The New Local Enterprise Partnerships: An Initial Assessment - Business, Innovation and Skills Committee Contents

Written evidence from the BETA Model


  This submission focuses on recommendations to help ensure accountability and value for money based around standardising and developing the approach to monitoring data on enterprise dynamics.


  The BETA Model has been providing data and analysis to local authorities, development agencies and other organisations involved in economic development since 2004. We manage a database, based on Experian's National Business Database, that provides information on trends in numbers of enterprises and employment, across the UK and which can be interrogated by sector and or post code defined geographies and by enterprise formations, enterprise closures and movements. This has allowed us a unique understanding of enterprise trends and, importantly, trends relative to other areas and sectors but also an understanding of the way in which economic development programmes have been designed.


  Where economic strategies have included targets based on outputs in terms of enterprises created (or the GVA of or employment within these enterprises), there is a risk that the net change in an area created by the strategy will not be in line with reported outputs. Despite successfully meeting targets for enterprises created or supported it is possible that:

    — the net number of enterprises in the target area has not changed; or

    — has not changed relative to trends before the programme started; or

    — the share of the UK's enterprises that is within the target area has not changed.

  So, for example, if a programme reports an increase in the number of enterprises that have been helped to start this result could be consistent with:

    — no change in the number of enterprises in other datasets, for example VAT registrations;

    — a commensurate increase in deformations despite an increase in VAT registrations; and

    — the increase in net formations being in line with trends in similar areas where there has been no support or in line with trends within the wider area of which the target area forms a part.

  Even where there has been an increase in the number of enterprises relative to other areas which can be attributed to the programme, an increase in net number of enterprises relative to benchmark areas could mask a decline in the number of employees as more larger enterprises close than smaller enterprises start.


  Our recommendations focus on the requirements for effective monitoring and evaluation of enterprise programmes.

    1. The approach to setting targets and monitoring performance should be established from the start and should be shared across programmes. There should still be opportunities for partnerships to measure other indicators of performance relevant to local conditions. This requires clarity on the objectives of a strategy and, in particular, whether these relate to changes in employment or productivity.

    2. The data sets that are used to monitor performance need to be updated and available to those delivering programmes in the same, or similar, timescales. Where data on performance is only available one or more years after the activity, it is not possible to respond quickly. Staff responsible for delivering activity need to see the impact of their work fast enough that they can respond.

    3. Any monitoring needs to compare trends in a target area against trends in benchmark areas, including areas comparable in terms of enterprise structure, and trends in the wider area of which the target area forms a part.

    4. Targets need to be understood in the context of wider enterprise dynamics, for example, enterprise starts should be understood in the context of enterprise closures as well as enterprises that move in and out of an area.

    5. Where the targets include numbers of enterprises that have been helped to start, the first challenge is for these enterprises to be tracked to monitor how many get to a point where they enter the datasets being used to monitor trends and benchmarks. Only numbers of those enterprises that do enter these datasets can be compared. Survival rates of enterprises in different data sets should not be compared without being clear about different characteristics within different datasets. For example the "survival rate" of enterprises that operate from home below the VAT threshold is likely to be higher than the "survival rate" of enterprises that are registered for VAT.

    6. There should be a move from reporting numbers of enterprises that have been helped to start and have, for example, become VAT registered or have entered Experian's National Business Database, to reporting on trends in the target dynamic and other dynamics which contribute to change. For example, reporting not only enterprise formations but also enterprise closures and movements and growing and shrinking enterprises within the area, and relative to other areas.

11 August 2010

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