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

Written evidence from Coast to Capital Local Enterprise Partnership

  I enclose a short note which I hope will address the issues the Committee is examining.

I would just like to say in response to your point that the Committee wished to hear from business led proposals that the Coast to Capital proposal is also business led, in partnership with our local authority colleagues. A list of supporting businesses is shown in the attached submission. Should you wish to see the full Coast to Capital proposal, it can be found at:

  1.  This supplementary note is submitted specifically for the Committee's meeting on 12 October 2010 when it will examine some of the proposals for Local Enterprise Partnerships. The Coast to Capital proposal was highlighted to the Committee at the meeting with business representative organisations on 14 September 2010.

  2.  The Coast to Capital proposal may be of interest in relation to some of the key issues the Committee has set out in the terms of its Inquiry:

    — The determination of the areas to be covered by LEPs, and how LEPs will work together.

    — The functions of LEPs.

    — Structure and accountability.

    — Funding of LEPs.


  3.  The initial proposal has been led by John Peel, Chairman of the West Sussex Economic, Skills and Enterprise Board with input from business leaders from business organisations representing more than 7,000 businesses including:

    Sussex Enterprise

    South London Business

    CADIA/Gatwick Diamond Business Association

    West Sussex Growers

    Marine South East

    Federation of Small Businesses—West Sussex Branch

    Engineering Employers Federation

    Civil Engineering Contractors Association

      4.  There is firm support from many individual strategic businesses in the area including:
    Arora HotelsLloyds TSB
    Baker TilleyParafix
    DHM StallardRicardo
    Gatwick AirportSouthern Railways
    ITTSouthern Water
    Legal and GeneralTime 24 Manufacturing

      Local authority input has come from West Sussex County Council, the London Borough of Croydon, Brighton & Hove City Council and some district councils. The proposal is supported by the University of Brighton, University of Chichester and Sussex University.


      5.  The Committee is interested in how LEP areas should be decided. In determining the area to be covered by our LEP, we were influenced by the views of the private sector on what they recognise as the natural functional economy. While there are many factors which overlap, it became clear that businesses believe the core economic driver that determines the functional economic area is international trade activity, which is reliant on the economic dynamo of Gatwick Airport. Recognised as one of the South East's key growth areas, the Gatwick Diamond is linked to the south to Brighton & Hove, itself a significant local economy, and to the West Sussex coast. To the north, the Gatwick Diamond is tied to the Croydon economy and through it to the London economy. To the east and west the Diamond is interlinked to the rural economy, which has distinctive strengths.

      6.  Within this area, businesses recognise the travel to work patterns; they share a labour force, which is mainly resident in the area; they work with a common skills infrastructure in terms of schools, colleges and higher education; and they are reliant on the same transport infrastructure. They face many of the same business issues and have strong common ground about the investment and development that is required to further improve the environment for strong business growth.

      7.  We believe a LEP area needs to be large enough to give scale to allow sufficient grip on our key issues—the application of a common strategic direction on skills, business growth, investment enterprise etc., across a sufficiently large mass of businesses and individuals to make a measurable difference. The Coast to Capital area is such an economy of scale and critical mass that generates £32.5 billion per year, exports £9.1 billion, with £3.7 billion of tourism income. The area has 79,000 businesses, 113,000 self-employed and 721,000 jobs (of which 27% are in the public sector). 8,000 new businesses are started each year.

      8.  However, LEP areas also need to be compact enough to allow local engagement of businesses and enable the tackling of local economic development issues. In the Coast to Capital area we have addressed this by explicitly recognising five inter-locking business environments which naturally fit together and which are tight enough to allow us to get things done at local level and to effectively engage a wide range of businesses, without fragmenting to such an extent that we lose sight of the bigger opportunities and the greater prize.

      9.  Each of the five interlocking local economies has its own attributes and particular problems and opportunities, but they are bound together by the potential to be transformed from a series of coasting and/or underperforming economies to an integrated high performance economy. Within Coast to Capital we will ensure that the characteristics and needs of the five interlocking business environments are fully recognised and included in the priorities and activities of the LEP.

      10.  Two of the areas have submitted their own LEP proposals—Gatwick Diamond and Coastal West Sussex. The Coast to Capital proposal includes these two areas in their entirety and with full recognition of their issues. Both have committed to work with Coast to Capital. However, we believe that as LEPs in their own right, the areas might not adequately recognise the real opportunities for businesses in working across a wider area that links the Coast, to Brighton & Hove, the Gatwick Diamond and via Croydon, to the London economy. The danger of LEP areas which are too small are that they may get trapped in their current patterns of business and local economy, and will find it difficult to effect real change and growth.

      11.  We believe that an argument could be made for a slightly enlarged area, which would include a further part of Surrey and the coastal part of East Sussex which would fit in well with our proposed LEP. We know that both Surrey and East Sussex County Councils have put in separate LEP bids. However, there are good reasons for both these separate proposals—there are distinct and specific issues in each area which are sufficiently well differentiated from Coast to Capital to warrant separate proposals. We will work closely with these adjoining areas on issues of common interest—for example, transport infrastructure, innovation and links to higher education, coastal issues and the rural economy and the economies of rural market towns.


      12.  The functions we envisage for Coast to Capital LEP are determined in part by the Government's agenda for LEPs, but also by our vision. The vision is straightforward and exciting. It places international growth and entrepreneurship at its very heart. The aim is to transform business and economic performance so that the area can compete in any international marketplace. The LEP aims to develop an economy that is trade-led with a business community that is outward-looking, investment-focused and driven by the need to be innovative. It will have a skilled workforce delivering high value added and knowledge-driven products and services.

      13.  To deliver the vision, the Coast to Capital proposal has focused on a small number of issues which are specific to this area rather than trying to cover every possible aspect. There are in any case existing strategies, partnerships and delivery mechanisms for spatial and economic development priorities.

      14.  The Coast to Capital LEP has just two key priorities:

      — Enterprise and entrepreneurship—tackling low levels of enterprise and business formation so that the longer term competitive health of the area is secured.

      — International trade—60% of UK productivity gain is driven by businesses that are internationalised. The area has some slight competitive advantage in this, but the proposal is to significantly increase the numbers of firms who trade internationally.

      These priorities will act as the economic engine to drive the required increases in employment, productivity, innovation and business growth. Other issues will not be ignored, but businesses have said that by focusing in this way the LEP will have maximum impact on the economy as a whole.


      15.  The LEP will be a strategic body and will take a long term view of the issues affecting businesses. It will set priorities for creating the right conditions for businesses to flourish. Led by businesses, the LEP's role will be:

      — Understanding the local economy and its drivers.

      — Developing a strategy to create the right environment (including planning and infrastructure protocols with the planning authorities).

      — Setting investment priorities and identifying a small number of catalytic projects.

      — Raising funding from the private sector and bidding for funding.

      — Commissioning delivery (possibly from a single purpose delivery vehicle).

      — Establishing an Enterprise and Export academy to be run jointly by further and higher education.

      16.  In doing this the LEP will work with and seek to influence statutory and other bodies that are responsible for planning, transport, education and skills etc. that impact on business.


    Being accountable

      17.  We will be openly accountable to the business community, local people and interested organisations, publishing regular reports of our activities. We will hold a bi-annual open meeting. We will challenge and hold others accountable to our strategic priorities and principles in so far as their activities impact on business success.

      18.  Subject to the responsibilities and powers that the Government gives to LEPs in the forthcoming White Paper, we will establish appropriate robust governance structures, and will establish working relationships with the bodies that have statutory responsibility for functions which are critical to creating a positive business environment, such as planning.

      19.  We do not expect the LEP to do everything itself. In line with the Government's principles of Big Society, we anticipate and want to encourage local business and social enterprise partnerships to also become involved and help determine the conditions for growth.

    Our LEP structure

      20.  The outline structure we envisage for our LEP is:

      The Partnership Board—will be formed as set out above, and be responsible for overall strategic direction and priorities.

      LEP Forum—to engage wider stakeholders, we will convene a regular forum to consult on businesses issues, not less than once per year.

      LEP Team—a small team, comprised in part secondees from business and other stakeholders, will support the Board, maintain partner relationships and manage the commissioning and delivery of projects.

      Special Purpose Vehicles (SPVs) and other vehicles—these will be formed to take forward particular investment and financing projects, for example the catalytic investments in key locations.


      21.  For Coast to Capital we have started from the assumption that private sector investment will drive the achievement of our goals in the long term. We have made the assumption that the private sector will deliver, as the first resort, the support services that need to be put in place. We have made no assumptions about the transfer of residual RDA funding to LEPs.

    22.  It is our role as the LEP to create the favourable conditions for private sector investment and to convince all businesses that they should invest in their own business growth, including buying external support when necessary. We will establish long term relationships with private sector suppliers of finance including banks, venture capitalists and developers. To deliver our goals we will need to facilitate and lever-in at least £5 billion of private sector investment.

      23.  As well as creating the right conditions for investment we will also lead investment in certain critical locations by bringing together landowners, developers, investors and potential occupiers. We will establish investment mechanisms and special purpose vehicles (SPVs) where necessary, learning from existing examples such as the regeneration vehicle established in Croydon.

      24.  The role of the public sector will be critical. Local authorities have a wide range of powers covering planning, economic development, education, housing and transport which will help to create the favourable conditions for investment. Local authorities' role is to make things happen, while ensuring minimum bureaucracy. Further and higher education are significant investors in their own right as well as providing essential skills and innovation infrastructure.

      25.  Public sector sources of funding and investment will be used strategically, acting to unlock specific developments or to lever-in private sector funding. Possible sources of public sector funding will include:

      — Establishing new business Improvement Districts and Supplementary Business Rates.

      — Regional Growth Fund—may be helpful in getting a rolling programme of investment going.

      We will also seek to make greater use of European Union funding, using the private sector investment we will unlock to act as leverage.

    Coast to Capital Local Enterprise Partnership is supported by the following businesses and organisations

    28 September 2010

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