Insight Local Government Lawyer Insight July 2017 29 There are some areas which have actively explored EPBs. Cheshire and Warrington seem to be the furthest towards the establishment of a formal EPB but no Order has been made to date under the relevant processes (i.e. it does not seem to have been approved by government). Several clusters of authorities also seem to be actively exploring EPBs as potential vehicles for economic development, regeneration and as a practical governance vehicle for regional collaboration by and between like-minded local authorities interested in promoting growth in their respective areas. Another driver for EPBs (or more simple combined authorities) is the fact that the current collection of possible vehicles through which local authorities might join up to pursue major infrastructure projects which cross boundaries, are limited and arguably not fit for purpose. The establishment of an EPB as such a vehicle would provide a clear remit through a special purpose vehicle which exists entirely within the public sector able to contract with third parties and to carry a mandate for each and every one of its local authority members. This would be a clear signal to developers and funders that the EPB region which the EPB serves, is open for, and means, business. EPBs and combined authorities are ‘bodies corporate’ with a separate legal identity from their constituent member local authorities (unlike joint committees). This means two or more authorities working through an EPB or a combined authority which they are sole members of will be able to undertake their own administrative processes, for example hold budgets, employ staff and enter into contracts for and on behalf of the EPB/CA. Whilst an EPB/CA is a corporation, it is not a company governed by company law. Rather, it is a separate public body entirely within the public sector. This is important, not least for tax, VAT and SDLT purposes. There are many advantages from a fiscal perspective of setting up a body which remains entirely within the confines of local government and is not (for example) a company, e.g. no corporation tax, inter-group VAT and SDLT implications. Geographical restrictions The relevant primary legislation for establishing both EPBs (and combined authorities) is contained in the Local Democracy, Economic Development and Construction Act 2009 (‘2009 Act’) and the Cities and Local Government Devolution Act 2016 (‘2016 Act’). Originally the 2009 Act imposed certain geographical conditions on who could or could not become a member of an EPB. However, Section 11 of the 2016 Act removes these geographical conditions which formerly prevented EPB authority areas from being non-contiguous or doughnut-shaped. However, in deciding whether to establish EPBs for areas where part of the area is geographically separated from the rest of the EPB, the Secretary of State must have regard to the impact on economic development in neighbouring local authority areas. Economic prosperity boards could become an important option open to groups of authorities who are exploring land pooling programmes to generate surpluses for re-investment purposes or where they are looking for a vehicle to promote a specific major infrastructure project or programme which crosses boundaries of each member. Some authorities (sensibly) are testing the waters by working through the more tried and tested method of joint committees but these arrangements have their drawbacks. Establishing a specific legal entity that engages the leading members of the community in crucial economic development, regeneration, job creation and growth initiatives impacting across a wide geographical area must be an attractive option to many councils to combat deprivation and re-invigorate local economies. How are they set up? Under the original procedure from the 2009 Act, a local authority or authorities may carry out a ‘governance review’, which must publish a ‘scheme’ recommending the creation of a combined authority or EPB. Publication of the scheme requires the consent of the local authority areas included in the scheme. The Secretary of State may then agree to create a combined authority or EPB, by Order under the 2009 Act. Alternatively, via the 2016 Act, the Secretary of State may decide to establish a combined authority or EPB, if the councils in the relevant area consent. The Secretary of State must hold a public consultation, unless one has already been carried out locally and a ‘scheme’ has been published. The Secretary of State must be satisfied that the establishment of a combined authority or EPB is likely to “improve the exercise of statutory functions” in the area in question. Conclusion EPBs (and highly focused combined authorities bodies), provide exciting new opportunities for the joining up of economic regeneration across regions through a legal entity wholly within the public sector administrative environment. Through such bodies, constituent councils would have greater flexibility and influence than each council working independently would have. The process to establish a combined authority and an economic prosperity board is identical and relatively straightforward, albeit there are public consultation and statutory approval processes necessary which may be a disincentive to some. EPBs and (simple) combined authorities offer new potential options for public sector collaboration which could help groups of public bodies speak with one voice to progress major projects and programmes affecting their regions. Particularly, in two-tier areas EPBs could be the missing link which would really assist such important projects to get off the ground and to secure funding, governance and delivery skills needed. Rob Hann is a legal consultant and author and the former director of legal services at Local Partnerships. Features of EPBs and combined authorities EPBs and combined authorities: • are corporate bodies • are governance structures for sub- regional areas • are voluntary for relevant authorities • can be established in England • can be given local authority functions (powers and duties) that relate to economic development and regeneration (and for CAs - transport).