The business of cities

The private sector, Local Enterprise Partnerships and growth Nye Cominetti and Neil Lee

The project

• The Government has overhauled economic development • Business is at the centre of the new model: But how is that working?

• This project aims to – • • Understand the implications of business leadership Question - Are LEPs working?

The overhaul of economic development

• New

institutions

: RDAs to Local Enterprise Partnerships. • New

funding

: • RDAs: £2bn pa.

• LEPs: access to around £3.5bn over five years (2011-16).

• New

approach

: private sector led

Local Enterprise Partnerships and Enterprize Zones

Local Enterprise Partnerships

•

Task

:

promote private sector jobs growth

. •

Coverage

: 39 LEPs in England (vs. 9 RDAs). Made up of LA boundary areas; some overlap.

•

Size

: most have between 0.5m and 2m residents.

•

Structure

: must be business-led. Half board members from businesses with business person as Chair. Small secretariat to support.

•

Funding

: Can compete for centrally allocated money. Limited capacity fund.

•

Legal status

: no statutory status, in most cases no legal status either.

Cumbria Buckinghamshire Thames Valley Cornwall and Isles of Scilly Worcestershire Gloucestershire The Marches Oxfordshire Swindon and Wiltshire Tees Valley Northamptonshire Dorset Coventry and Warwickshire Thames Valley Berkshire Cheshire and Warrington Humber Leicester and Leicestershire Greater Lincolnshire Stoke-on-Trent and Staffordshire Black Country West of England Hertfordshire York, North Yorkshire and East Riding Greater Cambridge & Greater… Lancashire Liverpool City Region Solent New Anglia Enterprise M3 Heart of the South West South East Midlands Sheffield City Region Coast to Capital Greater Birmingham and Solihull North Eastern Derby, Derbyshire, Nottingham and… Greater Manchester Leeds City Region South East London 0 1 1990 Population 2 3 4 2010 Population 5 6 7

Миллионы

8

LEPs are very different

Population change, 1990-2010 (ONS, mid-year population estimates)

…and face different challenges…

London Oxfordshire Buckinghamshire Thames Valley Enterprise M3 Thames Valley Berkshire Hertfordshire Coast to Capital England New Anglia Stoke-on-Trent and Staffordshire Liverpool City Region Humber Tees Valley Greater Lincolnshire Black Country 0% 5% 10% 15% NVQ 4+ 20% None 25% 30% 35% 40% 45% 50% Skill levels among the local population (APS, 2011)

Tees Valley Coventry and Warwickshire Liverpool City Region Greater Birmingham and Solihull Cornwall and the Isles of Scilly Humber North Eastern West of England Sheffield City Region Worcestershire Leicester and Leicestershire Greater Manchester Derby, Derbyshire, Nottingham and Nottinghamshire, Cumbria Leeds City Region Stoke-on-Trent and Staffordshire Lancashire South East Buckinghamshire Thames Valley Greater Lincolnshire Cheshire and Warrington Gloucestershire The Marches Oxfordshire LEP Swindon and Wiltshire Dorset Solent Black Country Heart of the South West New Anglia Enterprise M3 South East Midlands York and North Yorkshire 10 20 30 40 50 60 70 80 90 100

RGF allocations per capita in rounds 1 and 2, £/person

…and have different resources

RGF allocations per capita in rounds 1 and 2 (provided by BIS)

Is resource matching need?

Little correlation between RGF allocations and reliance on public sector 30% 25% 20% 15% 10% 5% 0% £0 £10 £20 £30 £40 £50 £60 £70

Per capita RGF allocations - rounds 1 and 2

£80 £90 £100

Private sector leadership

“Bring local business and civic leaders together to provide the vision and leadership to drive sustainable economic growth and create the conditions to increase private sector growth”

Lord Heseltine, 2012

• LEPS must be chaired by a business person • At least half of members must be from the private sector

Business leadership of place

• Does it work? Is it a good idea?

• What do businesses members

actually

do?

• Why do businesses get involved? What keeps them interested?

• What conclusions can be drawn about different businesses

size

,

sector

,

geography

?

Evidence from past examples of business leadership

• City Growth Strategy, 2001-06 Criticism: businesses drifted away when clear they wouldn’t benefit directly • Business Improvement Districts, 2004 Criticism: businesses given too much power over areas – little accountability • Urban Development Corporations, 1987 Criticism: undervalued role of public sector Transformative impact on area with little accountability

Methodology

• Primary evidence: 15 in-depth interviews with business members across 3 LEPs • Literature review of evidence from other examples of business leadership of place

Evidence from LEPs

• Businesses back LEPs. They prefer them to RDAs • Businesses are motivated mainly by a desire to help their local area • LEPs have successfully attracted high quality board members • LEPs facilitate sub-regional working

Evidence from LEPs

•

The clock is ticking

: businesses are impatient to see action on the ground • Smaller businesses under represented • Accountability is a problem, though varies by LEP

Recommendations: The Government needs to back LEPs

• Reform the RGF, and add further rounds. LEPs to be given more control • Increase participation of small business in LEPs • Increase capacity fund further • Clearer accountability processes