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Are local authorities rising to the challenge of local economic assessments? Jessica Smith reveals the findings of a new survey

From April every upper tier and unitary local authority in England will have a statutory duty to prepare a local economic assessment (LEA). It is envisaged that this assessment will provide both the local authority and sub-regional and regional partners with a common understanding of local economic conditions and geography of a place; and of the factors which impact upon future growth. Despite the publication of official guidance and the opening of a consultation, little has so far been said about how local authorities are preparing to undertake an LEA. The Centre for Local Economic Strategies (Cles) set out to uncover practitioners’ views and found 62.5 % had experienced challenges of one form or another.

The challenges

Determining the geography

This will perhaps be the biggest challenge; namely whether or not a sub-regional or local assessment is to be developed and negotiating the relationship between functional economic areas and administrative boundaries of local authorities. Some suggest there is a tension between the need and expectation for the LEA to support the ambitions of sub-regional governance structures, such as multiarea agreements, and the necessity to reflect the needs and challenges of the neighbourhood level. For areas with complex geographies and governance structures, such as Lancashire, this challenge may be particularly pertinent.

Uncertainty about requirements

While one respondent says the published guidance has given them a greater understanding of what was expected, another argues there is a lack of clarity as to what needs to be incorporated. DCLG guidance says the child poverty bill will put a new duty on authorities to work with their partners ‘to prepare an assessment of the needs of children living in poverty in their area’, and that this ought to be integrated into the LEA. However, how a local authority would achieve this in practice is not fully explored, nor the minimum content required.

Dealing with data

It’s likely that data analysis will be a significant part of the LEA as it features prominently in government guidance. Some suggest that weaknesses in available data, for instance a lack of up to date statistics, could hinder the validity and usefulness of the LEA.

Inconsistency between LEAs

Councils have been granted flexibility in terms of how they develop and undertake their LEA and this is likely to mean assessments are not consistent between authorities. But LEAs will nevertheless be used for inter- and intra-regional comparisons upon which to direct future funding. LEA documents could even become marketing tools for competition between areas and a lack of consistency could therefore be misleading.

Will it add value?

Some respondents are skeptical about the added value the LEA will bring to their economic development activities, indeed a number state they are already undertaking this sort of activity. It may distract from more important local issues, and some suggest the ambiguity about the availability of additional resources for LEAs may mean more work for no extra funding.

Opportunities

Despite the challenges raised, 68.8% of respondents say they feel very positive about the introduction of the duty – for the following reasons:

Putting local economic development at the forefront

One comments that the duty ‘highlights the value of the economic development service and the work it delivers as a non-statutory function’. Another says it brings ‘economic development issues centre stage’.

Encouragement of collaborative working

LEA has the potential to bring stakeholders together for serious consideration of the local economic prospects, and/or to formalise what partners are already saying. It may encourage local government to work with the private sector to gather and share business intelligence in a more structured way, says one respondent, and encourage authorities to consider how ‘economic development issues can be fed into and support other policy areas’, such as reducing child poverty.

Are local authorities prepared for the LEA ?

We asked respondents to rank how they felt on a scale of one to five. The results (see table, below) show a mixed picture. However, a number say they are confident they are prepared because they have a strong track record and experience in this field. One comments they have ‘been working on this since [it was] first mooted in the SNR [sub-national review]’.

How local authorities will use LEA

Some 62.5 % have thought about how they will continue to review the LEA and say they will use the following approaches:

• By recruiting a permanent member of staff who will produce and review the document
• Through the overall MAAprogramme management
• By responding to additional data asand when it becomes available
• Through annual statistical updates
• By tailoring subsequent LEAs to changing circumstances
• Through analysis of particular issues

Conclusions

1. Negotiating the appropriate geographical scale to undertake the LEA is a significant challenge. Undertaking assessment purely at the sub-regional scale risks generalising the challenges and opportunities over a larger area and could mean specific area based issues are overlooked. Conversely, an assessment focused on an individual locality risks an isolationist approach to economic development which doesn’t recognise the fluid nature of an area’s economy and its links to adjoining markets. This issue becomes even more complex where different tiers of governance are present, for example, where a county council area encompasses an MAA or a unitary authority. More government guidance is not the answer – the challenges provide an important opportunity for authorities to take responsibility and establish the parameters and scales of the LEA for themselves.

2. DCLG guidance states the LEA should include a worklessness assessment and that local authorities may also wish to produce a work and skills plan. But government has not released detailed guidance on how they are expected to put them together. Cles has made suggestions as to how local authorities may go about tackling this, see here.  

3. It is important that LEAs are not simply about the collation and analysis of data. While it’s important for creating successful interventions, local authorities must be wary of falling into an information trap where too much capacity, resources and energy are expended in managing so-called ‘evidence’. Often local authorities find they tend to be ‘information rich, but intelligence poor’.

4. Statistics can only say so much – qualitative data can help play an important role in explaining the trends and patterns in data, particularly at a local level. Local authorities developing a methodology for their LEA should think creatively about how to best capture information about their economy. Not only will qualitative data enhance overall understanding of the local economy, it is also likely to promote the purpose and value of LEA among stakeholders.

5. Authorities should think beyond traditional measures of the strength of a local economy. LEA presents an opportunity for them to consider the size and influence of the social and public economies and environmental considerations.

6. There is wide recognition that the purpose of the LEA is to inform strategy, rather than being a policy document in its own right. Local authorities should develop an understanding of how it will be used to practical effect to ensure it’s a useful and living document which can be used to inform the future direction and delivery of economic development and encourage greater integration of priorities within council departments.

LEA: how prepared are you?

Rank % of responses

Local economic assessment priorities

We were keen to find out what local economic development practitioners see as the key priorities for their LEA . More traditionally ‘economic’ themes, such as labour market, education and skills, and business and enterprise, were deemed most important. In contrast, less explicitly economically-focused themes, such as environment and resources and the voluntary and community sector were not deemed as important. This can perhaps be seen as a reflection of the narrow conception of the local economy that is presented in official guidance.

Find out more

Jessica Smith is a policy researcher at the Centre for Local Economic Strategies and can be contacted on tel: 0161 236 7036, email: jessicasmith@cles.org.uk

The full report, Local economic assessment duty: how are local authorities rising to the challenge?, can be downloaded here.