21 May 2013

Another guest post today in the David Bailey mini-series! This post is about the abolition of Regional Development Agencies in England - and their replacement with 'Local Enterprise Partnerships'...

After Regional Development Agencies were scrapped by the Coalition government in 2010, smaller scale Local Enterprise Partnerships (LEPs) were set up – effectively as partnerships between local authorities and business.

But those LEPs are now suffering from a lack of confidence, confusion and short-termism, the all-party House of Commons Business, Innovation and Skills Select Committee warned recently in a hard hitting report which is well worth a read (you can read it here). In particular, the funding of LEPs was sharply criticised in the Committee’s report, which argues that this undermines efforts to revive the economy. LEPs have each been offered £500,000 over two years, after the government bizarrely initially failed to allocate any funding at all. But LEPs must first find ‘matched funding’, usually from very cash-strapped local authorities, and the allocation process to LEPs anyway takes no account of different needs, the report stresses:

"Different LEPs face very different investment barriers. This makes a one-size fits all approach to their funding misguided; the minister (Michael Fallon)… failed to convince us otherwise when he appeared before us. In the future, the Government should consider funding allocations on a case by case basis. The Committee urged ministers to set out funding for LEPs all the way through to 2020, to ensure they can drive “long-term growth”.  The Committee’s Chair, Adrian Bailey, stated that “to do this, they require the confidence to make long-term investments. The current funding commitments fail to provide this”.

He is quite right, and this is something I have been banging on about since LEPs were hastily set up back in 2010. It’s good to see the Committee taking on board some of our arguments on this (indeed evidence presented by myself along with Gill Bentley at the Birmingham Business School with the Regional Studies Association - see here - was quoted in several places in the report).

The BIS Committee report also questions why responsibility for LEPs was spread across two different ministries – business and communities – a situation that had led to “confusion”. Just one minister should be responsible for them, it states. That’s quite right too, and goes back to a ‘Yes Minister’ style turf war between BIS and DCLG when RDAs were scrapped and LEPs created when the coalition government came in. Furthermore, MPs questioned whether the government had been too “hands-off” by leaving LEPs largely to their own devices (for example, they were created in a bottom-up way and several – including that in Birmingham – fail to match functional economic geography which was supposedly a key reason for setting them up in the first place).

The Committee argues that the government should from now on take a more active approach to monitoring LEPs and ensure that value for money is being achieved. That’s a key point – if LEPs take on new responsibilities as is envisaged in the Heseltine Report their performance and use of taxpayers’ money must democratically accountable. At the moment this is a key weakness.

Overall the BIS Committee’s report is hard-hitting and spot on. The All-Party group has done a very thorough job in examining how LEPs are developing and the barriers to them supporting growth, and makes some important recommendations as to how LEPs can be charged up to deliver growth. The government needs to respond to this well-laid out critique.

Professor David Bailey works at Coventry University Business School and is an Editor of the journal Regional Studies