Saturday, 29 August 2015

What the hell is a Local Enterprise Partnership?

On Wednesday morning I found myself in the Caledodian Club at 8.30am, eating posh biscuits and feeling decidedly out of place in a sea of suits. I was at a seminar, organised by the Westminster Social Policy Forum thrillingly entitled Regeneration and local economic growth in England - innovation, investment and the future for LEPs.
I went to this because I'd wangled a free ticket, and someone on the Just Space Economy and Planning (JSEP) mailing list mentioned it may be interesting, but I had no idea what LEPs (Local Enterprise Partnerships) were. So, in case you are as ignorant as I, LEPs are partnerships between Local Authorities in England and business bodies, which exist for the purpose of promoting economic development. There are 39 of them, and a bit more information can be found here.
LEPs were set up when the Regional Development Agencies were 'burned to the ground' (in the words of one of the speakers) by the Tories in 2012. If you don't know what they were either, they were then non-departmental public bodies set up by Labour from 1998 to promote development - you can find out more here. Significant for me is the London Development Agency, which came into being in 2000 when the Greater London Authority was set up (and we elected Ken Livingstone as Mayor of London) which has now been replaced by the pan-London LEP, nattily entitled the London Enterprise Panel (acronym also LEP).
With a couple of small peeps of dissension, the speakers at the seminar mostly agreed that LEPs are a good idea, and that the private sector is a source of bounty for economic development. Several key themes emerged over the course of the morning:
  1. Flexibility – LEPs are not well defined, so they have the potential to be anything
  2. Purpose – what are LEPs for?
  3. Accountability – what are LEPs up to? In whose interests?
  4. Resources – who pays for it and how is this significant?


In 2012 LEPs were set up on a wholly voluntary basis, with no resources and the expectation that activities would be self-funded by local business and local authorities (LAs). The problems with this are obvious. First, LAs have suffered massive budget cuts, to the extent that because there is no statutory requirement for them to have departments responsible for economic development, many have disbanded them (and consequently lost their expertise) altogether. Second, the types local business which would have money and time available to contribute would only be the bigger ones, who are already more powerful and don't necessarily represent the interests of small local business, and certainly don't me necessarily represent the interests of local non-business people.
Recently, EU money (from the European Structural Investment Fund and the European Social Fund) has became available for LEPs to apply for, with present project funding of between 95 and 250 million per LEP. They have the freedom to pool money from different funds, but significantly it must be 50% match funded from the private sector. This requirement is reflected in the disinterest in the money available from the European Social Fund in for building social housing or retrofitting existing social housing as low-carbon. The returns are low, so because the private sector must be closely involved it is unlikely to happen through the mechanism of LEPs, even though money is available for it.
European law dictates what can and can't be done and the European Social Fund is particularly interested in employment, education and skills. LEPs get the money, they draw up strategies for spending it (although several speakers said that actually spending it is more complicated than it sounds) and ensure that the proposed outcomes happen. The EU prizes delivery and performance above all else, but the majority of LEPs have a permanent staff of under 10 people, so how this actually happens was the focus of much debate.
Keith Burgess from the Federation of small businesses summed it up nicely. Although there are resources from the EU, do the skills and capacity exist to manage these? The LEPs are composed of private interests and local authorities,, with few which include local communities in the development. The UK Government is keen on locally-led growth... but growth for its own sake seems pointless, for whose benefit?


Professor John Shutt suggested the engagement of LEPs, it is hugely advantageous for universities and FE to be key partners, because every LEP is different, all over the UK. Economic restructuring of the city, developing new institutional structures to deliver economic growth at a city-regional scale, which is not an easy task.
Alex Pratt: For the first time in living memory we are sitting down locally to consider local economic imperatives. It’s the first time we’ve got buy-in from local businesses. 50% of the LEPs are Local Authorities. All LEPS are different, but in general there is much more business engagement than there was with the Regional Development Agencies.
Alex Pratt: Delivery is the focus of LEPs, the LEP network was devised in order that 39 separate solutions don’t emerge to solve the same problem. It will not go away soon, LEPs are set in stone (although how soon is soon?). Competition should be between between the UK and the rest of the world, not within the UK.


Baroness Valentine, Chief exec of London First, explained that the Pan-London LEP works closely with London First on the long term economic development of London, focussing on things like HS1 and HS2, the Northern Line Extension. Other cities can learn a lot from the way these have been developed. London needs to invest in transport and housing in order to maintain growth, we have a projected population of 10 million by 2036.
John Shutt echoed this: Place matters, powerful city-regions are important in the global context, cities need to federate with one another in order to be globally competitive. The LEPs need to understand local institutions and economic situation. Place-based issues include leadership and governance locally, institutional restructuring of the LEPs, analysis of assets networks and places with development potential (to do this at a fine enough grain to appreciate the nuances of particular streets requires huge resources – local authorities certainly don’t know this level of detail).
There are problems with overlapping boundaries and places which lie on boundaries in terms of delivery, there needs to be policy in place to drive co-operation between LEPs rather than competition between the regions. London is particularly good at this, elsewhere is less so. Some places are combined authorities, others are not and it is a complex, evolving and contradictory process. Margaret Hodge in her report on the LEPs argued that not much of the money was actually reaching businesses.
Carol Sweetnam gave a run-down of I was particularly interested in Community led local developments, although I had great difficulty finding out about his on the internet afterwards – mentioned an orchard which apparently had regenerated an area, created jobs, community cohesion and all sorts of other things. THANK GOD FOR ORCHARDS.
Alex Pratt was an excellent speaker, very engaging and spoke without slides which was a nice change. In the UK in the length of a lifetime we have gone from being the richest and most powerful country on the planet to on which is £1.5 trillion in debt, with a series of crises on our hands – housing, obesity… what’s happened to us? Part of the problem is centralised economic decision making, and when things are centralised you get sub-optimal outcomes. There has been no strategic influence on the factors which influence production locally. We seem to have all agree that the private sector is the source of all things good. The problem is that the balance is wrong between the short term political priorities and the medium to long term economic priorities. The LEPs will possibly be a step along the way towards solving this, some by choice, some co-erced. We run a nationalised system, eg. skills are nationalised, the national system is ‘dug-in’, and the LEPs have less support than we might like to see ideally. Councillors sometimes see LEPs as a ‘slap in the face’


Professor John Shutt established a core theme when he argued that they organisation around governance, resources and funding has not yet been established. John Shutt raised the question of governance, and noted that resources are required for LEPs to be accountable to everyone else in what they do, and as yet we do not know where the money for this comes from.
Keith Burgess from the Institute of Economic Development said The RDA valuation reports were going to be scrapped, and the Institute of Economic Development has saved them for the LEPs to use. LEPs are intended to be bottom-up. LEPs, what are they going to do and why?
Paul Watson from the FSB: Between 2008-11 95% of people who found a job found a job within a small business or set up a small business. Jobs in small business are jobs, and are also important for social inclusion, they often employ those who find it difficult o find jobs elsewhere. Local Authorities need to be empowered, and small businesses lack trust for Local Authorities. They suspect that LEP money will be used as an easy means of plugging deficits, and they have a poor record when it comes to ameliorating town centre decline. They see consultation as ‘tickbox’, and that LAs don’t take the time to engage in genuine consultation (I have observed exactly this in Haringey). LEPs need transparency, accounts, minutes, members’ interests – otherwise people don’t know what’s going on. FSB could find only 50% with published information. Governance of LEPs should be accountable to SMEs, which are a blind spot for a lot of LEPs. They need to ensure against ‘mission drift’ in which they drift towards becoming mini RDAs. LEPs should be about business support, ensuring local procurement for LAa. Business rstes reforms incentives (Enterprise Areas) are not working.


The problem here seems to be between the scale of the LEP, and the scale of a large proportion of the economic life in an area, which is SMEs. I wondered if there is any mechanism in place to help very small businesses, and those which belong to non-native speakers or those with a lower level of formal education. All in all, it seems there are 39 bodies throughout England who have the potential to bridge the gap between vast institutions which may be a source of money, and the individual business person who lives and works in Tottenham. But there are 59 million people in England. Divided into 39 LEPs that's 1.5 million people each. That's a lot of people for a small, voluntary, business-led organisation to be of much use. Which is probably why I've never heard of LEPs before.

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