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A new local economic assessment duty starts in April. Colin Marrs reports that, while some councils are making good progress with the process, others hope a new government will relieve them of the burden.

Alistair Darling’s Pre-Budget Report of December 2008 is likely to be best remembered for its symbolic VAT cut in the face of the unfolding economic crisis. This tax holiday may now have ended, but upper tier local authorities in England and Wales are now having to focus on another aspect of the chancellor’s report.

Bundled into its supplementary documentation was a Treasury requirement for county and unitary councils – with the support of lower tier authorities – to carry out regular economic assessments of their patch. They will be required to produce a formal document that will paint a comprehensive picture of local economic activity. The documents will help inform existing statutory plans (mostly prepared at a district level), including local area agreements, local development frameworks, transport plans and housing strategies.

The duty to prepare local economic assessments kicks in – along with central government funding – this April, with each council required to create one by the end of the year. Research soon to be released by think-tank the Centre for Local Economic Strategies (Cles) shows that half have already made good progress with their plans. However, there are sharp differences between the best prepared councils, some of whom are sitting on virtually complete assessments, and the worst, which have barely started work.

Evolution not revolution

For many councils, there is nothing particularly new in preparing economic assessments. Neil McInroy, chief executive of Cles, says that the assessments are “merely formalising processes that are often already in place”. Hertfordshire County Council, for instance, is among a number of councils that got cracking shortly after Darling’s announcement, using existing resources, and has already produced a “dry run” document it says will just require “tweaking” before submission.

McInroy says that northern urban councils, which have historically faced greater economic challenges, are best prepared. He cites the councils involved in Greater Manchester’s multi-area agreement (MAA) with Whitehall on cross-boundary funding, which had completed detailed studies into the sub-regional economy before the new assessment duty was announced. “Most northern authorities have always seen this work as crucial,” he says.

Conversely, smaller county councils and those in the South are at a disadvantage because they have not had to focus so much on tackling issues such as worklessness in the past. Liz Demaison, senior consultant at regional development consultancy Mickledore, says: “It is going to be a major challenge to councils that haven’t got a history of working with other local authorities and are more parochial. There is not really a level playing field because of areas’ different economic backgrounds.”

Regeneris Consulting managing director Stephen Nicol, who is working with a number of councils on their assessments, warns that there is no room for complacency just because previous studies have been carried out. “Many councils do not appreciate that what is being asked is a level of sophistication that they have not been asked for before,” he says. “In addition, the economy has changed so much since two years ago that what was seen as a robust, ambitious plan at that point may no longer be fit for purpose.”

At least there is no shortage of existing local data for the assessments, from sources including the Office for National Statistics, government census documentation and from councils’ own departments. “We estimate that local authorities have access to about 90 per cent of the necessary data already,” says Caroline Masundire, associate director at consultancy Rocket Science, who helped draw up the LEA guidance for the Department for Communities and Local Government. “From a resource point of view, authorities should be focusing on drawing it all together.” However, she warns that much data, particularly from the last census, is out of date, and that new surveys may be needed to fill information gaps.

Data selection

One of the main challenges to councils preparing an assessment, then, is to navigate the glut of existing economic data and filter out the least relevant. McInroy is keen to stress that departments preparing the documents should avoid becoming bogged down with statistics. “We do not want these assessments to become information rich and intelligence poor,” he says. “The danger is that they just become a list of second-hand statistics.”

Funding for the assessments does not kick in until later this year, but many councils are confident they won’t need extra staff to cope. Tom Stannard, director of policy and communications at Blackburn with Darwen Borough Council, says that his council already has joint staffing structures in place with other local authorities as part of the Pennine Lancashire MAA. “These structures will absorb this work,” he says. “We won’t be looking to create a big new team of people to produce our assessment.”

This seems to be a common picture, with few councils interviewed for this feature planning significant recruitment drives. Central government money is more likely to be spent commissioning missing data from external consultants. Much of this commissioning is set to be achieved by using efficiencies of scale: those authorities not already collaborating through multi-area agreements are using regional structures including regional development agencies to pool data and commission surveys of, for instance, local businesses.

Before Christmas, the Government announced details of the sort of funding councils can expect to enable them to produce their assessments, with top-tier councils each getting £65,000 and districts £6,000. The majority of councils spoken to said that this funding will be adequate to help prepare the documents. But there was disappointment from some quarters that the money will not now be ring-fenced. McInroy says that this could threaten some assessments, particularly in the recession. “There will be pressure on budget holders to divert some of the cash to protect frontline jobs,” he says. Some councils that claim to have completed much of the work told Regeneration & Renewal that they would not spend all of their allocations on the assessment process. Others said they would try to protect the money for updates or for publicising the assessments.

Wait and see

Another issue is that some councils cannot see the point in expending energy fulfilling the requirements of a government that may be on its last legs, especially when shadow communities minister Paul Goodron has publicly stated that the assessments should not be compulsory. “Some, mainly Tory, councils are less far along with the plans because of the forthcoming general election,” says Masundire. One consultant posted the following on a web forum: “It is apparent that almost all authorities are waiting to see what happens (in) May first!” But Masundire maintains that it would be a mistake to assume that any incoming Conservative government would abolish the LEA requirement. She says: “The LEAs are consistent with the Tories’ emphasis on localism. It won’t be the first thing on their agenda.”

McInroy agrees that there is no advantage in councils stalling for time. Although the LEA documents will not be independently assessed, he says that there will be rigorous scrutiny, for instance during planning appeals, of how councils have used them in preparing other strategy documents. He adds: “In any case, economic assessments are crucial in this time of recession. Whether there is a statutory duty or not, any sensible council will be taking this process very seriously.”

OUR EXPERIENCE: TWO COUNCILS’ VIEWS OF THE ASSESSMENTS

TISO FIAOLA, economic development officer, Swindon Borough Council

What difficulties did you encounter in undertaking your local economic assessment?

One of our main challenges has been defining the geographical economic areas of which Swindon is a part within the South-West and South-East. Another challenge was to focus on obtaining the right type of information and making sure that the statistics are meaningful. One of the main gaps we discovered in our “dry run” process was a lack of meaningful anecdotal data from stakeholders. There is plenty of hard data, but we need to balance that with the views of various sectors.

How has producing an LEA changed your council’s approach to economic development and regeneration?

We have done similar work before, but the fact that this is now a statutory requirement has focused our minds. We are now much better at asking what use the data will be as we are collating it – thinking much earlier about how it will impact on later strategy. We have had to work quite hard to define how Swindon fits into the wider South-West economy, and even that of the South-East and London. To gather our information, we have used the Wiltshire & Swindon Intelligence Unit, a company set up by local public authorities as a dedicated data collection body. Some of this data, such as that relating to new businesses, is out of date, so we are dealing with the Office for National Statistics, which is helping us by working on ways of providing more recent figures.

MICHAEL HAND, Economic strategist, Norfolk County Council

What difficulties did you encounter in undertaking your LEA?

Although we have quite a lot of the necessary data already, we are looking for our £65,000 (of government cash to pay for the cost of producing the LEA) to go towards filling the gaps we have, such as information on small businesses. We really don’t have much information on what they are thinking at the moment. The overall process isn’t completely new to us as we have carried out economic and labour assessments in the past. The difference now is that the LEA process sets out criteria to follow and the breadth and depth are greater than previous assessments. We are in a situation where we are completing the LEA on top of our existing workload, which provides a challenge to all staff – no-one is taking any work away from us to help us cope with this requirement.

How has producing an LEA changed your council’s approach to economic development and regeneration?

My role has been rejigged so I have got more time to lead on the LEA process. In addition, I am working much more closely than previously with other colleagues who are responsible for data collection from other parts of the planning and transportation department. Norfolk County Council is now working on a regional level with colleagues and government offices and the RDA, and is sitting on a regional group to share information that we might not have shared before.