Written evidence submitted by Furness
Enterprise
1. INTRODUCTION
Furness Enterprise is a local enterprise partnership
of the public and private sector set up in 1991 as a response
to the massive loss of jobs in the Furness area, SW Cumbria, from
the local shipyard and other key manufacturing employers. Its
focus is on the regeneration of the Furness economy through job
creation, job safeguarding and helping local unemployed people
to access jobs. This activity is very challenging in a deprived
community (Index of Deprivation 29) with high levels of worklessness,
particularly with significant numbers of Incapacity Benefit claimants.
Furness is an Assisted Area and consequent grant schemes such
as Grants for Business Investment have enabled Furness Enterprise
to help businesses create some 9,700 jobs, safeguard 3,500 jobs
and help over 1,000 unemployed people access jobs. Its focus on
"people" based regeneration has been very effectively
complemented by "place" based regeneration carried out
by the local Urban Regeneration Company, Barrow Regeneration,
and the local authorities. It is this highly successful approach
to regeneration which won the Barrow area the only "Green
Flag" award in Cumbria in 2009 for its work on worklessness
where improvements in the infrastructure of the area, eg new business
parks, was integrated with incentives to business to create new
jobs and help given to unemployed local residents to get jobs.
Recently the House of Commons Business, Innovation
and Skills' Select Committee in its report "The New Local
Enterprise Partnerships—An Initial Assessment" identified
Furness Enterprise as an organisation which offers a track record
of successful co-working between local authorities and business.
2. SUMMARY OF
SUBMISSION
Regeneration in the new era will depend very much
on private sector job creation and the involvement of the private
sector. While the new "localism" approach of the Government
is welcome, the ending of the Grants for Business Investment scheme
(GBI) will severely impact the ability of deprived areas, especially
Assisted Areas, to create private sector jobs. Its withdrawal
will also be further disincentive to businesses to be involved
in regeneration.
Enterprise Agencies have an important role in providing
support to enterprises within functional economic areas such as
Travel to Work Areas.
3. REGENERATION—DETAILS
OF SUBMISSION
We welcome the Government's commitment to localism
and potentially providing local people, authorities, and businesses
with the means to drive growth and improve the social and physical
quality of their area.
The British State is considered to be one of the
most highly centralised within the advanced industrial economies
and because of this, any Government finds it very difficult to
accommodate local differences which are critical to the successful
pursuit of regeneration. This centralising approach brings with
it the "dead hand" of excessive bureaucracy which stifles
innovation and enterprising thinking. Regeneration becomes "process
driven" powered by a tick box mentality. Hence an attitude
of "localism", if matched by an appropriate level of
resources will be much more effective at solving local regeneration
challenges and maximising local opportunities.
However to make a success of a "localist"
based approach to regeneration there has to be a relevant level
of resource consistently applied recognising that some areas regenerate
easier than others due to such factors as good communications
and access to markets attracting new investment. Other areas find
it difficult to adjust to major structural changes in their economic
base because of the scale of the change involved, and the lack
of inbuilt success factors in the local economy such as a high
business density, good skill base and good access to markets.
This has been recognised to a certain extent in the way that certain
areas have been designated Assisted Areas, ie. needing additional
support.
The future of regeneration activity in the UK given
the major cutbacks in public funding and the demise of Regional
Development Agencies will depend on private sector job creation.
Particularly in those deprived areas which have suffered a major
loss of employment in a key industry such as shipbuilding, coal
mining or steel, much regeneration has depended on the public
sector both for physical regeneration and job growth. To replace
public sector job losses in these areas, due to public sector
expenditure reductions, with private sector jobs would be very
challenging even in buoyant economic conditions. Hence it is very
hard to understand why the Government has eliminated in England
the Grants for Business Investment (GBI) scheme designed specifically
to encourage investment and job growth by all sizes of companies
in Assisted Areas and small to medium sized companies outside
of Assisted Areas. Over the last six years, GBI and its predecessors
have provided £428 million in grants to 1,787 projects in
order to support £3.9 billion of investment helping to create/protect
77,000 jobs in the English Assisted Areas alone. Scotland and
Northern Ireland retain their versions of GBI and Wales their
modified version.
It is extremely challenging in any case to get the
meaningful involvement of employers and business interests in
regeneration activities. Businesses particularly small to medium
sized enterprises feel regeneration processes are dominated by
public sector interests and delivery mechanisms that operate slowly
and stifle initiative, enterprise and risk taking. Businesses
are interested in focused interventions when they can see a clear
and immediate benefit. The GBI scheme provided a clear regeneration
mechanism focused on business needs and designed to encourage
them to invest in plant and jobs particularly in the Assisted
Areas. Getting businesses involved in regeneration will be made
even more challenging in difficult economic conditions and with
the lack of incentive previously provided by the GBI scheme. The
Smith Institute's "Rebalancing the Economy: prospects for
the North" published on 14 March 2011 called for greater
support for declining industrial areas, including a new Grant
for Business Investment scheme, to provide a simple way of supporting
firms in areas of economic disadvantage, in a way compliant with
EU rules on State Aid. The newly formed Local Enterprise Partnerships
(LEPs) will likewise struggle to get business engagement unless
they can provide clear benefit to the business community.
The new Regional Growth Fund (RGF) is seen by the
Government as replacing the incentive to invest to businesses
in deprived and Assisted Areas currently dependent on the public
sector. However RGF is a much less flexible, less attractive,
less certain scheme for the vast majority of businesses, particularly
small to medium sized ones. For example the minimum under the
Regional Growth Fund is £1 million; the minimum grant under
the GBI scheme is £10,000.
In summary, with the Government's "new"
approach to regeneration, while its emphasis on "localism"
is welcome as is the focus on private sector job creation, it
is extremely difficult to see how private sector led regeneration
will occur in deprived areas. One clear action the Government
could take to signal its understanding of this difficulty would
be to restore the Grants for Business Investment scheme. Regeneration
of areas with high worklessness can only be solved by the supply
of jobs that can be accessed, allowing for any appropriate re-skilling
and up-skilling. Those jobs in the new era of regeneration will
depend very much on the private sector.
The Government's 10 March 2011 "Coalfields Why
a Special Approach is Still Needed" policy paper highlighted
the key role enterprise agencies can play in supporting smaller
enterprises in the new business improvement landscape. Together
with the Federation of Small Businesses, the enterprise agencies
are a reliable route for business support which needs to be adequately
resourced, especially in disadvantaged areas.
March 2011
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