Local Enterprise Partnerships – we have to get this right

IPPR North, business and industry, devolution and localism, local government, regional issues

Author(s):  Ed Cox
Published date:  22 Sep 2010
Source:  Public Servant

With cuts looming, private sector growth is more vital than ever but regional economic growth could be hamstrung for another generation if LEPs don't deliver.

Last week saw the deadline for applications to form Local Enterprise Partnerships, the new bodies destined to replace Regional Development Agencies and be charged with promoting economic development and private sector jobs growth. In all, government received 56 proposals from around the country and ministers are reporting that they are impressed by the level of innovation and radicalism contained in many. But with a large number of proposals based around rather small local geographies it is hard to see how this praise extends beyond a select few.

The drive to create Local Enterprise Partnerships is based on the idea that local economies develop around a 'natural economic geography'. The size and nature of such geographies is clearly open to debate as the boundaries of different markets – labour, housing, commodities – are fuzzy. But the government's expressed desire is to move away from the artificial political units that were the English regions to something more relevant to business and commercial interests.

In the North East, for example, there are five separate proposals which in simple terms look too small and factional to make good economic sense and will once again leave the region trailing as Greater Manchester and Leeds steam ahead.

There may well be a case to make for Tees Valley or Newcastle Gateshead as centres of employment, but their hinterlands are much wider than their LEP boundaries suggest and their connections to the wider regional economy are too important to overlook. The prospects of Sunderland & South Tyneside, Northumberland & North Tyneside or County Durham going it alone in the context of the national – let alone global – economy are bleak which is why, no doubt, business interests have rallied around with a hasty plan to create a separate non-LEP North East Enterprise Partnership. If the North East is going to punch its weight in climbing out of recession and dealing with public sector dependency then at the very least it needs size and scale.

This problem extend to other areas of the country where the debate about natural economic areas seems to have been superseded by political rivalries ultimately reducing LEP geographies to the smallest politically workable unit.

So why such a mess? The roots of the problem lie in contradictions at the heart of the coalition government's plans. While it wants LEPs to cover natural economic geographies, there is an ideological loathing of all things regional. In the North East this poses a conundrum as the most 'natural' economic area of sufficient scale probably is the region. It would appear that ideology has won the day as North East local authorities were warned off submitting a whole North East proposal. But rather than exposing and challenging this contradiction, local leaders exacerbated the problem: one by one, breaking away from a more meaningful economic geography. Ironically, the five LEP proposals now presented to government are probably more artificial political units than the region ever was at a time when a show of unity is probably the region's best hope of recovery.

This week ippr north published its own four tests for Local Enterprise Partnerships which ask other questions such as whether they are demanding the appropriate powers and functions and how far they have addressed issues of governance and accountability, but if they cannot even pass the first test of being of suitable scale, regional economic growth would appear hamstrung for another generation.

So what will happen now? If government sees sense it will surely send many proposals back to the drawing board: knocking together the heads of those politicians who appear unable to share the same room and strengthening the resolve of business leaders to develop economic plans at the scale that their economies deserve.

In the North East, as a compromise, and to appease those who fear the ghost of the Regional Development Agency, Tees Valley could perhaps do its own thing, but with strong 'cross-border' working. But now is the time to bury differences, hold government to its commitments to decentralised decision-making through leading not pleading, and do the right thing for the people and businesses of the North of England. With cuts looming, private sector growth is more vital than ever, we have to get this right.


Our people

Ed Cox, Director, IPPR North