investment, whilst 40% of companies in another cited the poor state of local transport networks as the top business challenge.
Devolution of transport power would provide 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, when they know funding will be directed into an infrastructure investment programme, EEF claims.