The business of citiesThe private sector, Local Enterprise Partnerships and growth

Nye Cominetti and Neil Lee

The project

• The Government has overhauled economic development

• Business is at the centre of the new model: But how is that working?

• This project aims to – • Understand the implications of business leadership• Question - Are LEPs working?

The overhaul of economic development

• New institutions: RDAs to Local Enterprise Partnerships.

• New funding:• RDAs: £2bn pa.• LEPs: access to around £3.5bn over five years

(2011-16).

• New approach: private sector led

Local Enterprise Partnerships and Enterprize Zones

Local Enterprise Partnerships

• Task: promote private sector jobs growth.

• Coverage: 39 LEPs in England (vs. 9 RDAs). Made up of LA boundary areas; some overlap.

• Size: most have between 0.5m and 2m residents.

• Structure: must be business-led. Half board members from businesses with business person as Chair. Small secretariat to support.

• Funding: Can compete for centrally allocated money. Limited capacity fund.

• Legal status: no statutory status, in most cases no legal status either.

LEPs are very different

Population change, 1990-2010

(ONS, mid-year population estimates)

…and face different challenges…

Skill levels among the local population (APS, 2011)

…and have different resources

RGF allocations per capita in rounds 1 and 2 (provided by BIS)

Is resource matching need?Little correlation between RGF allocations and reliance on public sector

Private sector leadership

“Bring local business and civic leaders together to provide the vision and leadership to drive sustainable economic growth and create the conditions to increase private sector growth”

Lord Heseltine, 2012

•LEPS must be chaired by a business person

•At least half of members must be from the private sector

Business leadership of place

• Does it work? Is it a good idea?

• What do businesses members actually do?

• Why do businesses get involved? What keeps them interested?

• What conclusions can be drawn about different businesses - size, sector, geography?

Evidence from past examples of business leadership

• City Growth Strategy, 2001-06Criticism: businesses drifted away when clear

they wouldn’t benefit directly

• Business Improvement Districts, 2004-Criticism: businesses given too much power

over areas – little accountability

• Urban Development Corporations, 1987-Criticism: undervalued role of public sector

Transformative impact on area with little accountability

Methodology

• Primary evidence: 15 in-depth interviews with business members across 3 LEPs

• Literature review of evidence from other examples of business leadership of place

Evidence from LEPs

• Businesses back LEPs. They prefer them to RDAs

• Businesses are motivated mainly by a desire to help their local area

• LEPs have successfully attracted high quality board members

• LEPs facilitate sub-regional working

Evidence from LEPs

• The clock is ticking: businesses are impatient to see action on the ground

• Smaller businesses under represented

• Accountability is a problem, though varies by LEP

Recommendations: The Government needs to back LEPs

• Reform the RGF, and add further rounds. LEPs to be given more control

• Increase participation of small business in LEPs

• Increase capacity fund further

• Clearer accountability processes