Which Leps are developing resilient local economies?

Ed Miliband recently announced plans to devolve more resources to cities and local areas including support for the 39 local enterprise partnerships (Leps) – the key vehicle tasked with local economic growth.  However, recent work by the Centre for Local Economic Strategies (CLES), highlights how Leps have some work to do before short term economic growth priorities translate into longer term social improvements.

In an investigation into the economic resilience of the 39 Lep areas, the report reveals that many lack a social focus and have generic plans and narrow perspectives in terms of the inputs needed for economic and place success. In short, many Lep areas lack long term resilience in the face of ongoing and future social, environmental and economic challenges.

The work, which uses a variant of the CLES resilience model, ranks all 39 Leps according to their ability to adopt a ‘whole place’ approach, which advances both economic and social growth.  They do this by assessing the strengths of networks between public, private and social sectors and how far social priorities – as well as economic ones – are met.

The work reveals that most Leps have a short-term narrow economic growth focus, overly driven by ideas that an ‘economic tide will lift all boats’, or ‘trickle down’.  For CLES, a resilient local economy does not just create business growth and private gain, but it also strengthens local economic infrastructure, builds enduring social and civic institutions for the future and helps provide a decent standard of living for all.  Leps can also be used as part of the process of public service reform.

But the analysis found that many Leps are failing to build this form of resilience.  Using a four point scale (resilient, stable, vulnerable, brittle) the work reveals that, of the 39 Leps, only eight take a resilient ‘whole place’ approach.  These areas have good economic and jobs performance alongside decent inputs from the wider social sector and small business, and a significant focus on local social issues.  Nine areas were defined as brittle – with poor performance, a narrow Lep composition and lack of focus on social issues.

The work analysed the composition of Lep boards based on the level of representation, from the public sector, community and voluntary sector and from small and medium size enterprises (SMEs) – a key source of locally rich jobs. On average, only 30% of the private sector composition of Leps came from the SME sector.  The report showed that 56% of Leps had at least one community and voluntary social sector representation on its board, with the Marches Lep having the largest social sector representation.  CLES also identified that in the proposals to allocate European funding to social inclusion, no Lep had more than 50% of funds allocated to social inclusion projects, with Liverpool the highest at 34%.

The work also found that many of the Lep strategies are generic.  Recently the government wrote to all 39 Leps saying that their EU structural and investment fund strategies were too ‘generic’ and should be made more ‘distinctive to local areas’.  This is a reflection of the narrowness of the Leps.

The government is partly to blame for this, as it has been too prescriptive, tram-lining the composition of the Leps and detailing what should be contained within their plans. Furthermore, cuts to local government and public sector more generally has served to reduce capacity and hollow out knowledge.  Economic development staff have been made redundant and knowledge and skills have been lost.  As such a number of private consultancies have been used, often working on more than one Lep area.

Social issues, standards of living and poverty have hitherto not been a primary focus for many Leps – but for local economic resilience it is essential.  Addressing poverty and improving the lives of local people is what economic development should be about. Social progress should be seen as both an outcome and an input to economic success.  A resilient approach to local economic development is about appreciating how developing skills for the future, addressing social issues and building people’s self esteem are inputs to economic success, empowering them to grab employment opportunities – or even create their own job.  Without these social inputs, local economies are brittle and not resilient.

For greater local resilience, Leps and wider partners need to have greater flexibility to move beyond economic growth and job creation, addressing social issues and poverty.  Leps must build local economic resilience.

•  A full copy of the report can be downloaded from CLES here