Cable launches RDA replacements - to storm of criticism

Local Enterprise Partnerships will boost investment, according to the Government. Not without proper funding, say businesses.

by Emma Haslett
Last Updated: 06 Nov 2012
Stage one of the Government’s attempt to wean businesses off public money has been launched today, in the form of brand new ‘Local Enterprise Partnerships’, which are designed to encourage growth and boost investment in areas hit by spending cuts. According to Business Secretary Vince Cable, it’s all about shifting power ‘to local communities and businesses’ by putting councils in charge. Best of all, says Cable, is that because they’re partnerships between councils and local business leaders (rather than individually funded bodies), they’ll be cheaper to run and more accountable than their Regional Development Agency precursors. Businesses, though, have been quick to see the downside, saying that unless they get their own budget, they’ll end up as ‘toothless talking shops’.

The idea of the 24 new LEPs is that they’ll help businesses who have previously relied on the public sector for contracts to find ways to approach the private sector. They’ll also help businesses to bid for a piece of a brand new £1.4bn Regional Growth Fund, designed to help businesses create new jobs, particularly in communities where the majority of people are (/were) employed in the public sector. The Government hopes that by creating the right conditions for growth, it will boost investors’ confidence – thereby boosting the local economy.

But businesses have rounded on LEPs already, calling their implementation a ‘shambles’ after the Government didn’t manage to produce more than a two-page outline of its plans back in June. Now, the Institute of Directors has added that without their own budgets or any statutory powers, the LEPs won’t be able to function properly. ‘Money will matter’, insists Alexander Ehmann, the IOD’s head of parliamentary affairs.

That’s not all, though: there are concerns that councils, most of whom have had their budget cut by 7%, won’t be able to shoulder the cost of the new bodies, which will lead to them struggling to compete for a slice of that £1.4bn pie (which, incidentally, is due to be cut to £500m next year). And that’s not even mentioning the fact that, with just 24 LEPs, large swathes of the country, including most of the South West, remain without coverage – which risks turning entrepreneurship into a sort of postcode lottery.

Trying to fund enterprise support agencies with a drastically pared-down budget is always going to encounter teething problems.  And it's a bit hard to see how these budget-free agencies will provide succour to local firms. But the first applications for the £1.4bn won’t be submitted until early next year – so until then, maybe we should suspend judgement.

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