Foreign investment concerns over new LEPs

A DEPARTMENT for Business select committee report into the replacement of regional development agencies with Local Enterprise Partnerships has highlighted concerns that Scotland and Wales will have an unfair advantage in attracting foreign investment.

The Government is scrapping the network of nine RDAs including Advantage West Midlands in favour of more than 40 LEPs.

But Scotland and Wales will retain their development agencies. Various bodies reporting to the select committee said these resources could overwhelm the English regions, especially if LEPs are not funded properly.

The report stresses that the Scottish and Welsh organisations have “dedicated budgets and impressive one-stop shop websites that incorporate clear information for investors on areas such as start-ups and international trade”.

Despite ministerial reassurances that England would not lose out, the committee reported that it “remained concerned” and quoted Welsh Assembly member Dr Brian Gibbons who saw the end of the RDAs as an opportunity.

He said: “One good thing that the Westminster Government has done is to abolish regional development agencies in England.

“That was a pretty stupid decision from the point of view of regional regeneration in England because we know that the investment return from those agencies, particularly the best-performing ones, was quite substantial.

“However, it removes significant competitors at a regional level from the market.

“That provides Wales with a range of opportunities that would not have been available to us previously. Therefore, we should be thankful for small mercies.”

The committee also concluded that a network of more than 40 LEPs could result in “business confusion, lack of critical mass and insufficient economies of scale”.

Nick Ogden, a partner in the regeneration and renewal practice in the Manchester office of law firm McGrigors, said: “This report demonstrates quite clearly the concerns that business leaders have about the potential for the region to lose out to Scotland and Wales during the transition from RDAs to LEPs.

“The Government seems not to be overly concerned but the fact is that some of the benefits of inward investment, such as urban regeneration, will be lost unless all the UK development agencies can compete on an even playing field.”