Written evidence from the East of England
Space for Ideas Forum of business leaders
1. INTRODUCTION
The East of England Space for Ideas Forum is
a group of business leaders from across the East of England. The
businesses represented are from a wide range of sectors. The group
is committed to working together to address critical issues facing
both businesses and our communities and to ensure the continued
contribution of the East of England to UK Plc. The group welcomes
the opportunity to input into this Inquiry into Local Enterprise
Partnerships (LEPs).
We recently launched the "East of England Blueprint
for Growth" to highlight the priorities and opportunities
for investment in this region. This has been endorsed by almost
100,000 businesses, individuals and organisations across the region.
Our key objective is to ensure that the East
of England (comprising Bedfordshire, Cambridgeshire, Essex, Hertfordshire,
Norfolk and Suffolk) continues to be an economic powerhouse. Our
economy is worth £110 billion a year and we contribute £6
billion net to UK Plc—we believe there are significant opportunities
to grow this further. Future economic development activity must
recognise and capitalise on the opportunities and challenges here
in the East. It is vital appropriate resources and investment
are in place to drive future activity for the benefit of UK Plc.
The Space for Ideas Forum welcomes the opportunity
to work with local authorities and partners to implement new structures
that will best serve businesses and help us drive the economy.
However, current policy on developing the economy and stimulating
growth is still unclear. There is a drive towards localism, but
on the other hand government wants to centralise many of the functions
Regional Development Agencies (RDAs) carry out. This raises significant
challenges and concerns for business:
— The East of England is a complex geography
with 52 Local Authorities. This poses real challenges for the
formation of strong LEPs covering natural economic areas. The
danger is they will be disparate and parochial in their outlook
which will not best serve businesses. Our area needs strong economic
leadership tocapitalise on its major assets and challenges and
a strong voice totake these tothe national and international stage.
We alsoneed to function with economic significance.
— We are alarmed that central funding and
services seem to be targeted elsewhere, overlooking the East of
England, in an attempt to rebalance the economy. It is critical
that the government invests in true areas of excellence. This
region has significant growth opportunities and strengths, for
example in low carbon and life sciences, and as such should receive
a fairer share of central resources which reflects its growth
potential. Also, any funding or business support arrangements
must be managed and led effectively across administrative boundaries.
Our relative success must not hide our difficulties. We have real
issues of poverty, deprivation and underachievement that we cannot
address alone.
2. THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
(LEPS) AND
ENSURING VALUE
FOR MONEY
LEPs must be business focused if they are to
represent business needs. Current policy is unclear as to how
these new arrangements will be formalized and the level and nature
of business representation. LEPs should be business chaired and
there needs to be a clear incentive for businesses to engage and
put their time and efforts behind LEPs.
LEPs must be of a critical mass to address cross-boundary
and strategic issues, for example, transport priorities and broadband
provision. LEPs will need to build a strong collective voice if
they are to continue to make an impact on the national stage,
particularly if there will be opportunities to bid for funding
and input into policy driving centralized activity.
Current indications are that LEPs will focus
on housing and planning, local transport and infrastructure priorities,
employment and enterprise and the transition to the low carbon
economy. Whilst these are important issues for businesses, we
are concerned that without responsibility for critical high-growth
areas of activity such as inward investment, growth sectors and
business finance, LEPs will not be sufficiently strategic to engage
with the business sector generally, including multi-national corporations.
Currently, proposals are for sector-specific
business support and innovation services to be centralized. These
are currently administered regionally and are vital to the growth
of businesses, particularly during these challenging times. Each
geographic region has particular features and aspects that we
cannot see being understood effectively at a centralized level.
Aside from concerns about LEPs' strategic abilities and potentially
limited functions, we are concerned that central activity will
overlook opportunities in more prosperous areas such as ours.
These services need to focus on investing in excellence to drive
future economic growth. This region has significant growth opportunities
in key sectors such as offshore wind and major strengths in sectors
such as lifesciences. It also has major challenges around infrastructure
and skills which require investment. There is a strong business
case for investment and central funding should reflect this.
Businesses ultimately want easy to access, single
point engagement through one organisation. Value for money is
critical to the success of future delivery as is consistency and
quality across areas. Businesses are concerned that a proliferation
of LEPs will incur increased bureaucracy and increased costs,
with less return on investment, leading to less for businesses
and front line services.
3. THE REGIONAL
GROWTH FUND,
AND FUNDING
ARRANGEMENTS UNDER
THE LEP SYSTEM
Current proposals for the Regional Growth Fund
are wholly unclear. Whilst its focus is on growth, it also states
it will focus investment in "areas and communities that are
currently dependent on the public sector". We are concerned
that it is not reflective of investing in excellence and the most
significant opportunities, but rather seeking to rebalance the
economy which will inevitably disadvantage businesses in the East,
notwithstanding a significant reliance on public sector jobs in
the region.
The opportunities in the East are significant,
for example offshore wind, life sciences, low emission vehicles.
We believe it is critical to ensure the growth fund looks to invest
in excellence and growth sectors and that organisations bidding
into the Regional Growth Fund from the East of England will not
be disadvantaged.
The current guidance around the Regional Growth
Fund indicates that LEPs will be able to bid. It would be helpful
to have clarification as to whether other business-led or sector
groups will be able to apply for funding and whether there are
any further restrictions or guidance that is to be published around
this.
The Regional Growth Fund does not amount to
the current level of spending on RDAs. Therefore, urgent clarification
around other funding available to LEPs is needed. However, if
funding is to be allocated by region, we believe there needs to
be a review of the current funding formula. East of England businesses
have been disadvantaged through the current formula. The East
has one of the highest level of businesses—over 500,000
or around 11% of businesses in the UK—and yet current funding
for the RDA equates to only £265 per business, compared to
£1,863 per business in the North East. This group strongly
advocates that businesses in this region get their fair share
and that future funding allocations reflect this.
The announcement in the Emergency Budget 2010
on the National Insurance Contribution (NIC) holiday will significantly
disadvantage start-ups in the Greater South East. To block the
pipeline of these early stage companies will dangerously compromise
a national engine for economic growth.
4. GOVERNMENT
PROPOSALS FOR
ENSURING CO
-ORDINATION OF
ROLES BETWEEN
DIFFERENT LEPS
The government must seek to avoid duplication
amongst different LEPs, deliver value for money and consistently
high quality outcomes.
It is also critical that LEPs recognise key sectors
and strengths in their area, for example in the East of England
one of the greatest opportunities is around offshore wind. LEPs
across administrative boundaries will need to coordinate activity
and recognise strategic growth potential.
5. ARRANGEMENTS
FOR CO
-ORDINATING REGIONAL
ECONOMIC STRATEGY
LEPs need to be of a critical mass to take a
strategic view on cross administrative boundary issues. For example,
a strategic view needs to be taken on transport issues and local
authorities, businesses and other partners will need to work together.
The regional development agency has played a critical role in
such activity to date providing strong economic evidence, advocating
on the national stage and providing leadership to bring key partners
together. LEPs or additional bodies will need be able to adopt
this long term strategic view on cross boundary issues to benefit
their patch.
We believe there are challenges for LEPs to
establish themselves and collaborate on such issues. Therefore,
unless larger cross-boundary LEPs are formed, we advocate a body
that sits at a sub national level with sufficient capacity and
vision to coordinate strategic issues.
6. STRUCTURE
AND ACCOUNTABILITY
OF LEPS
There is a lack of clarity around the structure
and accountability of LEPs. It is not clear how they will be governed
and scrutinised. Lack of accountability has been a criticism of
public bodies and therefore we strongly advocate for formal arrangements
to be in place for this purpose.
LEPs are delivering for businesses and therefore
we strongly believe they should be business Chaired and with a
significant presence of business Board Members.
7. MEANS OF
PROCURING FUNDING
FROM OUTSIDE
BODIES (INCLUDING
EU FUNDING) UNDER
THE NEW
ARRANGEMENTS
The East of England has procured outside funding,
particularly EU funding but also through Research Institutes,
Technology Strategy Board and levering private sector funding
for projects such as major Science Parks on a regional basis and
needs to continue to do so.
The EU and external bodies will continue to
be an important source of funding for economic development activities,
particularly with limited UK government resources. It is however
unclear if LEPs will be of sufficient critical mass and influence
to bid for such funding. On EU funding, instruments call for a
regional Government partner, therefore a sub-national structure
may be critical to ensure the region continues to benefit.
Finally, developing proposals and managing bids
for EU funds and external sources takes time and expertise. A
critical mass of expertise currently sits within the RDA and must
not be lost. Furthermore, bids need to be innovative and of a
critical scale to attract investment. It is questionable whether
LEPs will be of sufficient scale to do this and have the capacity
to manage the process effectively and efficiently. Duplicating
resources across all LEPs defies the drive for value for money.
8. CONCLUSION
The Government's "Big Society" relies
on increased levels of engagement from all sections of society,
including businesses. The serious and concerning lack of clarity
in general surrounding LEPs and future funding, and specifically,
from functions to future structures is off-putting for businesses
and will result in lower levels of engagement.
We in the East of England are concerned that
there will be a disparate state of affairs that will seriously
disadvantage businesses and economic growth at a critical time
and will disproportionately affect the competitiveness of one
of the UK's most competitive regions.
We want to see clearly organised, effective
and efficient organisations in place that can deliver an optimum
level of service to businesses. We want easy, simple and swift
channels through which to access public sector finance and investment.
We understand the theoretical urge to allow
local areas to come forward with innovative solutions around economic
growth, however having no guidance whatsoever on how LEP bids
will be assessed is unhelpful and inefficient, especially given
the current emphasis on value for money and effectiveness.
We strongly believe in aspects of local delivery
but they need to be combined with economic significance and a
regional overview. Localities do not exist in isolation and we
need to ensure they are joined together synergistically, not negatively.
12 August 2010
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