Local Democracy, Economic Development and Construction Bill [HL]

Amendment No. 160D, in the name of the noble Baroness, Lady Warsi, but introduced by the noble Lord, Lord Hanningfield, would effectively take away the requirement for principal authorities to assess the economic conditions of their area. The noble Lord, Lord Greaves, has also given notice of his intention to oppose the Question that Clause 63 shall stand part of the Bill. Before I address this amendment and the others in the group, it might help if I explain specifically why we believe that a duty should be placed on local authorities. I shall restrict my comments to the economic duty in Clauses 63 and 64, and the wider issues raised by the noble Lord, Lord Hanningfield, about the RDAs will be addressed by my noble friend in later amendments. In July 2007, we published our review of sub-national economic development and regeneration. This was a joint Treasury, DTI and CLG review that looked at how regions and localities can respond more effectively to future economic challenges. This review concluded that there are considerable opportunities for local authorities to play a stronger role in economic development and regeneration. It added that as local place-shapers, authorities are well placed to lead and facilitate the delivery of economic growth and regeneration. To increase its focus on economic development, the review concluded that all county councils and unitary authorities should have a new duty to assess the economic circumstances of their area. Such a duty would help local authorities and their partners to work more effectively, supported by a comprehensive and robust economic evidence base. The review proposed that local economic assessments should form part of the evidence base for the sustainable community strategy, local area agreements and the regional strategy. In March last year we consulted on the key proposals set out in the SNR, including the local economic assessment duty. The consultation revealed broad support for the duty across all sectors, including local government and business. Local government welcomed the duty as a helpful addition to local authority functions. It sees it as vital in underpinning a much stronger role for councils and groups of councils working together at a sub-regional level in economic development. The proposed duty would help to ensure that all local authorities have a clear understanding of the conditions required for business to flourish in their area and for people to take advantage of economic opportunities. It will also help to ensure that all future economic and regeneration interventions by local authorities and their partners are informed by a thorough and robust assessment of the strengths and weaknesses of their area. I am sure that noble Lords will agree that that duty is particularly important in the current economic climate. As the noble Lord, Lord Hanningfield, said, of course, many local authorities already carry out local economic assessments and the duty would build on existing good practice. But we believe that it is important that all areas should be covered by an economic assessment and that they should be done to a high standard. Our own research—Review of economic assessment and strategy activity at the local and sub-regional level, undertaken in March 2008—clearly shows that local assessments vary considerably in quality and are often limited in extent. That research also shows that local strategies are not always underpinned by a strong evidence base. The proposed new duty would help to ensure that local authorities deliver high quality assessments. As noble Lords may be aware, we have published a policy statement entitled Local Economic Assessments—Policy Statement. This sets out how we believe local economic assessments should be taken forward and the principles that should shape them. We have worked closely with a number of stakeholders in putting together this policy statement, including local government representatives, the RDAs, regional observatories and the Improvement and Development Agency. As the statement makes clear, we believe that local authorities should determine for themselves how best to carry out their assessment. After all they know their economy best. However, we also believe that there are some core principles that should be common to all assessments if local authorities are to get a comprehensive picture of the economic conditions of their area. Our intention is to include these principles in guidance. For instance, we believe that the assessments should have a strong spatial focus and identify economic conditions at all spatial levels. Assessments should, wherever possible, mirror functional economic areas. Where economic areas transcend administrative boundaries, local authorities should undertake joint assessments. We also believe that assessments should review the regeneration challenges of their area. In that context they should improve understanding of how economic development can support regeneration priorities. It is not our intention to prescribe what data and methodologies local authorities should use. However, given that the new assessments should feed into sustainable community strategies, LAAs, local development frameworks and the single regional strategy and that they will inevitably be a factor in the development of sub-regional arrangements between neighbouring authorities, there needs to be some consistency in the scope and use of data and methodology across each region. This is more likely to be achieved if local authorities and regional partners work together to agree a framework for taking forward the assessments by making the best use of the knowledge and expertise held across the region. We continue to work closely with the local government sector in helping local authorities to prepare for the new duty. The Improvement and Development Agency is putting together a sector-led package of support and guidance on local economic assessments, funded through the planning advisory service. Partnerships are organising a series of regional events for local authorities and other regional partners to explore how collectively they can make best use of knowledge and expertise. The events that have taken place so far have been particularly well attended and there is already a good deal of enthusiasm among local authorities for getting to grips with the new duty. This evidence will complement our own guidance and build on the messages that we set out. I hope that the context that I have set out has been helpful and that Members of the Committee will agree that Clause 63 should stand part of the Bill and the amendment should be rejected. Amendment 161 would take away the requirement for principal local authorities to revise an assessment, or any part of it, if the Secretary of State directs. I assure Members of the Committee that the power to direct a local authority to revise its assessment, or any part of it, is not something that the Secretary of State would use lightly. We fully expect most local authorities to ensure that their assessments are current and fit for purpose. For example, there is much to be gained from keeping up to date. So the power of direction is merely there as a safeguard. On Amendments 164 and 160E, Amendment 164 would take away the requirement for principle local authorities to have regard to guidance issued by the Secretary of State; and Amendment 160E would enable principal local authorities to prepare an economic assessment in accordance with their own criteria. The Members of the Committee who have tabled these amendments believe that local authorities should decide for themselves the criteria for taking forward the economic assessments. I can assure them that our aim is to publish only light-touch guidance that helps local authorities to make best use of the opportunities presented by the duty and provides the level of consistency needed. As I explained earlier, some common principles should apply to all assessments. We do not think it unreasonable to ask authorities to have regard to these in developing their assessments. For example, our aim would be to help local authorities by clarifying how the new duty links up with other duties and responsibilities, such as the sustainable community strategy, LAAs and the local development framework. It would also explain how the assessments fit in with the proposed regional strategy. We should not forget that, as we have discussed before, to ““have regard”” means just that. Of course local authorities must consider the issues raised in the guidance, but that does not mean that they must slavishly adhere to them if they have good reasons not to. This strikes the best balance between having restrictive government direction and leaving local authorities to go off and do whatever they wish in undertaking their assessment. Indeed, many local authority practitioners welcome government guidance, as they believe it will help them to prepare for the new duty. Of course, as always, we would consult widely on draft guidance before issuing it in final form. Although we expect local variation and welcome both it and innovation, we also expect this to be within a framework, set out in guidance that ensures that the assessments achieve the aims that I have outlined. Amendment 160F, tabled by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, would require a principal local authority to have regard to social and environmental issues in preparing its economic assessment. The noble Baroness, Lady Hamwee, expressed her concerns that the new duty would possibly give too great a prominence to economic issues at the expense of social and environmental matters. Again, I reassure Members of the Committee that this is absolutely not the case. As the local economic assessments policy statement makes clear, local economic assessments should contribute to the overall aim of delivering sustainable development. Ultimately, the assessments should inform the sustainable community strategy, which should set out the long-term vision for the economic, social and environmental well-being of a local area. We believe that the assessments should, among other things, address the social factors that impede economic growth and the causes of labour market exclusion. So the evidence gained through the assessments should also support the Government’s broad aims of tackling barriers to economic growth, creating accessible jobs and giving people the skills to progress, and empowering communities. The policy statement also encourages local authorities to consider the impact of local economic development on the environment, and how the local economy will be affected by the transition to a low-carbon economy. On top of this, local authorities already undertake a number of other surveys and assessments that would have a bearing on social and environmental issues. It is important that there is interaction between the economic assessment and these other assessments, a point that we make in our policy statement. Our view is that any thorough assessment will give sufficient prominence to social and environmental issues. The issues raised by this amendment are best addressed through guidance. Any guidance issued by the Secretary of State would indeed stress the need for local authorities to have due regard to social and environmental matters. Placing the matters that should be addressed in assessments in the Bill would, in our view, unnecessarily constrain local authorities. It would also be more difficult for us to respond to changing economic circumstances and changing priorities as any change to the elements that should be included in any assessment would require a further Bill. For example, priorities during an economic upturn may be very different from the priorities in a recession. Amendment 160G, tabled by the noble Lord, Lord Greaves, seeks to ensure that a principal local authority would not need to carry out a new assessment if such an assessment had been prepared within the previous five years by it or even by another body and the principal local authority believes that the assessment meets the general purposes of this clause. Understandably, the noble Lord seeks to ensure that that previous work does not go to waste, which is commendable. The important point is that an assessment is fit for purpose and gives an accurate and up-to-date assessment of local economic conditions. This is a point we stress in our policy paper. Therefore, we do not believe it is appropriate to place an arbitrary cut off point in the Bill, and certainly not one of five years. I doubt very much that an assessment carried out five years ago would fit the bill, given the economic changes that will have occurred in that time. As our policy statement states, a principal local authority that has already carried out an assessment prior to this duty coming into force will need to consider it in the light of the new duty and any government guidance. While they may need to make some changes and will need to ensure that they meet their obligations to consult, the work they have already done will not go to waste. The noble Lord also proposes that a principal authority should be able to prepare the assessment for different parts of the area covered by the assessment at different times. We do not agree that local authorities should prepare the initial assessment for different parts of the principal local authority’s area at different times. The aim of an assessment is to get a comprehensive and holistic picture of the current economic conditions of the local economy. If local authorities were encouraged to assess different parts of the area covered at different times, they would not be able to get that holistic picture. You could have the situation where different parts of the area covered would be assessed against inconsistent data sets. However, authorities may revise the assessment or part of it at any time. This allows sufficient flexibility to ensure changes that in local circumstances can be taken into account. I hope that these assurances address the Committee’s concerns and that Members will understand why I do not think these amendments are necessary. I also ask that Clause 63 stand part of the Bill.