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The need to maintain the momentum of economic recovery makes it timely to take a fresh look at sustaining local growth. Our Report indicates broad support for the creation of Local Enterprise Partnerships as a way of addressing local growth. In particular we recognise the potential of LEPs to offer a greater focus on local economic needs, and build on the affinity between business, local government and other partners at a local level.
LEPs also offer opportunities to improve on the achievements of the Regional Development Agencies, but it would be a retrograde step were the RDAs' successes in overcoming unfruitful local rivalries to be lost in a disorderly competitive scramble. It is right that LEPs should compete at certain levels, but there will be an equally important need for them to collaborate where it makes economic sense. Mechanisms should be put in place to encourage this. We also recommend that the Government monitor very closely the overall performance of LEPs against the Scottish and Welsh enterprise bodies, especially as, unlike those bodies, LEPs will need to be broadly self-financing.
Local Enterprise Partnerships are being introduced quickly, and at a time of greatly constrained public funding. We set out our concerns that, in the short term, LEPs will need know-how and powers and in some cases financial resources to make a positive difference. This will be a challenge to both Government and the business sector. LEPs can offer the kind of forum for implementing business objectives which business has often sought, so the business community will need to be prepared to give its support both in resources and finance. For its part, Government will need to be willing to devolve power to LEPs to give them credibility from the outset. That need for devolution and willingness to hear the local voice should extend to recognition of regional bodies—including permanent regional bodies—where there is a majority demand for them.
Government needs to be conscious of the potential gap in LEP funding—between start-up and an eventually self-sustaining financial model—and in certain cases be willing to support LEPs at inception. LEPs' role in promoting growth and rebalancing the economy is too important, and the potential dividends from their success too great, to permit them to fail for lack of small amounts of transition funding.
The Regional Growth Fund will play an important part in supporting recovery and in rebalancing the economy, but it should be aligned with other sources of Government funding to minimise gaps in overall support for enterprise and to recognise the needs of smaller businesses and of the rural economy. The RGF application process is not straightforward, and it risks being weighted in favour of more affluent areas. The Independent Advisory Panel which is charged with considering applications for funds under the RGF will need to consider whether superficially less well presented offerings merit further examination.
If LEPs are to be a success, the Department's transition team will need to concentrate its efforts in three areas: retaining RDA know-how, realising the full potential of RDA assets, and leveraging potential EU funding. Our Report highlights the importance of retaining RDA know-how and we air our concerns that this may not be receiving sufficient attention. Furthermore, it is an area in which a small amount of transition funding could pay a considerable dividend.
Finally, LEPs, unlike RDAs, have both the advantage and the disadvantage of being creatures of local political persuasion. In many instances this might offer more cohesion, but LEPs run the risk of being undermined by political instability. A principal determinant of the success of the LEP project will be in the extent to which central and local government, business, and other sectors can offer stability alongside a welcome move toward more local diversity.
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