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


Written evidence from the Greater Manchester Chamber of Commerce

1.0  INTRODUCTION

  Greater Manchester Chamber of Commerce is the most prominent and collective voice of business across Greater Manchester and is the largest in the UK with over 5,300 members who between them employ 1/3 of the total workforce in Greater Manchester. The Chamber is well placed to understand the needs and concerns of the business community as it not only provides help, advocacy and representation to its member businesses, but also provides services to another 8,000 non-member businesses.

  The Chamber welcomes this opportunity to give written evidence to the Business, Innovation and Skills Committee on behalf of our members concerning the proposals for the introduction and subsequent operation of Local Enterprise Partnerships (LEPs).

2.0  SUMMARY

  Proposals for a Greater Manchester LEP are at an advanced stage and are the result of several years worth of established and integrated work between the local authorities under the auspices of AGMA (Association of Greater Manchester Authorities) and the private sector, primarily through the Greater Manchester Chamber of Commerce.

  The proposals not only fully address the initial outline requirements for LEPs from government, as described in the joint BIS/CLG letter of 29 June, but also identify and make recommendations that would make the function of a GMLEP much more effective and relevant for local needs and priorities.

  The Chamber is fully supportive of the move to LEPs in order to help deliver the required private sector growth and capacity, however we feel that there are significant elements of the proposals that require further development especially around the transfer of those RDA functions (inward investment, sector leadership, business support, innovation and access to finance) that government proposes to be nationally led in the future. Our view is that if the LEP is to be fully effective then all services and functions must be controlled and delivered locally across the full spectrum of business support needs. To create artificial barriers at the outset will prove damaging in the long term and cause confusion at a critical time for the economy. It is vital that effective business support delivery is at the heart of LEP activity, our members have been vocal in their demands for a significant change in the existing arrangements yet the proposals as they stand at present from government only offer, at best, a half way house solution. We believe our proposals offer a viable, workable and transferable solution to this fundamental issue.

  There must also be effective transitional arrangements in place to ensure a smooth and timely handover from RDAs to LEPs and it is vital that any funding currently earmarked for local programmes should be retained under local control and not be transferred to and between central government departments.

  The following section identifies in detail the key areas and topics for the committee in addition to expanding on other issues described above.

3.0  ISSUES FOR EVIDENCE

3.1  Functions of a Local Enterprise Partnership including revised proposals for business support and capacity

  We fully agree with the guidance from government that the priority aim of the current formation process for LEPs should be on the purpose and functions rather than the structure and governance. We also agree with the geographical basis for LEPs being functional economic areas rather than specific local authority boundaries.

  From the content of 29 June letter and taking into account that LEPs have their origins in the demise of the RDAs, there are five functions that have been identified as being best led nationally. These are inward investment, sector leadership, business support, innovation and access to finance.

  Current proposals identify that LEPs will be able to create the right environment for business and growth by tackling issues such as housing, planning, local transport and infrastructure, employment, enterprise, the transition to a low carbon economy and business start-ups.

  At the time of the letter from BIS and CLG it was anticipated that further details on the function of LEPs would be set out in a white paper that was expected to be released in summer. Latest information now suggests that this has been delayed until late September/early October. This will be too late for the initial LEP proposal deadline of 6th September and also be too late to have any real effect on the CSR which will be released on 20 October.

  In the absence of a formal mechanism to respond to governments initial proposals we would welcome the opportunity to raise our suggestions as to how a significant number of core functions of a LEP could be more effectively delivered and incorporated into a cost effective and comprehensive local business support mechanism.

  To be truly effective and deliver what will be needed to support the required private sector growth, LEPs must have as much control over all elements of business support as necessary. Whilst current RDA functions may be run nationally in the future, there must be a workable and effective structure in place to ensure that LEPs have as much control as required to ensure successful local delivery. This must be available to areas where LEPs exist and are effective and may take the form of a sub-contract or tender model. Where areas have no LEPs then neighbouring LEPs or other contractors should be allowed to deliver the service. Whilst there must be consistency in the quality of the service it should be recognised that areas have different needs and requirements and flexibility must be built in so that individual LEPs may be allowed to tailor elements of the function in order to achieve a satisfactory service delivery. Any attempt by central structures to control the local delivery of any service or programme will weaken a LEPs ability to deliver on its remit.

  Tailoring support to meet identified needs, linking policy strands closely within LEP areas and ensuring that business support, skills and employment are linked together and not delivered in isolation will further strengthen the ability of LEPs to successfully deliver economic growth.

  In Greater Manchester the Chamber, with strategic and delivery partners, has identified a model for the delivery of all the major elements of business support and growth that exceed the basic requirements laid out for LEPs at a cost of approximately 1/3 of current delivery. The identified mechanism and model offers a workable solution to ensure the successful local control and delivery of the proposed nationally led functions.

  In addition to meeting the requirements around strengthening overall economic growth, this also addresses major priorities for Greater Manchester as identified within the Manchester Independent Economic Review around international trade, productivity growth, inward investment and business engagement and which have been subsequently included as priority action areas in the Greater Manchester Strategy and carried forward into the proposals for a Combined Authority, due to commence in April 2011.

  In addition to the ability of delivering effective support for growth, this model also delivers a true local business advisor led service, leading to the involvement in fee paying and co-funded services, which has been absent for the last four years and has been a source of dissatisfaction for the business community.

  This practical, tailored approach, coupled with broader strategic issues that the LEP would be responsible for eg housing, infrastructure, planning would enable a Greater Manchester LEP to deliver everything required to ensure the continued economic success of the local economy.

  Full details will be included in the GMLEP bid.

3.2  Structure and accountability of LEPs

  LEPs should set the economic strategy and delivery plan for their areas and have a functional Board structure, chaired by a representative from the private sector, that reflects the true partnership nature of public and private sectors yet does not become or is seen to become further strata of organisation or bureaucracy.

  Board members should be seen and acknowledged as influential leaders who are able to operate successfully at a strategic level and also take on accountability for their actions and ultimately the performance of the LEP.

  It is important that any operational or delivery organisations are not hindered or obstructed in the pursuit of their activity by excessive or poorly thought through governance arrangements.

3.3  Transition from RDAs to LEPs

  The current haste and speed of change is causing some concern. Whilst acknowledging government's desire to move quickly on this process to enable action to start to address the deficit, the danger is that gaps are left in current provision which may prove detrimental in the medium to longer term.

  Questions remain about the potential future use of RDA assets currently within the region and it is felt that these must be retained to assist with binding the work and objectives of the relevant LEPs together.

  There is current potential for random cuts to be made by the RDA to address immediate budgetary issues eg ignoring the value and impact of projects in favour of cutting spend as contracts fall due for renewal. This could be damaging in the extreme and could adversely affect the ability of LEPs to be as fully effective as possible from the start of their operation.

  We would like an early positive decision on a GMLEP following submission of the proposal on 6 September. Due to the nature of the importance of the Greater Manchester economy any hold up or delay to allow other areas to catch up will be detrimental to the local economy and also ultimately the ability of the UK economy to move back into full and sustainable growth. We would expect to see formal approval for a 2011 transition from the NWDA to a GMLEP.

3.4  Regional Growth Fund

  We will be responding in full to the current Regional Growth Fund consultation however in relation to LEPs we have some concerns about the potential conflict that may arise by allowing non-LEP bodies to bid for funds yet still have LEPs as being the main coordinators of the fund. Recognising the ongoing consultation on RGF this needs clarification for the avoidance of doubt.

3.5  Co-ordination of regional economic strategy and between LEPs

  The Chamber acknowledges that co-operation between LEPs will be a necessity. However the new structure and framework of LEPs will allow greater integration between non-traditional areas eg Greater Manchester having the ability to work closer with other surrounding LEPs some of which may not necessarily be within the North West.

  There is though, in the short term at least, still a need for an under arching residual body that is a product of and answerable to LEPs to ensure an effective transition from current RDA work and to ensure relevant strategic economic and infrastructure issues are addressed, alongside supporting the delivery of residual contracts after the RDA has been abolished. Current proposals in the North West are for this to be undertaken on a very light touch basis that will give the necessary anchor point but in no way replicates previous levels of bureaucracy or control that could stifle innovation and growth And with the LEPs being very much in the driving seat.

  The other major consideration is that LEPs established with Chambers of Commerce firmly at their centre will inherit a natural heritage and depth of experience of close working and co-ordination not just with immediate neighbours but across wider geographic areas. This is also a fundamental benefit as integration of services with public funding will help further reduce costs.

4.0  CONCLUSION

  Greater Manchester Chamber of Commerce is supportive of LEPs and is engaged at the highest level with the preparation for a Greater Manchester LEP.

  As a result of this work, opportunities have been identified for a business support model that would:

    — be business friendly and hence maximises the degree to which businesses do things which they would not otherwise have done;

    — be delivered at approximately one third of recent costs but nevertheless deliver a higher volume of businesses started and assisted and higher growth outcomes;

    — link directly to the requirements of the Greater Manchester Strategy;

    — strike a proper balance between what Government will do centrally and what must be led and delivered locally such that we work together with national programmes (eg UKTI);

    — be integrated with business funded services so as to maximise impact and minimise costs;

    — be based on the use of advisers for the majority (but not all) of the programmes; and

    — retain what is best in the current regional programmes and structures.

  Whilst acknowledging the role and remit of a LEP is more than just delivering business support we feel that this is a fundamental issue that needs addressing if LEPs are to be truly successful and deliver the economic and employment growth that is required.

  We would hope to see Chambers of Commerce playing key roles in the set up and running of LEPs. This would help bring in necessary skills in addition to acting as a viable and legitimate conduit to the private sector.

12 August 2010





 
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