Decisions, decisions
Are we expecting too much from local enterprise partnerships? Sarah Longlands and Austin Macauley examine what it will take for them to translate political rhetoric into reality.
Some people are wondering whether they’re local, about enterprise or even partnerships.’ Patrick McVeigh senses there’s a certain amount of cynicism about local enterprise partnerships around the country.
Speaking at an Enterprise Partnerships Forum discussion in Manchester this month, the MD of Shared Intelligence says that even at this early stage in their development, a gap is emerging between political rhetoric about LEPs and the reality on the ground.
The feeling among participants could be summed up in one question: exactly how can LEPs deliver with no resources, power or mandate? But, as anyone who’s worked with LEPs will tell you, you really can’t generalise about them. For some, says Mr McVeigh, historical funding and established networks have allowed them to hit the ground running and they are, unsurprisingly, making the most progress.
However, many others are starting from scratch in the toughest environment imaginable. ‘We need to recognise that LEPs are working in an environment that’s in a state of flux,’ Mr McVeigh says. New government policy, funding streams still coming to an end, a struggling economy, public sector cutbacks: LEPs have got to deal with all this and more, and sustain private sector interest along the way. He argues they need time to complete this set-up phase – a point echoed by others throughout the discussion.
But, from the relative disarray that followed the government’s announcement on local enterprise partnerships last year, LEPs are starting to finalise their geographical structures and establish their boards. The majority of the 35 LEP areas have had their boards recognised, have a chair in place and can start to turn their proposals into action. Just how ‘local’ those proposals are is already the subject of debate and analysis.
Despite far from ideal circumstances, the advent of LEPs presents an opportunity for local authorities to work together across administrative boundaries in order to explore new ways of working and new ideas for economic development in the future. As the immediate hurdles of process, administration and short-term resourcing begin to settle, there are a number of important considerations with which to grapple.
ENSURING ALL VOICES ARE HEARD
The last few months have seen many areas go through the process of attempting to fill the seats on their LEP board. Many have adopted a formal process for this, advertising for interested parties and interviewing to select the best candidates for the job. Other areas have built on existing partnerships and networks and used these as a basis from which to develop the LEP.
However, whatever method chosen, the quality and diversity of that representation will underpin the performance in the future. Government preference has been on the private sector and LEPs have duly obliged with senior representatives from business, a great many of which are from global businesses keen to play a role in the future direction of the area.
While this is to be welcomed, it is important that other parts are represented or at least included in the discussion, particularly the interests of small and medium sized businesses, mirco-businesses and social enterprise. As well as chambers of commerce, could there be a role for organisations like the Federation of Small Businesses and other trade organisations?
Similarly, if LEP board membership consists of the usual suspects, there is a potential limit on the scope for new ideas, discussions and debates, all of which are crucially important at a time when creative thinking and imagination are vital to overcome the challenges of public sector cuts, low growth and lack of investment.
At the Manchester discussion many participants pointed to the lack of women on boards and the absence of voluntary and community sector representation. LEPs should aim to have a diverse membership which allows for good representation of interests across an area while also providing the opportunity to bring a variety of ideas, opinions and inspiration to the table.
Without diversity they risk minimising the potential for the exchange of ideas knowledge and experience and could end up remaking the mistakes of the past.
ECONOMIES OF SCALE
LEPs bring us back to an age-old debate about the scale at which to undertake economic development and regeneration. The creation of regional development agencies was an attempt to provide a level of governance that would enable decisions about infrastructure, transport and housing to be made on a more strategic basis.
However, they were criticised for their lack of accountability, which was undermined by the failure of the elected regional assemblies. LEPs tend to be sub-regional or city-regional, an interesting hybrid which is not quite regional and definitely not local.
Yet there are vast differences across LEPs. Joined up working ought to be easier in areas such as Greater Manchester and across the Leeds city-region, thanks to both the geographical area involved and the long history of joint working. But, as some participants at the Manchester discussion asked, can the same be said for the Kent/East Sussex/Essex LEP? Is it possible to deal with competing priorities over such a vast scale?
Powers may be devolved directly from central government as well as drawn up into the sub-region from local government. The scale at which LEPs operate and direct delivery will become increasingly important as they start to gather powers and they’ll need to ensure their decision-making process is properly plugged into local democracy and they can be held fully accountable.
As well as representative democracy, LEPs will need to be mindful of another aspect of the government’s localism agenda which aims to encourage participative democracy, the emerging neighbourhood planning process which is currently being piloted in 17 areas across the UK. Neighbourhood planning encourages communities to make a stand over what they want to see in their localities in the future.
In some areas, particularly where there are pressures on transport and housing, the views of the LEP on growth, housing and infrastructure may not reflect the views coming out of the neighbourhood planning process, for example, on issues such as housing growth areas and transport and energy infrastructure.
The government is interested in giving powers to LEPs, for example on spatial planning, business support, skills and employment and transport. Any devolution of powers from central government is to be welcomed because it helps localise decision making. But more difficult to resolve is where powers flow in the opposite direction – up from local government to an unelected organisation such as the LEP.
Any decisions made must be properly linked in to local democratic structures of representative democracy to ensure LEPs are fully accountable.
PURPOSE AND OBJECTIVES
One of the big challenges for LEPs over the coming months will be establishing a clear focus, particularly at a time when there are many challenges and fewer organisations and people to tackle them. Central government has set out its views on the purpose of LEPs ‘to provide the vision, knowledge and strategic leadership needed to drive sustainable private sector growth and job creation in their area’. It also expects LEPs to be strategic rather than delivery led.
Their purpose and approach will vary according to the particular characteristics of each area, although a number of common themes are beginning to emerge. A quick analysis of the top priorities for LEPs at the current time based on available information reveals they currently centre around provision of enterprise and business support; improving infrastructure; improving skills; and jobs creation.
These aims reflect government aspirations and are broadly similar to previous objectives of RDAs and local authority economic development departments and, unsurprisingly, reflect the priorities of previous regional and local economic strategies. What is not clear is how LEPs will work differently from RDAS and previous sub-regional partnerships (often largely based around multi-area agreements) in order to make tangible progress.
Without a clear strategic purpose LEPs risk becoming distracted by the many and emerging issues that affect the ability of a locality to grow and develop. It is important they focus on the key priorities for their area and assess where it has a competitive edge – what are the locality’s USPs and how can partners work together to exploit them?
QUICK WINS AND PRIORITISING JOB GROWTH
There is great pressure on LEPs to create jobs in their areas, both as a response to recession and to mitigate the impact of public sector job cuts across the country. All are keen to achieve ‘quick’ wins which provide new opportunities for employment and investment in order to help kick-start regional and national growth over the next few years. For some areas, growth may be more likely given their historical competitive advantage, quality of infrastructure, proximity to markets or inherent high levels of skills and education.
Initiatives such as the Regional Growth Fund and particularly enterprise zones will be useful tools in supporting job growth in LEP areas and provide additional options in terms of attracting investment and encouraging new enterprise.
For other areas, especially those that have historically found it more difficult to compete, the challenge will be significantly greater, particularly without an enterprise zone. LEPs should not only be about growth, but also about resilience and the ability to lock in the benefits of growth so that local supply chains, the labour market and investment opportunities all benefit, a point highlighted in research by Localise West Midlands (see xxx).
Where growth is difficult, the LEP will have to think much longer term to tackle underlying economic weaknesses such as poor skills and low levels of entrepreneurship.
Partnerships should be prioritising growth which helps develop place resilience – i.e. supporting and strengthening local supply chains, diversification, links to external markets and understanding the value that the social and public economies can bring to an area. Although public sector expenditure has been reduced, LEPs can play a role in maximising the impact of what expenditure there is so that it is not only spent efficiently but also effectively by addressing wider policy goals such as social and economic priorities.
KEEPING THE PRIVATE SECTOR ON BOARD
How do you keep the board together when there’s no money and no power?’ – this opening gambit during one group’s discussion in Manchester about the challenges for LEPs sums up the concerns of many. Government talks about LEPs being private sector-led, but where are the incentives for businesses to stay the course?
Public and private sector partners come to the table with different demands and expectations and even in areas with a long history of partnership working, a new culture needs time to develop on the board. No matter how committed those from the business world are to making a LEP work, without the necessary transfer of powers from government to do the job, how long before frustration sets in?
If LEPs have little more than an influencing role it’s difficult to see how they can have real impact, particularly in places still grappling with long-term structural issues.
Opening the Manchester debate, Ian Hamilton, assistant director for BIS North West, said LEPs were just one means of rebalancing the economy, albeit a ‘large part of it’. His own organisation in many ways mirrors the challenge for LEPs. Set up following the winding down of RDAs and government offices, BIS North West and its counterparts across the country have little in the way of budget and plan to ‘influence development and delivery of policy’.
He was quick to point out they’re ‘not RDA lite’. Given the Northwest Development Agency had 450 staff and BIS North West will have eight staff, few will argue that point.