Concern over new local enterprise partnerships 'clout'

The government has received 56 requests to set up local business groups, amid concerns some will be too small and lack "clout".

The new partnerships of councils and businesses will replace England's nine Regional Development Agencies, which are being scrapped by the government.

Business Secretary Vince Cable said they would have their own agenda instead of one set by Whitehall.

But MPs have heard concerns some may be too small and fragmented.

'Artificial regions'

Regional Development Agencies (RDAs) were set up under the Labour government to help local businesses and were attacked by the Taxpayers' Alliance pressure group as an "unnecessary and expensive layer of bureaucracy".

The government has said the new Local Enterprise Partnerships (LEPs) of local authorities and businesses are part of a new way of "rebalancing the economy".

Communities Secretary Eric Pickles said it was an end to "the artificial political regions of RDAs" and would better serve businesses.

Mr Cable said there had to be "genuine partnership between business and local government" and LEPs must be "practical bodies for promoting enterprise, not talking shops".

"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."

The government said it had been impressed by many of the "radical" proposals received to tackle challenges facing local economies. It will look at the 56 proposed partnerships over the coming weeks.

But at a hearing of the business, innovation and skills committee on Tuesday, RDA chairman Sir Roy McNulty told MPs he had heard there could be as many as six local enterprise partnerships in his West Midlands region. He thought three to four would work better.

'Significant clout'

Sir Roy - chairman of the Advantage West Midlands, the region's RDA - told MPs: "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."

He added it would be difficult for six LEPs to separately address "a shock as big as the Rover collapse which spread right across the West Midlands, major industries like automotive and aerospace which again spread across the West Midlands".

He said he felt there would still have to be some form of "co-ordinating body" that crossed the LEP boundaries.

And Paul Nowak, of the Trades Union Congress, 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."

He said the indications they had received were that some of those proposed were "too small to carry the clout and weight they would need to really be able to support economic development and private sector growth in their particular areas".

David Sparks, of the Local Government Association, said he would be wary of setting one size to fit all areas but there were about 50 regions in England that should be taken into account when LEPs were set up.

"It's no use having something at a regional level if it doesn't react locally," he said.

"We welcome the opportunity that there is to establish something new that might be more relevant in relation to regenerating our local communities through LEPs."

Shadow communities secretary John Denham said different councils were trying to grab responsibility for the same areas, adding: "The confused bids are scrabbling for less money than the RDAs had to spend and it is clear that there are huge divisions between Lib Dem Vince Cable and Tory Eric Pickles on what they are trying to achieve."