The New Local Enterprise Partnerships

Memorandum submitted by the North West Business Leadership Team

Executive Summary

As an independent group of senior business leaders in the North West, the North West Business Leadership Team (NWBLT) welcomes the Government’s proposal to create Local Enterprise Partnerships (LEPs) aimed at rebalancing the economy both regionally and sectorally. It is in our view essential for measures to be taken to reduce the UK’s reliance on London and the South East and to stimulate a larger and more dynamic private sector.

We welcome the establishment of a Regional Growth Fund but believe it will need to be very carefully and strategically targeted to make a significant and lasting impact.

We have some practical concerns regarding potential fragmentation in the North West and, to help address broader aspects of economic development, we consider it essential that the LEPs be supported by a lean but strong and effective co-ordinating mechanism. This should take the form of a small, business-led advisory partnership working from the outset to a shared statement of overall priorities for enterprise and economic development.

We are also concerned at the prospect of functions such as business support, inward investment and science and innovation being centralised in London. In our experience, the efficient delivery of these functions requires a detailed knowledge and understanding of local conditions and facilities.

NWBLT members are keen to engage with LEPs in the North West and play our part as business leaders, helping to achieve enterprise growth in this part of the country and enabling this major manufacturing region to make its maximum contribution to the economy of the UK as a whole. In this submission we offer some thoughts as to how the North West’s LEPs can best support local economic growth within the context of a coherent, business-led agenda for the North West as a whole.

The comments made in this submission relate specifically to the introduction of LEPs in the North West. We recognise that "one size does not necessarily fit all" and that our comments may or may not be relevant elsewhere.

Introduction

1. The North West Business Leadership Team ("NWBLT") welcomes the opportunity to submit evidence to the Select Committee regarding the proposed Local Enterprise Partnerships (LEPs).

2. NWBLT is an independent, privately funded group of senior business leaders, all of whom carry major responsibility for leading business operations in the North West (see enclosed current membership list). Our aim is to provide an experienced, cross-sectoral business view on issues of strategic importance to the economic development and long-term well-being of North West England. Over the years we have experienced a number of different models of governance for promoting regional and local economic development and this submission draws upon our experience over the past twenty years whilst recognising the demands of the current economic climate.

Rebalancing the Economy

3. We strongly welcome the Government’s commitment to rebalancing the economy towards the private sector and fostering economic growth in those parts of the country which have become too dependent upon the public sector. Some parts of the North West clearly fall into this category and we naturally share the Government’s concern to address the need for more entrepreneurial and wealth-creating local economies. It will not be easy for the private sector to absorb all of the fall-out from the public sector but we entirely agree that the goal of more balanced and sustainable growth will only be achieved through a larger and more dynamic private sector in the regions, with more business investment. If the UK is to reduce its reliance upon London and the South East, significant measures need to be introduced to stimulate enterprise and economic growth in other parts of the country.

Powers and Funding

4. It is unclear at the present time exactly what powers the Government intends to grant to LEPs. We would like to see these include extensive powers in relation to enterprise and business development, inward investment, skills, housing, transport, the transition to a low carbon economy and, where appropriate, promoting tourism and the cultural sector. We welcome the proposed creation of a Regional Growth Fund and note that LEPs (and some other organisations) will be able to bid into this for support in addressing particular priorities in their area. The scale of the proposed fund, at £1 billion for England as a whole, is nevertheless small when viewed against the size of regional economies (the North West’s economy alone is worth well over £100 billion). We therefore believe the fund will need to be very well targeted at some key business-related projects in specific areas. We would be keen to support some well-targeted bids which can make a significant, sustainable and strategic contribution to economic development.

Some Concerns

5. We have the following concerns regarding the LEP proposals as they currently stand:-

i. In this region the formation of LEPs is being based primarily upon Local

Government structures and boundaries which may not fully reflect the

real economic geography as it relates to business needs and future

investment opportunities. We are also concerned that if economic

development is chiefly a local authority function it may prove difficult in

practice for business to be the lead partner, which we understand is the

Government’s intention.

ii. The centralisation of such functions as business support, inward investment and science and innovation gives us grave concern. These functions all require, in our experience, a detailed knowledge and understanding of the relevant area in order to operate successfully. In relation to inward investment we would be particularly concerned that the North West would find itself seriously disadvantaged in comparison with Scotland, Wales and Northern Ireland, each of which has a substantial organisation and budget despite having much smaller economies than North West England.

iii. We share with our region’s Universities a serious concern over the extent to which vital collaborative working, in areas such as industrial and scientific research, may be adversely affected. The loss of funding and support for the North West Science Council, for major centres of shared excellence such as the Daresbury Science and Innovation Centre, and for industry alliances and development programmes such as the North West Aerospace Alliance and the Energy Innovation Centre are potentially very damaging to some important industries. The North West’s well-developed and valuable Regional Intelligence Unit would also be much missed and we share a widely-held view that a closer evaluation of particular RDA functions would have been advisable before throwing out "the baby with the bath water".

iv. There seems to us to be the potential for considerable wastage of resources during the transition from existing structures to the new arrangements. We are very concerned that in some areas resources may be wasted unnecessarily on re-organisations and the redundancy and subsequent re-employment of staff. Money is too tight at the moment for this kind of re-organisation to consume precious resources.

v. There is a real risk of some particularly valuable initiatives losing momentum - for example those which are successfully developing young people, micro-businesses and other new, creative enterprises. There is a

serious danger of failing to foster tomorrow’s business leaders if we do

not commit sufficient support towards nurturing talent, e.g. through well organised mentoring support, at the present time.

vi. Finally there is a concern that the fragmentation of the North West must

not be allowed to lead to a breakdown in collaboration and

co-operation across the North West, as has sometimes been the

case in the past, nor to an undue concentration on short-term gain

as opposed to long-term benefit.

Structure of LEPs

6. The precise geography to be covered by the individual LEPs is unclear at the time of writing. In our view it is important that they not only cover natural economic areas but that they also have sufficient economic and administrative capacity and relevant expertise to make a real difference in terms of economic growth. Within the North West we anticipate that capacity levels, and the nature and scale of the challenges to be faced, will vary considerably. It is therefore important to recognise that "one size will not fit all". There is also some concern as to whether the level of private sector engagement in some LEPs will be of sufficient stature and experience to exert real influence over policies and priorities. Given the inevitable pressures on private industry these days, we fear that it may be difficult to attract capable, influential business leaders in sufficient numbers to ensure strong private sector engagement on all of the LEP Boards. NWBLT can however help, and is already helping, to mobilise some significant business engagement across the region. We also believe that appropriate University representation could help to provide some valuable and relevant expertise within the LEP Boards.

Co-ordination

7. We believe it will be essential for the LEPs in North West England to be supported by a lean but effective co-ordinating authority which provides coherent oversight of such matters as major region-wide projects, transport schemes, collaborative research and supply chain issues and European funding programmes. For the North West as a region to continue its cluster-driven economic revival it will require a regional appeal, offering combinations of strengths and opportunities which may cross LEP boundaries. Housing, transportation, leisure and communications will all need to be developed on a broader scale to support the resurgence of Manchester and Liverpool as powerful, internationally-competitive cities. It will also be necessary for neighbouring LEPs to recognise the demands and opportunities presented by one another when, for example, considering the need for investment in skills development programmes.

In order to ensure that these broader strategic issues are addressed we would advocate the existence of a small, business-led advisory partnership comprising independent regional business leaders together with civic and business representatives from each of the relevant LEPs. This partnership should at the outset agree a shared statement of overall strategic priorities for enterprise and economic development. We would be interested in discussing further with the Department for Business, Innovation and Skills how this essential co-ordinating role might most effectively – and most economically – be performed.

Support for the LEPs

8. On the basis of the above comments we would support the introduction and operation of Local Enterprise Partnerships. We welcome the model of partnership between local government and business leaders as a basis for strong, effective and accountable economic development. Provided they are well co-ordinated and are granted meaningful powers - including responsibility for managing their own inward investment and business support - and the quality of business engagement is such as to overcome the risks of fragmentation and lack of capacity, we are confident that we will be able to work successfully with the LEPs to achieve significant enterprise development.

Conclusion

9. NWBLT is therefore encouraging its member companies to play an active role in supporting and influencing the North West’s LEPs. Member companies of NWBLT -such as Arup, AstraZeneca, Bruntwood, BT, Grosvenor, Manchester Airport Group, Peel Holdings, Siemens and Virgin Trains - are already taking active steps to participate in outline LEP proposals. Others stand ready and willing to do so. As a group of significant business leaders who have been closely involved in formulating regional economic strategy, we have developed a clear and coherent set of priorities for successful and sustainable economic growth in the North West. We are confident that, with strong and consistent direction, Local Enterprise Partnerships will make a very positive contribution to the economic performance of this important manufacturing and wealth-creating region and hence to the UK as a whole. Meanwhile NWBLT will continue to develop its own role of stimulating innovative and constructive dialogue, and collaborative working, throughout the business communities of the North West.

13 August 2010