LEPs to be stripped of key roles

THE Government is to centralise functions such as inward investment, promoting overseas trade and nurturing high-growth sectors, a minister has said.

Powers currently held by regional development agencies will not be transferred to the Local Enterprise Partnerships that will succeed them.

Speaking at a Northern Regeneration Summit held in Manchester on Monday, Business Minister Mark Prisk said that the regional development agencies had “failed” in their task of closing the gap between the South East and the rest of the country despite a £19bn spend over an 11-year period.

He argued that the boundaries set for many of the RDAs bore “little relation to real local economies” and said the organisations lacked any democratic accountability. As a result, they had been unable to gain the necessary engagement with communities needed for regeneration efforts to flourish.

“Put simply the assumption that the people of Chester and Carlisle share the same economic challenges and priorities is thoroughly misguided and it’s one of the reasons this system is failing to deliver.”

He also argued that RDAs had too often overlapped functions, for instance by having separate teams within overseas cities competing for the same inward investment projects.

“It’s wasteful and completely counterproductive,” said Prisk.

As a result, central government would now pull back policies for promoting inward investment, overseas trade, R&D investment, enabling business support and nurturing high growth sectors to national bodies.

“By leading from the centre will be able to provide the consistency in these vital activities which business needs. And we will be able to maximise the value from tighter budgets,” he said.

The details of the shake-up of economic development policy will be included in a soon-to-be published white paper, but Prisk said that it “distinguish between strategic national needs and local economic priorities”, set out the parameters for LEPS and contain details of how the previously-announced £1bn regional growth fund would operate.

He said that the government had already heard concerns from business that the proposed LEPS could become too lopsided by public sector interests but added that it was “determined that these are genuine partnerships between business and civic leaders”.

“That means that we would normally expect to see equal representation between public and private, with a leading business person chairing the partnership.
“LEPs will succeed only if the local business community is right at their heart, shaping the vision and setting priorities for action.”

Speaking at a dinner held on Monday night to welcome the summit, Manchester City Council leader Sir Richard Leese said the forthcoming cuts set to be announced in next week’s spending review would hamper regeneration efforts.
“If we think we’ve seen cuts yet I think we’ll have a bit of a shock next week,” he said.

“The notion of balancing the country’s economy is a very good one and something we welcome in the north of England but the large-scale public sector cuts will make that more difficult. We’ve already seen in some places reductions in investment and infrastructure and in many parts of the country – though not in Manchester – a massive reduction in investment in education and skills with the halting of the Building Schools for the Future programme.”

However, he added that those involved in the regeneration sector could not afford to sit and wait for the economy to improve.

He added that he believed that the LEPS gave areas such as Greater Manchester “a great opportunity to fund economic growth” and added that it intended to use Jessica Funding to take equity stakes in stalled investment projects as well as using tax increment funding – a model which allows local authorities to borrow against future tax income – to fund infrastructure projects.

“We see enormous potential for it,” he said.

He also argued that Manchester’s own inward investment efforts had made the city “more resilient over the past decade, arguing that this has paid off with increased foreign direct investment into the city even in the midst of the recent recession.