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North East’s five plans for spending prosperity fund

The North East has submitted no fewer than five local investment plans (LIPs) to the government for spending the region’s allocation from the UK Shared Prosperity Fund (SPF), which is the replacement for the European Structural and Investment Funds (ESIF) which it used to receive before Brexit.

Lack of regional co-ordination has been a worry for the region’s economic planners in the management of what the government describes as a central pillar of its levelling up agenda, though they say they have now been reassured that common sense has prevailed.

A single plan worth £47.1m has been submitted for the North of Tyne Combined Authority (NTCA) covering Newcastle, North Tyneside and Northumberland. Like LIPs throughout England, it is to be spent on community and place; supporting local business; and people and skills.

But the four councils south of the river, which for six years have failed to do a devolution deal and elect a mayor, have been obliged by the government to submit separate LIPs for their allocations – Gateshead (£11.6m), South Tyneside (£8.9m), Sunderland (£14.9m) and County Durham (£30.8m).

In addition, each of the five NTCA and North East areas receives a smaller allocation under a central adult maths programme called Multiply, altogether worth £10.5m, bringing the regional grand total to about £124m.

Tees Valley has a separate allocation of £42.7m and a single LIP for the core SPF under its mayor, Ben Houchen, and a Multiply budget of £3.6m bringing its total to £46.4m.

The money is to be invested over three years, amounting to £37.8m a year under the five North East LIPs plus £3.5m a year under the Multiply programme.

This is equivalent to about 57% of the 540m euros over seven years which the same North East area (excluding Tees Valley) received in 2014-2020 through European Structural and Investment Funds (ESIF) – an annual total of about £66m a year at today’s exchange rate.

Members of the board of the North East Local Enterprise Partnership (NELEP), which administered the ESIF funds for the whole North East (Tees Valley excluded) before they disappeared with Brexit, revealed some disquiet at the proliferation of LIPs for the SPF.

Board minutes reveal that members were told the LEP was working with the North East’s five ‘lead authorities’ – NTCA and the four south-of-the river councils – and with their economic directors as a collective.

‘Regardless of the different approaches taken to develop business cases for submission to government’, according to the minutes of the July board meeting, ‘regional collaboration would ensure that the intelligence gathered would be used to develop a shared understanding of how best to take forward different projects especially when strong alignment to regional commissioning frameworks was evident.’

During board discussion, the minutes record, the Chair [Lucy Winskell] stated that she had found these comments reassuring as there had been concern about a much more fragmented position. The consistent message at NTCA meetings had been to avoid fragmentation, work collaboratively and build on what already existed. It was good that common sense was prevailing.

However, with European funding coming to an end, according to the minutes, there was a real worry in the voluntary sector about gaps in provision for the most vulnerable, those facing multiple barriers or furthest from the labour market.

COMMENT

The North East’s arrangements for economic development, judging by these arrangements for managing the SPF, are not fit for purpose, as they have not been since the seven councils in Northumberland, Tyne & Wear and County Durham split over devolution in 2016 and arguably since the coalition government abolished regional development agencies and replaced them with LEPs back in 2010.

That there should be five separate ‘lead authorities’, each with an economic director, to manage a comparatively small sum over three priority areas and three years suggests a piecemeal rather than a strategic approach to development. The arrangements mean each council area will get its fair share but whether there will be a chance to combine them into an investment that will prove to be more than the sum of its parts seems dubious.

Ministers who have decided to put single councils in charge where there is no mayoral combined authority, and North East councillors who have still been unable to agree a devolution deal share responsibility for this lamentable state of affairs. One can only hope, with NELEP, that common sense will overcome these difficulties.