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Can the new Local Enterprise Partnerships (LEPs) deliver economic growth?

User Avatar Blogger . 05/11/2010 15:29:34
Birmingham City Council House
By Graham Pearce, former Professor of Public Policy and Management, Aston Business School

The task of boosting economic growth and tackling regional inequalities could be undermined by plans in the Coalition Government’s Regional Growth White Paper to transfer powers to sub-regional consortia of councils and businesses working through Local Economic Partnerships (LEPs).

There are considerable uncertainties and potential risks, I believe, arising from the current reshaping of responsibilities for securing sustainable economic development at the sub-national level. My conclusion, in a nutshell is this, below. And I invite you, the reader, to give your comment in a bid to gauge, as a region, our collective reaction:

• LEPs will replace England’s nine Regional Development Agencies (RDAs) but collectively will have far smaller budgets. The scale of resources available to RDAs has not been sufficient of itself to make a significant impact on regional economic disparities and without political clout and some financial incentive LEPs could prove ineffective.

• The loss of RDA funds will be felt most keenly in Northern and Midland regions and, despite reassurances that resources for economic development will be distributed in favour of the less prosperous regions; reductions in public expenditure will exacerbate the longstanding economic disparities between the Greater South East and the rest of the country.

• The Government expects LEPs to tackle a range of policy issues that contribute to creating the right environment for business and economic growth. But the task of effective partnership working requires a considerable investment of time and energy. Moreover, the new Partnerships will be reliant on multiple funding streams administered by a plethora of government bodies, whose own budgets are threatened. Their room for manoeuvre will be severely restricted.

• LEP boundaries should reflect socio-economic realities, rather than administrative units. Nonetheless, the willingness of authorities to put aside local interests and provide a collective voice on issues that have a strategic dimension cannot be assumed. As the current bargaining around LEPs has revealed, parochialism remains a potent ingredient and rather than ‘natural’ economic areas LEPs are being defined according to arbitrary administrative boundaries. There is also the risk of unproductive ‘place marketing’ between LEPs to attract mobile investment and jobs.

• There is an underlying assumption that the key groups representing business are both willing and able to engage in LEPs - factors that are highly variable across business organisations and geographical areas. As volunteers, business partners do not want to be part of bureaucratic ‘talking shops’. Nonetheless, granting business interests an equal status with local authorities in LEPs may lead to undue prominence being given to economic considerations and may be incompatible with local authorities’ remit to deliver sustainable development in a public and accountable setting. As such they are likely to replicate the weaknesses of legitimacy associated with the RDAs and unelected regional assemblies.

• LEPs are expected to provide strategic leadership for the coordination and integration of sub-national spatial and investment priorities, where certainty is vital for both private and public sectors. There is virtue in seeking to coordinate such policies to maximise the effectiveness of public and private expenditure but this will depend upon authorities and their business partners demonstrating a capacity to enter into collaborative and long-lasting commitments, with the risk of significant geographical variations. Furthermore, the need for statutory planning across sub-regions is not currently recognised.

• The legacy of economic development knowledge and expertise in the regions, I think, should not be dissipated. Indeed, because there are economic opportunities and challenges that cannot easily be dealt with either nationally or locally, there remains a compelling case for establishing region-wide partnerships of local authorities, business leaders and other key partners to deal with strategic economic issues.
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  • At 16:31 on 03/02/2011,
    John P Fletcher wrote:
    It would be useful to have a post of the LEP boundaries for the West Midlands.

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