Core elements of a local economic assessment

What should a local economic assessment look like?

It makes sense to have a clear view at the outset of what the local economic assessment (LEA) will look like.

We do not propose a prescriptive approach but, in practical terms, you will need to be clear about:

  • who will use the assessment
  • how it will be used and why it will be used.

It needs to explain your area to those that know it well and less well. But is particularly aimed at those who will use it to develop and implement strategies, plans and activities at local, regional and national levels. It needs to have a clearly-defined fit with the integrated regional strategy (IRS).

While it will be rich in data and information, think about the style and content to get clear messages across. Set out data in an easily-digestible form and use graphics, photos and images.

Think about the size and structure of the LEA.

A suite of documents is likely to work best. This provides flexibility and the opportunity to tailor content to different audiences who require a range of depth of information. However, a suite is more complex to draft and produce - so capacity needs to be taken into account. The structure likely to be most flexible would cover: short and long executive summaries, main body report in chapters and sections and detailed information in appendices.

It is important to think about the media through which it will be made available. The appropriate mix of hard copies - short and long versions, web-based structures, use of interactive maps and so on should be planned from the outset.

Its 'shelf life' should also be clear from the outset as this will help determine how and when it will be updated - in full and in part. Due to the nature and complexity of information it will draw upon, it makes sense to be able to update key information easily. This will ensure that the LEA remains as current and useful as possible. We recommend annual and three-yearly reviews.

It is also important to clearly reference the source, date and scope of information used.

Keep in focus that the LEA is an assessment and evidence base. There is a danger that it could stray into being a strategy in its own right, which will add confusion and duplicate other work.

As well as ensuring it covers key issues, it is useful also to define what it does not include. That is, setting out aspects that are not viewed as priorities for inclusion and the relative importance and emphasis of elements that are included.

What should a local economic assessment contain?

Your assessment should reflect the unique nature of your place.

It is crucial that it paints an accurate picture of the economic geography of your area and its connections with other places and areas. This approach recognises that a local authority area is not ‘a place' but a collection of places that relate to other places in a complex range of ways.

If an assessment is to be effective it also needs key elements of analysis in common with LEAs undertaken by neighbouring local authorities. This is particularly important if your functional economic geography goes beyond administrative boundaries.

In undertaking the analysis, begin by thinking through precisely the evidence you need to collect and why. We have set out below 10 key questions that should be considered when starting the assessment. The list of questions is not exhaustive and should in no way be seen as prescriptive.

First you should ask: "Have we covered all the issues set out below?" Once you are satisfied, it is up to you to decide the level of emphasis you want to put on each specific category of information. This will be determined by the level of importance you have given to that area of analysis. More information on how to judge the initial scope and scale of the LEA, and how to determine the level of detail to work up for each category of data, is set out in the 'Vision, purpose and scope' section of this document.

Step 1: Vision, purpose and scope

There could well be other areas of analysis that you think are important for the development of your LEA. And, as long as you have worked logically through the 10 questions below, you should also consider what else you might include. It is also perfectly acceptable to decide that the issues set out below have adequately covered the aspects you need to include.

10 key questions to ask in developing an LEA

  1. What do we already know that can be justified with reference to the evidence we hold?
  2. Does this enable us to describe both what is going on directly in our area and the global, national, regional and local forces driving it?
  3. Can we describe the economic geography of our area in terms of the impact of other places on it and its impact on them?
  4. Can we supplement this with forecasting information which will show future trends and developments?
  5. In light of the above, how can we best describe our economy and, more broadly, the economic wellbeing of our area in terms of:
    • spatial and economic variation: economic sub-areas, rural, urban. coastal geography
    • the key characteristics of those areas in terms of: demography, skills, employment, enterprise
    • the drivers for change in terms of each of those factors in each area
    • the relative importance in each area of supplementary contexts including: inclusion, environment, housing, planning and connectivity.
  6. If this represents a factual description of place, what anecdotal or other impressions exist which challenge or validate it?
  7. Do these reveal gaps in data or knowledge, for each of the sub-areas and categories of information relevant set out above, which can and need to be collected and or mapped?
  8. Can this data be collected easily, can proxies be developed, and can it be accessed on a commercial basis?
  9. What other documents, produced by the council and its partners, can be used to challenge or confirm your analysis?
  10. How can we use the evidence in the LEA to support our planning and policy activities?

Creating conditions for the LEA in two-tier areas

A critical part of the process is to ensure that there is effective dialogue and working between districts and their county in developing the LEA. The following checklist sets out the key questions and actions that counties and districts need to be asking of each other.

District County
  1. Do we have robust and effective mechanisms in place to enable us to engage in the development of the LEA?
  2. If not, how can we positively establish them through a dialogue with the county council?
  3. Have we developed a clear sense of what the economy of our district looks like which can meaningfully inform the writing of the LEA?
  4. Is this based on a corporate overview which takes account of our lead roles on housing, the LDF and our economic development strategy?
  5. Is this view supported by partners within our district, including parish councils and the LSP - how do they relate to the current community strategy?
  6. Do the emerging views of the county, in terms of the assessment, fit with our perceptions and approaches?
  7. How will views impact on the work we have been doing on the relationship between our LDF and the emerging regional strategy?
  8. Are they consistent at the sub-county level approach to localities and service delivery?
  9. If not, where are the key points of difference and how might we positively work together to address them?
  10. Have we allocated enough resource and expertise to the process of positively and actively engaging with the LEA?
  1. Have we developed a clear plan to engage districts in considering the data they hold and use to plan service delivery?
  2. Have we thought carefully about how our local engagement with districts will link into our respective inputs to the leader's forum and the regional strategy for all issues which involve interaction?
  3. Have we entered into a dialogue about the collection of additional jointly-identified gaps in the evidence base?
  4. Has the LEA dialogue covered all key stakeholders within districts, particularly planners and housing practitioners?
  5. Does it relate effectively to the other key representative organisations in the district, including the LSP, and how does it relate to the district community strategy?
  6. Have we developed effective plans to ensure an ongoing dialogue with the districts, not just on development of the LEA but its monitoring and or evolution?
  7. What is our strategy for ensuring that, where there are differences of view, we can build a consensus?
  8. What is our plan and timetable for signing-off the LEA, and have we given districts sufficient prominence and ensured time for their full involvement.
  9. Have we considered how we can most effectively support the capacity of the districts to participate fully in the LEA?
  10. Have we allocated enough of our own resources to this process?

Assessing your economy

This section explores the seven components laid out in the diagram. For each component we outline the basic contents along with any issues that should be considered when gathering evidence for each of the components. Again, the list is not exhaustive and should not restrict you from exploring other issues that are particularly relevant to your area.

More than data: telling the story of place

It is important to consider the story of your area, its history, relationships, economic and social profile. The story needs to capture the characteristics of the total functional economic area and its sub-areas - building from the very local story to the sub-regional perspective. A statistical analysis will not be enough to draw out the distinctive features of your area. A range of qualitative information gathered through various methods will be needed to ensure views, opinions and perspectives of people and businesses adds strength, depth and life to statistical analysis. The third sector has valuable perspectives to bring to the LEA and should be actively engaged alongside businesses and local communities. Setting out your 'story of place', and agreeing this as the foundation of your LEA with your stakeholders, will help you to bring together evidence which explains your area. Important local stakeholders include town and parish councils, the third sector and a wide range of other local neighbourhood representatives.

Spatial context and connections

Spatial definitions

The rural and urban definitions set out effectively how rural or urban each component part of your area is. They provide real insights into the relationship between key service centres and their hinterlands. When used to underpin the analysis on linkages and flows, these provide a powerful means of understanding the interdependency of different smaller and larger settlements within and outside your administrative boundaries. They help flesh out the challenges of achieving the same level of service delivery throughout rural and urban areas and provide an excellent context for the development of rural proofing approaches.

Linkages and flows

Economic forces do not follow administrative boundaries. It is really important to determine the economic geography of your area and to map how it relates to the areas surrounding it. The most robust data for this area of analysis is based on the 2001 Census and is therefore somewhat out-of-date. However, using Census data, in conjunction with any survey-based Travel to Work area data and Housing Market area assessments, is a good starting point for the process. Mapping how where your residents, live, work and play affects the overall functioning of the sub-economies in your area is a key element of this work.

Demography

This is particularly important for understanding the economic potential and challenges of your area, particularly in relation to the structure, profile and trends of your working-age population.

Inclusion

This information will also play an important role in helping to understand the worklessness issues facing your economy. It will also identify key issues and opportunities in how the social and economic cohesion of your area impacts on its sustainability and economic viability.

Employment

An assessment of the local occupational structure, economic activity rates, employment and unemployment rates and salary levels will help build a picture of the current and potential workforce.

Skills

Assessing local skills levels, including educational attainment, will set out more clearly than any other element of the assessment, the supply side strength of your economy. It is also very important for scoping the speed with which your economy might make the transition out of the current recession. It will also put into clear perspective the challenges facing your area in responding to the worklessness agenda. The National Regeneration framework and the 'Houghton Review' have both set out the importance of local authorities undertaking a worklessness assessment as part of the LEA.

Transforming Places, Changing Lives (PDF, 156 pages, 3.3MB large file) - on the Rocket Science website

Final report of the Houghton Review - on the Communities and Local Government website.

It is an important aspect of the development of your LEA to provide all key elements of analysis to support development of a strategy for worklessness. It should be integral to the assessment rather than a standalone exercise. According to the prevalence of worklessness issues in your area, the LEA should identify key areas of need to inform the necessary worklessness action plan - a key outcome of the worklessness strategy. Taking this a step further, this plan could also inform a ‘commissioning blueprint' for your local authority. This you could use to ensure that skills and employment commissioning within the council and with partners at local and regional level reflects local needs.

Developing a Strategy to Tackle Worklessness (PDF, 16 pages, 226KB)

Enterprise and business

Economic structure

This will further build the profile of the supply side of your economy. It will inform the view of demand and indicate how your economy compares to the national picture by considering its relative strengths and weaknesses as an employment environment. It is important to draw out the sectoral structure of your employment base to get a sense of its diversity. Identifying sector size and structure and significant individual employers will present a picture of robustness or vulnerability. It is also important to look at employment structure alongside the flows and linkages section to consider the sustainability of your economy. The relationship between sustainability and self-containment is an important consideration. That is, the higher the proportion of those who live and work in the area, compared to those who live in it and work elsewhere, the more self-contained and vice versa.

Entrepreneurship

With enterprise, we enter the demand side of the economy. It is important in developing a profile of enterprise to look at levels and trends of self-employment and non-VAT registered businesses. This is alongside the more standard and easy-to-access data around VAT-registered businesses. Sectoral analysis is also important, as is a concentration on the distribution of knowledge-intensive businesses which many economists feel underpin the dynamism of local economies. In addition to data on companies, it is also very useful to consider the inferences which can be drawn from business premises and Valuation Office area data. This can be a means of developing further information on the dynamics of the enterprise agenda in your area.

Productivity

This continues to sit at the heart of regional policy in terms of the regional development agency (RDA) tasking framework. It is important to scope the contribution your area makes to the productive capacity of the region. It is useful to bear in mind that the principal indicator of productivity, gross value added (GVA), only really works at county levels of geography and above. While there are now data sets that enable GVA to be measured at more local levels, there are real challenges in being able to attribute productive capacity to specific work sites and plants. This is because productivity is measured at the workplace but takes no account of the home locations of the individuals who work in those plants. There are also reporting distinctions between head and sub-office locations of companies and the actual places where the companies produce the goods concerned. These further affect the story arising from the evidence, particularly below the NUTS3 picture .

RDA tasking framework (PDF, 15 pages, 128KB) - on the Rocket Science website

In considering the productive capacity of your area, it will be important to think about how the five individual components of productivity, as laid out by the HM Treasury, manifest themselves in your area. There is an ongoing debate about how best to manage each element, so we have not suggested any prescriptive approaches on how this might be achieved.

Land, buildings and infrastructure

You should have a sense about the physical configuration of your area and the challenges it faces in terms of its characteristics. These include location and type of affordable housing, and the availability and quality of industrial and commercial workspace. These should inform how much attention you pay to these issues in the context of this aspect of the LEA.

These issues are integral to the economic development focus of LDFs and are instilled in the proposed 'Planning Policy Statement 4: Key considerations in scoping your area's economic strengths and weaknesses'. This includes location and density of commercial properties, the relationship of the skills base which sits alongside and consideration of its relative accessibility or remoteness.

Local Development Frameworks (PDF, 108 pages, 1.37MB large file) - on the Rocket Science website

Digital connectivity is an increasingly important consideration, alongside transport connections, but tracking changes can be difficult. Identifying best practice is a valuable approach on an aspect like this where there are issues of commercial confidentiality and rapid change.

Housing completions, trajectories and targets are also very important in assessing the economic vibrancy and sustainability of places in your area, particularly in terms of the relationship between housing and jobs.

Environment

The national performance indicators (NPIs) for local government bracket 'environment' and 'economy' together. Similarly, the 'Stern Review' covers the economics of climate change and provides a range of contexts. Some local authorities have undertaken a mini-Stern review.

While this is not the only way to consider the importance of environmental indicators, pulling out the relationship between environmental issues and your economy is very important to providing a rounded picture. There is a very strong argument for ensuring that the environment and the use of key indicators in relation to it is a horizontal element - reflected throughout the analysis as whole. This is in preference to being a 'tagged on' part of the assessment as a discrete block. This, however, is ultimately for you to decide based on your view of its relative importance. There has been considerable debate about whether the issues in this category should be a cross-cutting or discrete theme within the LEA. Carbon reduction and adapting to climate change are of fundamental importance.

Suggested foundation set

Using this table of indicators as a starting point will also enable you to compare and contrast your economy's performance against other relevant authorities. The foundation data set only includes publicly-available and nationally-comparable indicators, rather than those that need to be paid for or are only available locally. To ensure the detailed links and metadata details relating to the indicators are kept up-to-date, Communities and Local Government has offered to create a dedicated section on the data4nr website.

Data4nr website

Suggested Local Government National Performance Indicators (PDF, 3 pages, 37KB)

A number of local authorities have committed themselves to economic development, environmental and inclusion targets as part of the development of their LAA. It is clearly important to cross-reference these targets and the rationale for choosing them with the development of the LEA. It is also important to look at these in terms of how the assessment will be judged as part of the comprehensive area assessment (CAA) process. The LEA itself is unlikely to be checked and verified by a government agency; however, the process by which the LEA is used to inform how your council responds to the area will be judged through the CAA. Therefore making these distinct links will be very important.

CAA information - on the Audit Commission website

 

2 May 2012

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