The New Local Enterprise Partnerships

Memorandum submitted by A4e

Summary

A4e welcomes the opportunity to contribute to the debate on the establishment and objectives of Local Enterprise Partnerships. In this submission we argue that:

· LEPs, in bringing a number of Councils together alongside other local public and private sector partners, will need the scope to cover relevant economic development and travel to work areas and sufficient scale to make an impact on economic outcomes

· The LEPs represent an opportunity to join up services to the workless with programmes to support job creation and enterprise , thereby making the programmes more effective in reaching their objectives and generating savings in local support services

· With public resources scarce it will be important to maximise the community’s support and contribution and to coordinate all forms of local public investment in an area relevant to the enterprise development. LEPs should have a key role in overseeing both these processes

· Private sector investment will be crucial to local economic success: LEPs should have a key role in ensuring the private sector is able to contribute to building a sustainable local economy

· LEPs will be faced with a highly complex challenges and significant resource constraints : they should be set up so that they are able to draw on the support of strategic partners from private and voluntary sector to act as managing agents responsible for overseeing the delivery of key programmes

A4e Background

Established over 20 years ago, A4e was set up with the aim of lifting people out of poverty in Sheffield, originally through helping ex steel workers re-train and find jobs in other industries. Since then the company has grown on a global scale, supporting over 1 million people to improve their lives.

With a £145m turnover, and 3500 staff A4e is a global organisation helping over 100,000 customers every year and delivering employment and skills services to almost 7000 employers every month. It provides a wide range of services to the unemployed, communities and business in all parts of the country. All these are directly relevant to the LEPs’ objective of developing their areas’ resources to create the right environment for business and growth.

In summary A4e has close, practical experience of the past and current approaches to local economic development, understands the issues intimately and is well placed to contribute to the debate on their future led by the new LEPs.


1. Introduction: the LEPs’ Scale and Scope

There is a clear case for a local authority role in building resilient local economies which meet their residents’ needs – and particularly the needs of residents who are economically vulnerable such as the workless. LEPs should be seen an important means of setting economic priorities for their areas and enabling public, private and voluntary sectors to work together to deliver long term, local economic ‘well being’.

Given the wide variation in the structure and needs of local economies it is important that LEPs are able to set their own priorities and establish their own programmes to achieve their objectives.

Equally , it is clear that there are some important principles that need to guide the general approach of LEPs to economic development and support for the workless. A number of these principles are suggested below. However one of the most important is that LEPs be established from the start with the necessary scope and scale to be effective.

Economic activity and travel - to - work areas cover areas far wider than those of individual local authorities. Authorities which decide to work together in a LEP must therefore ensure their chosen area ‘fits’ the local economy and labour market. Equally they will need to establish a role that is broad enough to make an impact on the local economy and avoid small scale projects which have only marginal impact.

An important example is the need for a link between the LEP areas and the DWP’s new Work Programme contract areas. Significant problems of duplication have arisen in the past as a result of the lack of a clear relationship between the DWP and the Regional Development Agencies’ programmes of support for the unemployed. The LEPs will find it difficult to integrate their support for the workless with the DWP unless a clear relationship is established between the programmes.

Recommendation 1 : The scope of LEPs must be sufficient to match those of the local economy , and the scale of their activity and objectives sufficient to make an appreciable impact on the economy

2. Joining Up Employment Support and Job Creation Programmes

One of the central principles LEPs should adopt is to ensure they have a balanced and integrated programme for the support of the workless and for local job creation.

Programmes to tackle worklessness and economic regeneration through job creation have traditionally been considered largely independent activities – even when they have been overseen by the same agency. The assumption has been that attracting new investment leads to the creation of new jobs, and that the labour market will then ensure that people will be available for these jobs (or where necessary, once the workless have been prepared through welfare-to work programmes).

In practice this assumption is rarely fulfilled. As a result there have been chronic mismatches of opportunities and skills which in turn have led to long term residual unemployment in many areas1. In an economic downturn this mismatch becomes much more serious and can threaten the viability of welfare-to-work programmes.

An alternative approach is to give greater emphasis to job creation programmes which are more closely linked to local resources and needs. By managing the elements of local economic regeneration as an integrated programme, working with the communities involved, jobs created can be better matched to those people needing work.

The current welfare-to-work programmes highlight personal barriers to getting work, notably individuals’ lack of knowledge or confidence, possible health issues, presentation skills etc. These are key components to any programme and A4e (together with the other providers in the field) has done much to develop a more integrated delivery model and to add further components, such as job skills and community support to their programmes.

However even in relatively buoyant job market there are both individual and structural barriers to job placement success. Some of the individual barriers can be addressed by more intensive support programmes (which may become viable under the new Work Programme). However there are other structural barriers that arise from changes in labour demand and by a sheer shortage of local job opportunities. These of course will become more evident if the general level of unemployment rises.

It will therefore become increasingly important to develop clearly focussed job creation initiatives alongside (and integrated within) the journey to work.

Moreover building a resilient local economy and meeting the needs of the workless over the long term demands programmes that build long term skills and local enterprise.  We need therefore to look beyond 'quick fix' solutions and instead build long term skill development escalators and strong, sustainable enterprises. In particular it will be important to resolve the tension between short-term pressures to get workless people into current vacancies and the longer-term objectives of ensuring the general skills base develops to meet the realistic future needs of the local economy. This will involve building an integrated programme with a number of key elements notably :

· Personalised employment support that recognises the needs of vulnerable groups and fully engages the community’s support in meeting them

· Long term skills development programmes . These will need to recognise the starting points of individuals and groups and build locally appropriate skill specialisms which both meet employer needs and act as a vocational bridge between schools and employers

· Enterprise development to develop confidence and skills of the workless to establish their own business , in many cases breaking the cycle of inter-generational unemployment 2

· Business support and advice

· Financial support for community focussed job creation

Recommendation 2 : The LEPs represent an opportunity to join up services to the workless with programmes to support job creation and enterprise , thereby making the programmes more effective in reaching their objectives and generating savings in local support services 

3. Community Engagement and T otal P lace : Maximising the Impact of Public Investment

Community focused services supported by voluntary and community based organisations have proved highly successful in meeting the needs of those excluded from the labour market. Many of the welfare-to-work contracts for example shown how the integration of community based providers into regeneration programmes can make very significant contributions to successful outcomes.

More broadly a large number of local authority led Total Place pilots conducted over the last year have shown the scope for providing more effective services at lower unit cost by joining up locally provided services. There is clearly scope to apply both community support and ‘total place’ principles to the problem of worklessness and local job creation. The central funding streams that are most relevant are:

· Work Programme

· Regional Growth Fund

· Skills funds (supported by the SFA and YPLA)

· Health funds aimed at reducing spending on worklessness related conditions

· Housing benefits

These programmes and funds, coupled to the funding streams from Councils need to be integrated to ensure they have the greatest effect on carefully selected outcomes relevant to the area. It will be important for LEPs to show how they can shape the national programmes around the needs of the local area while meeting the particular outcomes required by those national policies. For example LEPs will need to show that Regional Growth Fund projects will both support immediate needs for economic support and reduce long term differences in wealth creation between the different regions.

LEPs will be the appropriate level to focus the design of these integrated programmes by bringing together community support and national funding streams to achieve the twin priorities: long term development paths for the workless and resilient local economies.

Recommendation 3 :  Given the scale of problems of worklessness and the sharply reduced levels of public funding, LEPs would have to focus their efforts on key priorities .  This will involve mobilising community resources and adopting a total place approach, concentrating scarce national programme resource around key priorities, including in particular, the needs of the workless

 

4. Maximising the Impact of Private Sector Investment

Private sector investment will be a critical factor in building local economies, more so than in the past in light of cuts in public spending. LEPs will need to avoid competitive bidding for inward investment between themselves which would be needlessly expensive. Instead they will need to help build relationships between private companies and local workforce and the workless.

There are an increasing range of examples of companies building these types of links with local insti tutions, communities and people. Many companies have support ed local community development as part of a policy of Corporate Social Responsibility . Others, notably companies supplying the local public sector, have done so as part of their contracts with the Council or have agreed such conditions as part of S106 planning agreements. There is a strong argument that organisations receiving public money should be required to deliver agreed social outcomes as part of their contract.

In summary t here is considerable scope for organisations that act as 'midwife' for the process of bringing together investment in capital and local ‘human’ capital and the LEPs have the scope and position to play this role as appropriate for each area

Recommendation 4 :  With the reduced public funding private sector investment in local areas would become more important.  The LEPs will need to ensure they take advantage of opportunities to link privately driven investment with local resources, particularly the contribution the workless can make. 

5. Managing Agent Role for Private and Voluntary Sector Strategic Partners

The key starting points of LEPs will be to understand the economic needs of their communities and to understand the structure of the local economy. Their role should be as a service ‘commissioner’, deciding the outcomes needed and choosing the appropriate strategy to achieve them in consultation with local people and providers. Scarce local expertise and limited public funds will mean that LEPs must be prepared to bring in strategic partners to support the delivery of their core priorities. 

This is particularly likely to be required when setting up and managing integrated workless support / economic regeneration programmes. These will have complex outcome targets which will require high levels of expertise in the design of effective solution s. They will also demand knowledge and experience of building complex supply networks in the community and in the wider economy . Particularly important will be expertise in both understanding and engaging local communities and implementing effective strategies to tackle worklessness and the development of enterprise.

Recommendation 5 LEPs’ principle role should be as commissioners of programmes designed to achieve economic success. LEPs should then be ready to bring in private and voluntary sector partners to act as managing agents to achieve their major economic priorities.

6. Conclusions

Local government and LEPs in particular, face very significant challenges in ensuring that the resources of local communities are mobilised to cope with the increasing economic needs of communities in face of significantly reduced public resources. The needs of the workless will become particularly acute as many areas face lower rates of job creation.

We must not waste – as we have in the past – one of the community’s key resources, the contribution that the workless in a community can make. The cost of allowing people, especially the young, to move further and further from the labour market will be high in the short term. There will be higher benefit payments and a greater call on local services such as the police, health and social services. The long term effects are even more damaging. Recent studies of the long run impact of the 1980s recession have shown that the contribution of a whole generation of young people can be lost.

There is strong evidence that local government can have a very significant impact. They can co-ordinate and orchestrate the contributions of community, private sector and public expenditure in rebuilding local economies with long term resilience. As important they can ensure those local economies meet the needs of the community as a whole, and especially its most vulnerable members.

The potential of LEPs as a focus for all those who contribute and benefit from local economic development can be best mobilised if they work as commissioners of economic outcomes. They are able to understand their communities and know how to bring in the expertise of both private and voluntary sector providers. They need to combine this approach with strong leadership and political vision so they are able to resist threats to economic development schemes that have arisen in the past from fragmented, short term decision making

In summary LEPs have the potential to become a focus for genuine local economic development programmes that meld community effort, private sector investment and targeted, integrated public service investment. We cannot afford to waste resources in pursuing silo based programmes , either within the economic development field or, more generally, across the local public sector.

16 August 2010

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Summary of Recommendations

Recommendation 1 : Scope and Scale

The scope of LEPs must be sufficient to match those of the local economy and the scale of their activity and objectives sufficient to make an appreciable impact on the economy

Recommendation 2 : Joining up Support for the Workless with Job Creation

The LEPs represent an opportunity to join up services to the workless with programmes to support job creation and enterprise , thereby making the programmes more effective in reaching their objectives and generating savings in local support services 

Recommendation 3 : Community and Public Sector Support for the Workless

Given the scale of problems of worklessness and the sharply reduced levels of public funding, LEPs would have to focus their efforts on key priorities .  This will involve mobilising community resources and adopting a total place approach, concentrating scarce national programme resource around key priorities, including in particular, the needs of the workless

Recommendation 4 :  Private Sector Contribution

With the reduced public funding private sector investment in local areas would become more important.  The LEPs will need to ensure they take advantage of opportunities to link privately driven investment with local resources, particularly the contribution the workless can make. 

Recommendation 5 :  Strategic Partners

LEPs’ principle role should be as commissioners of programmes designed to achieve economic success. LEPs should then be ready to bring in private and voluntary sector partners to act as managing agents to achieve their major economic priorities


[1] One particularly glaring current example is the Olympic development in east London where of 7000 construction job opportunities only 4% have gone to people living in the five surrounding Boroughs where rates of worklessness are especially high.

[2]

[2] Th ere are significant success stories in this area of work. For example A4e’s Intensive Start-up Programme in the North West works in all the region’s local authorities . Running since March 2009, the programme has created 3292 businesses and 3398 jobs. This has been achieved through a prime contracting approach . A4e takes on all managing agent functions (programme and performance management), overseeing delivery through a network of local public and third sector suppliers

[2]