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Survey shows business leaders ready to walk away from Local Enterprise Partnerships unless real progress made soon

Tom Phillips

31 October 2012

With the publication today (31 Oct) of the Heseltine Review, a new report from The Work Foundation warns that time is running out on business involvement in Local Enterprise Partnerships (LEPs), the government’s flagship measure for rebalancing the economy. A series of interviews with business leaders conducted as part of the report indicates that many are ready to walk away unless the government gives LEPs real powers and finance. This underlines the importance of the Review’s expected recommendation to boost LEP powers.

Drawing on interviews across three LEPs, the report finds that the overwhelming majority of business leaders surveyed are ready to reconsider their involvement unless considerably more progress is achieved, with some giving a timeframe of as a little as six months. While there was a consensus in favour of LEPs as vehicles for economic development, half of those surveyed expressed acute frustration over slow progress.

The report highlights various concerns around the operation of LEPs. While the recent announcement of core funding is a welcome move, it is not enough for LEPs to be fully effective, and a lack of formal powers is further hampering progress. The report also identifies a lack of involvement from small to medium sized businesses (SMEs), and warns that this could mean LEPs struggling to target projects at smaller businesses – which account for 60 per cent of private sector employment in the UK.

Nye Cominetti, report author, said: “The government has committed itself to involving business in rebalancing the UK economy through LEPs, but business leaders have been frustrated by the lack of progress. There can be no doubt that LEPs face tough challenges - creating private sector jobs during a recession is no easy task. The announcement of core funding is a very welcome move, but if LEPs are to drive growth across the country, they need more power and more funding.

“Our research also identifies problems with underrepresentation from SMEs. This type of company employs the majority of private sector workers in the UK, so it is essential that SME leaders are brought on board with a view to targeting projects at the needs of smaller businesses. These business leaders are also likely to be particularly attuned to the strengths and problems of their areas.”

The report calls for measures to tackle the lack of funding and formal powers and to encourage the involvement of SMEs. At current levels of funding, LEPs should be able to employ three to four highly qualified staff, but this is unlikely to be enough given the size of the areas involved. The report recommends further increases to core funding and calls for LEPs to be established as legal bodies with real accountability. Further key measures include reform of the Regional Growth Fund, with LEPs given a stronger role in delivering this programme.

LEPs should also adopt measures to encourage SME involvement. With time pressures identified as a major hurdle for SME leaders, LEPs should consider compensating small business members for their time. Government may also want to explore introducing a requirement for LEPs to achieve greater representation from small businesses. 
                
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Notes to Editors:

1. Report authors, Nye Cominetti, Lizzie Crowley and Neil Lee are available for comment, interviews and briefings.

2. The Business of Cities: The private sector, local enterprise partnerships and growth is available at www.theworkfoundation.com or from the media team in advance.

3. The report is part of Cities 2020 research programme which is dedicated to looking at policy for successful cities in 2020. The programme is sponsored by HEFCE, Bristol City Council, the University of Essex and Southend-on-Sea Borough Council.

4. The Work Foundation aims to be the leading independent, international authority on work and its future. The Work Foundation is part of Lancaster University – an alliance that enables both organisations to further enhance their impact. www.theworkfoundation.com