Concerns have been raised that the proposed new local enterprise partnerships (LEPs) may be too small to carry enough influence.
The worries were aired after the government announced that, following the closing date for submissions, some 56 proposals for LEPs have been received.
LEPs have been introduced by the government to replace the nine Regional Development Agencies in England, and the government now has to select the successful applications.
The partnerships are to be comprised of both private and public sector groups, local councils and local businesses, and are intended to provide support for enterprise in the regions.
LEPs will have the freedom to generate and direct their own business-growth agendas, independently of Whitehall.
Commenting on the proposals submitted, Eric Pickles, the Communities Secretary, said: “These 56 local enterprise partnership proposals are just the beginning of a new radical way of delivering prosperity and rebalancing the economy.
“The secret to the success of local enterprise partnerships will be working on the basis of local economic geography – gone are the artificial political regions of RDAs – as this will better serve the needs of local business.
“Local enterprise partnerships are a way of tying council and business interests together, and creating the conditions for business to thrive and prosper.”
The Business Secretary, Vince Cable added: “It is clear that there must be genuine partnership between business and local government and that local enterprise partnerships should be practical bodies for promoting enterprise, not talking shops.
“Trade and investment promotion, sector leadership, innovation, business support and access to finance will in future be led nationally, though with devolved local management in many cases.
“This still leaves huge scope for local initiatives to promote enterprise. The outcome will vary just as local economic priorities differ across the country. In some areas, there might be a focus on skills. In others, local enterprise partnerships may help set priorities for planning and infrastructure decisions. The key is that these partnerships are built from the bottom-up and will have the flexibility to determine their own agenda, rather than have it handed down to them by Whitehall.”
However, at a hearing of the Business, Innovation and Skills committee, Sir Roy McNulty, chairman of the West Midlands RDA, questioned whether the possible proliferation of LEPs might be counterproductive.
He said: “I can’t imagine that a LEP would have significant clout if you had a population unit below one million and I know at least one of the proposals that has gone in is for a unit of significantly less population.”
The sentiments were echoed by Paul Nowak of the TUC. He told the committee: “We are concerned about possible fragmentation, particularly if we are talking about 40, 50, 60 LEPs.
“We are worried about LEPs having the critical mass that they need both in terms of scale and of expertise to actually be able to do the functions the government wants them to do.”
The Institute of Directors (IoD) also expressed unease over the possible effects of “parochialism”.
The employers’ group said: “All LEPs must be of sufficient geographical size to be able to exercise a strategic bearing on a local economy.
“At present the IoD is very concerned at a new wave of parochialism that has emerged through the LEP bidding process. Additionally, (and as stated in the original letter from both the Secretaries of State to local authorities) no LEP must be constructed of less than two upper-tier authorities.”
It is expected that business groups will be pressing the government to pin down those areas of business activity that will fall within the province of the LEPs.
The Forum of Private (FPB), for example, has called for the LEPs to focus on training provision as well as on business guidance.
In addition to fostering economic growth and providing local infrastructure improvements, many smaller employers want training to be one of the main remits of LEPs.
The FPB’s new Training and Skills member panel survey asked members which elements of business support they would like LEPs to deliver.
In total, 56 per cent want them to provide local, named advisers who can help with training needs.
Half (50 per cent) want the new bodies to integrate training providers with business support, and 46 per cent called for regular consultations on local training and business support issues.
Phil Orford, the FPB’s chief executive, said: “The danger is a return to the parochial approach to business support of the 1980s and 90s. Close-knit networking is not enough and prescribed, vaguely-defined business support is not practical or cost-effective.”
He added: “We want business owners to be armed with the full information they need to exercise proper choice. We simply want LEPs to provide a useful service that business owners want.
“Impartial guidance on the real support that is available would be one such service. Helping businesses to access the right training would be another, particularly as firms seek to recruit and grow.”
The IoD, on the other hand, is pressing to see a marked emphasis on transport, infrastructure and planning by the LEPs. Other activities could be carried out by the partnerships, the IoD insisted, but a clear and narrow focus would deliver more than broad, complex objectives.
Miles Templeman, the IoD’s director general, said: “We believe that each proposed LEP should only go ahead if it has critical mass in terms of size, is supported by the vast majority of business bodies based locally, and focussed on the issues of transport, infrastructure and planning development.
“If these conditions are not met by bids and business is not given a central role in the governance of each new LEP, the government must be willing to say no on a case by case basis.”