Written evidence from the Forum of Private
Business
SUMMARY
Given the economic difficulties faced over the
last two years and the projected cuts in public spending, the
future success of the UK's local economies will be dependent on
the ability to deliver local services in the most cost-effective
manner possible.
The Government's proposed Local Enterprise Partnerships
(LEPs) will be important to cost-effective economic growth, driven
in no small part by cooperation between the public and private
sector.
The Forum sees the some of the key functions
of all proposed Local Enterprise Partnerships as the following:
— Localised business support.
— Effective delivery of local services.
— European regional funding distribution.
— Regional infrastructure investment.
The central Government will need to ensure that
LEPs fulfil these roles in a cost-effective manner, providing
a "toolbox" of framework services and budgetary oversight
for each LEP. The Government should also ensure that every LEP
is engaging effectively with all sectoral and small business interests
in their area.
ABOUT THE
FORUM OF
PRIVATE BUSINESS
The Forum of Private Business is a proactive,
not-for-profit organisation, providing comprehensive support,
protection and reassurance to small businesses.
The organisation aims to deliver an exceptional
service to its members, adding value through the provision of
practical, tailored solutions that promote business success, and
by being their voice in government.
THE NEW
LOCAL ENTERPRISE
PARTNERSHIPS
The key purpose of the Government's proposed
Local Enterprise Partnerships (LEPs) should be to encourage economic
growth in their region and to deliver public services in the most
cost-effective manner possible.
That will mean strong leadership from the private
sector, including a balanced and small-business focused Board
of Directors for each LEP. Much of the success of individual LEPs
will depend on the quality of engagement with businesses of all
sectors and sizes.
THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
AND ENSURING
VALUE FOR
MONEY
Functions
The Forum is conscious of the Government's intention
that the LEP bid process should be used to drive innovation in
local and regional administration, particularly where economic
growth is concerned. They are hoping to prompt new ideas by leaving
as many options as possible available through the bidding process,
refusing to put limits on what LEPs can and cannot be expected
to do.
There are a few public services that will be
important for promoting economic growth and that we feel naturally
fit within the bounds of Local Enterprise Partnerships. While
they may not be considered necessary by all LEPs, the Government
should ensure that they are at least considered by bidding authorities.
Those services include, but are not limited
to:
— Localised Business Support.
— Supplier Matching and Inward Investment
(coordinated by UKTI).
— Regional Infrastructure Investment.
— Skills & Training Information and
Promotion.
With a focus on these key services, we believe
the Government's flexible approach to bids will encourage a diverse
set of potential partnerships, but we must also recognize that
there is an element of risk involved. If every LEP is pursing
similar goals for the economic development of their area, but
without similar guiding principles or mechanisms to achieve those
goals, there is a significant risk of inefficient use of funds
and a lack certainty for businesses.
We feel the delineation of responsibilities
for the Local Enterprise Partnerships versus local authorities
and central government departments will be necessary to provide
some clarity and consistency across the UK about the roles and
services of LEPs. The best way to achieve this may be to make
a "toolbox" of services available to LEPs, with a set
of mechanisms gleaned from bidding process.
Those mechanisms could provide LEPs with the
frameworks to engage with UKTI on export or inward investment,
to provide local business support services, to help set up a green
business hub, or any other role that fits naturally into the space
vacated by the RDAs. Provided the toolbox is flexible enough to
allow partnerships to implement the plans in their own way and
will not constrain them by holding them to a particular method
or minimum service, it will also take some of the guesswork out
of the process of developing new services for the LEP, allowing
them more freedom to customize beyond the required minimums.
Reporting & Value for Money
We anticipate the most direct mechanism for
ensuring that LEPs are fit for purpose will be through their funding
streams from central Government. LEPs will need to agree contract
terms through the bidding process, probably on a three to five
year basis, and then shoulder the responsibility for reporting
on those terms to central Government.
With regard to measures of success, the ultimate
gauge must be on regional contribution to GDP, with particular
regard for the sustainability of sector-specific growth in key
areas. This should be supplemented by business start-up numbers,
as well as investment and business growth figures within the LEP.
The Government should also consider developing
an audit mechanism for LEP performance as a check against the
delivery of individual partnership targets. If delivery of local
services in an area has declined rather than improved, then the
Government should retain the right to consider remedial action,
up to and including re-drawing the contract of an LEP with different
partners.
STRUCTURE AND
ACCOUNTABILITY OF
LEPS
Structure and Private Sector Engagement
From the Forum's perspective, increased private
sector involvement in Local Enterprise Partnerships has the greatest
potential to improve local delivery of services and economic coordination
over the current system of Regional Development Agencies (RDAs).
The challenge of the dual public/private approach,
however, will be to involve the right mix of business sizes and
types in the relevant sectors to truly represent the local economies
supported by the LEP. The RDAs have, in some cases, created artificial
clusters around those businesses they engaged with regularly,
rather than expanding their private sector partners to include
as many businesses and sectors as possible.
The easy option will be open for LEPs as well—to
only engage with large employers who may generate a disproportionately
high percentage of the area's employment and wealth. This will
leave those smaller businesses and under-represented sectors out
in the cold while decisions are made about the priorities for
economic growth and how local services are delivered.
To combat that tendency, we believe that all
LEP bids should demonstrate support from the spectrum of businesses
within their catchment, as well as details of how they plan to
engage with smaller businesses that may not be directly represented.
The Government should consider these proposals as necessary criteria
for approval for any LEP bid, and set up a system to regularly
monitor that engagement over the life of the proposed body.
THE TRANSITIONAL
ARRANGEMENTS FOR
CONVERTING RDAS
TO LEPS
One of the most critical current functions served
by the RDAs is that of business support. This will be critical
for LEPs as well, as they seek to promote growth within their
constituent business community. As such, ensuring the continuity
of those support functions must be one of the highest priorities
for the transition between the two structures.
Given the uncertainty around the Government's
plans for business support, managing a smooth transition will
require as early notice as possible for LEPS with a guiding set
of principles from central government around the structure and
goals of the public offering. This should specify the future of
the BusinessLink brand, how existing BusinessLink services will
be wrapped up, and a clear delineation about what will be handled
centrally and what will be handled locally under the new structure.
The Government should be prepared to keep in
mind the lessons of the Business Support Simplification Programme
that finished last year. Local and regional business schemes should
be consistent across the country, with easily recognizable programs
and clarity on requirements for interested businesses.
A second function of RDAs that will need effective
management is the distribution of European Regional Development
Funds (ERDF). Distribution of these funds is one of the most critical
tasks for businesses and communities around the country, and some
certainty should be provided for those constituents through the
transition period.
ARRANGEMENTS FOR
COORDINATING REGIONAL
ECONOMIC STRATEGY
· GOVERNMENT PROPOSALS
FOR ENSURING
CO -ORDINATION
OF ROLES
BETWEEN DIFFERENT
LEPS
Coverage
The current flexibility of proposals on size,
disposition and remit of individual LEPs is encouraging for the
development of fit-for-purpose partnerships, but as referenced
earlier, a fragmentary approach to the establishment of LEPs may
create challenges as well. If, as speculated, a region such as
the Northwest were to be broken down into a number of smaller
LEPs, there would be questions asked about how well-placed those
partnerships were to make decisions for the whole of the region.
The Government has yet to take a decision on
whether LEPs will be allowed to overlap each other, and how flexible
they will be with regard to size. Though this would certainly
give businesses engage at a regional level on economic decisions,
the establishment of multiple tiers of LEPs with varying remits
and services could create further confusion within businesses
and Government about the best level for engagement. Broadly-inclusive
LEPs with similar coverage to the system of RDAs containing smaller
LEPs established around local economies may also create unnecessary
levels of bureaucracy.
If regional LEPs are ultimately considered unwieldy,
then some of the functions that such a body would serve may be
best facilitated by structured cooperation between smaller, distinct
LEPs. This may be particularly relevant for large regional projects
such as power generation, flood prevention or high speed rail
links. The Government would then have a role in setting out what
it considers to be good practice for any organizations considering
partnerships with economic or environmental implications.
Coordinating Services and Enforcement
As mentioned earlier, it is also important that
UKTI remains the principal point of contact for export support
services for businesses and inward investment into the UK, and
does not hand responsibility for coordinating those down to the
local level.
UKTI will, of course, need to work with LEPs
on internal investment and supplier-matching services. But it
has developed a strong reputation as a competent body both abroad
and in the domestic market, and most Forum members who have used
its services have very positive experiences. The LEPs should be
able to develop their relationships with UKTI to bid for internal
investment contracts or to draw on its expertise to help develop
local services.
As the Government has undertaken a review of
the Local Better Regulation Office as part of its work on the
localism agenda, it is worth considering how the establishment
of LEPs will impact on the enforcement and compliance regime.
The use of the Primary Authority mechanism should potentially
be considered as a mechanism to coordinate enforcement across
a Local Enterprise Partnership's constituent authorities, with
the aim of producing more consistent and effective compliance.
Underrepresented Areas
The discussed numbers of LEPs and early indications
from proposals seen by the Forum of Private Business indicate
that not all local authorities will be covered by a form of economic
partnership. This presents a risk for those authorities who remain
unrepresented within the LEP structure, due to a lack of suitable
proposals in their area or even their own intransigence. What
does this mean for peripheral economies and the communities they
support?
The Government may wish to consider a system
by which an unrepresented local authority or council could elect
to join an LEP after its establishment if the authority was discovered
to be struggling with access to services.
13 August 2010
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