LEPs need to shape up?

By David Bailey on Oct 30, 11 09:12 PM in Economics

The Coventry and Warwickshire Local Enterprise Partnership (LEP) came in for some stick recently from the think tank Centre for Cities in a report reviewing the work of the 24 LEPs first approved a year ago.

The report asked whether Coventry's LEP, with its "huge" set of advisory teams including 14 associated focus groups, involving some 160 people, might "add a level of bureaucracy and process that might slow decision-making."

I'm no fan of the decision to abolish the RDAs and replace them with fragmented and resource-lacking LEPs, but feel that this particular criticism is a tad unfair on this particular LEP. Consulting widely in its first year is probably a good thing to do in setting priorities for the Coventry city and beyond, especially if the LEP is to develop a consensual approach to economic development. The think tank seems to miss the point on that.

But where the Centre's report does hit the mark is on the need for LEPs in general to get on with things, as far as they actually can. I'd go as far as to suggest that LEPs probably have another six months or so of goodwill before businesses - especially smaller ones - start to wonder if the LEPs are really local authority dominated talking shops, and start walking away.

Indeed, the think tank noted that "eight (LEPs) have yet to have their boards recognised by government, only two have produced a long-term strategic plan and five do not have a dedicated website".

More action and less talking would help on that front, but that isn't exactly easy when the LEPs have no real resources, limited powers and at best an influencing role. The failure for example to hand powers and resources over skills to the LEPs has been a key mistake in government policy.

The think tank went on to say many of the LEPs have made "limited progress", and some face "mismatches" between spatial geography and the political and economic realities of partnership working across new boundaries.

The Birmingham city region area was flagged up in particular as being split between six separate LEPs, indicating that local politics "prevented the city from establishing a LEP at the optimum scale to influence its growth prospects".

It's something I've been banging on about for ages. Whilst RDAs were criticised for not reflecting functional economic geography, the shape of some LEPs simply reflects whatever political deals could be stitched together locally.

At some point a need to coordinate and join things up again will need to be recognised - whether on planning, cluster policy, innovation or intelligence gathering. And giving LEPs some real powers and the ability to raise finance would help. That in turn could be linked to the willingness of the LEPs to cooperate to get things done at the 'right' local scale.

And that brings us back to the Centre for Cities' report. A key point of the report is that government should look at using funding to "incentivise collaboration at effective economic scales", for example with the government awarding money from the Growing Places Fund to groups of LEPs on the condition that they collaborate on infrastructure decisions at the right scale for cities.

Other key messages from the report include:

  • LEPs should concentrate on overall economic strategy rather than on delivery of specific projects.
  • LEPs have made varied progress so far and this suggests that the impact of the LEPs will also be inconsistent.
  • LEPs that have made very little progress over the last year may well not become effective bodies.
  • With 38 separate LEPs working to different, locally-agreed priorities the risk is that they will not deliver the government's national growth priorities (a point I have been making: LEPs and enterprise zones do not add up to a growth strategy).
  • If LEPs are to deliver the government's growth agenda, they need the right tools. The government should look at devolving further resources, powers and freedoms to capable LEPs operating at the right scale. Think transport, or skills.
  • Local authorities have a key role in overcoming local politics and working in partnership for the benefit of the wider area. (The report is right on this, but as the Audit Commission showed, during the recession relatively few local authorities actually did this. This was, after all, one rationale for the RDAs).
  • Local authorities should ensure that the LEP is an integral part of cross-boundary strategic planning required through the duty to cooperate in the National Planning Policy Framework.
  • The establishment of DCLG/BIS localities structure to "inform, influence and develop policy" suggests that the government may become more involved in supporting LEPs. The Centre reckons that it should "get to grips with underperforming LEPs before it is too late. The Government may need to insist that LEPs that are either too big or too small are reconfigured before further funding is allocated". Again, this is something I've argued for since the outset.
  • The government's 'Growing Places Fund' offers the chance to incentivise the LEPs to produce coherent, deliverable strategies and to actually work together across arbitrary borders, in exchange for funding .

Many of the points flagged up in the report reflect my own concerns raised in blogs here at the Post. The danger from my point of view is that the fragmented, toothless and poorly funded nature of many LEPs undermines the chance to allow local talent to shape economic priorities. The government is, I think, in danger of shooting itself in the foot on this one.

Professor David Bailey works at Coventry University Business School.

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