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Questions raised over coalition’s LEP whitepaper


Vince Cable's attempts to sell local enterprise partnerships as a tool to spur economic growth in the regions have fallen flat as business leaders raised question marks over their ability to deliver.
The business secretary has given the go-ahead for the creation of 24 LEPs out of a total of 62 applications submitted in a bid to attract investment and promote businesses across England, raising disquiet among MPs about holes in national coverage. The LEPs will replace regional development agencies, which will cease trading by March 2012.
Cable claimed that the measures laid out in the coalition government's whitepaper on local growth demonstrated its ambitions "to create a fairer and more balanced economy" driven by private sector growth and "business opportunities spread more evenly across the country and between industries".
But he spent much of his hour-long session at the dispatch box batting off concerns from a number of MPs that their constituencies' proposals had been turned down. East Anglia, the south west and north east, for example, have little coverage, while other areas will have two LEPs.
Cable insisted, however, that a £1.4bn regional growth fund would provide focused investment for projects that would enable the creation of private sector jobs. It would also support communities that currently relied heavily on public sector employment to make the transition to private sector-led growth, he said.
Successful bidders are now putting together proposals of how to tap into the fund, but the government has been criticised for not providing central financing to help the LEPs do the same. Already hard-pressed local authorities or local businesses will be expected to provide the necessary start-up funding, sparking worries that deprived areas of the country will find it difficult to raise the money.
When Cable revealed the situation at a select committee hearing earlier this week, chair Adrian Bailey said: "The most disadvantaged regions are those with the most public sector employment – and they often lack the business capacity to submit funding bids to the regional development fund. The fact that there appears to be no funding in central government for it means there is no funding system to develop the expertise and develop the bids."
John Denham, the shadow business secretary, was even more scathing, branding LEPs as a "pathetic fig leaf to cover the absence of any growth strategy". He also said that the approval process had been incoherent and hampered by "petty battles" between Cable and Eric Pickles, the communities secretary.
But the concerns were not limited to Whitehall. Miles Templeman, director general of the Institute of Directors, said: "We are concerned about just how much influence LEPs will have. Without any obvious formal or informal clout in the planning process, it is highly questionable whether LEPs will be effective."
Although the government had talked about providing local authorities with financial incentives to deliver on economic development to give them "a genuine reason" to listen to LEP proposals, "we need to see it working in practice", he added.
The LEPs also needed "a small amount of money" to identify local and regional development needs through research. "With no cash at all, they will end up relying on local authorities to provide advice on local infrastructure needs. This is likely to divert LEP priorities away from economic development and onto the local authority agenda," Templeman said.
David Frost, director general of the British Chambers of Commerce, was equally sceptical. "Local businesses want to know exactly how the new LEPs will make it easier for them to tackle the problems with planning, skills and transport that stifle private sector growth. The whitepaper is a good start – but it is only a start," he said.
In order to keep business on board, LEPs would need to have a "laser-beam focus on business growth and concentrate on getting the basics right" from the outset. But at the same time, "business expects a clear growth strategy from the government – a national strategy that delivers on the Prime Minister's recent commitment to a pro-enterprise agenda", Frost added.

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