Exclusive: Coalition's growth plans 'stymied by weak LEPs'

Former communities secretary, John Denham, today attacks the coalition's faltering blueprint for regional growth, warning local enterprise partnerships (LEPs) must be handed control of Britain's skills strategies and a multibillion-pound cash pot, if they are to succeed. Mr Denham, Labour's shadow business secretary, has written to all LEPs – consortia of businesses and local authorities established to co-ordinate sub-national growth, including local transport and planning strategies – urging them to push ministers for greater powers or face becoming powerless talking shops. In a letter obtained by The MJ, Mr Denham outlines a seven-point plan to empower community and business leaders to kick-start moribund local economies. John Denham claims LEPs need extra powers to thrive It follows meetings between Mr Denham and LEP representatives, during which business experts warned they could walk away from partnerships with local authorities if they did not receive sufficient government support to create jobs and growth. Mr Denham's letter accepts LEPs – which replaced Labour's regional development agencies (RDAs) – as future co-ordinators of local growth. But, it warns LEP frameworks outlined by business secretary, Vince Cable, and communities secretary, Eric Pickles, lack clout. LEPs currently have no central funding or guaranteed resource, and no legal powers. Britain's economy contracted by 0.5% during the final quarter of 2010, and concern is snowballing that the coalition's growth plans will be ineffective unless powers over key economic triggers are transferred from central or regional government. Ministers have already delayed publication of their national growth strategy until the Budget. Amid ministerial plans to transfer responsibility for billions of pounds of RDA assets and liabilities, including £500m of land and property, Mr Denham argues LEPs should be given ‘formal powers to request or have first refusal on RDA assets or liabilities in their area'. He claims this would give LEPs ‘real influence' over local assets and ‘allay fears of a centrally-managed fire sale, carried through with scant regard to local and sub-regional priorities'. Mr Denham also calls for LEPs to be handed oversight of local skills strategies, and to influence public investment in skills – the ‘Section 4 powers' currently available only to London and the Manchester city-region. He claims allowing business and councils to co-ordinate skills plans would allow ‘a more tailored focus for LEPs to address needs in local areas'. He also calls for LEPs to be handed a cash pot to help businesses with start-up costs, and for the £1m threshold for bids for the £1.4bn regional growth fund to be scrapped so that smaller businesses qualify for government support. Finally, Mr Denham warns against ministers' plans to centralise oversight of European Regional Development Funds. England's regions qualify for up to £1.5bn of ERDF cash by 2013. In the past, European funds were managed by RDAs, but the coalition plans to hand responsibility to Mr Pickles' department. ‘We fear this could potentially exclude LEPs from the process,' Mr Denham writes. He told The MJ: ‘LEPs have one hand tied behind their backs. As Dr Cable admitted, his plans for regional economic development are chaotic and ‘Maoist'. ‘As the recent growth figures show, the recovery has ground to a halt. The Government, more than ever, should be trying do all it can to create strong local organisations which have the confidence of business to create private sector growth and economic development. ‘We would support the Government in giving LEPs real teeth with these new powers. The concern if LEPs do not have the powers or resources, is that businesses will walk away and create more uncertainty.' Mr Denham's concerns are shared by business organisations. The CBI refused to comment directly on the former minister's letter, but a senior source acknowledged businesses were ‘aghast' that LEPs have so few formal powers. Adam Marshall, director of policy at the British Chambers of Commerce, recently explained: ‘There's a stand-off between the government saying ‘get on with it', and the LEPs saying ‘get on with what?' The New Local Government Network think-tank called for LEPs ‘to have access to a single capital pot for transport, housing, economic development and regeneration, in addition to control of skills and employment commissioning'. A spokeswoman for the Department for Business, Innovation and Skills explained LEPs would exercise the powers held by the councils on local boards.

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Exclusive: Coalition's growth plans 'stymied by weak LEPs'

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