LEPs need a major overhaul if Heseltine's plan is going to work
16 November 2012
Warwick Business School associate professor Kevin Mole says Local Enterprise Partnerships (LEPs) will need major re-structuring if they are to deliver Lord Heseltine’s plan to devolve power and money to boost the economy.
Dr Mole is an expert on business advice for small firms as part of Warwick Business School’s Centre for SMEs and has been studying LEPs.
In Lord Heseltine’s report on inspiring growth in the country entitled No Stone Unturned in Pursuit of Growth the Conservative politician called on the Government to plough money into the regions to boost business using the newly established LEPs.
LEPs are a voluntary partnership between local authorities and businesses formed in 2011 by the Department for Business, Innovation and Skills and Dr Mole believes they will need an overhaul if they are to deliver Lord Heseltine’s plan.
Dr Mole said: “The LEPs will have to develop programs to improve the management practices of firms and that will require them to engage fully with companies. They will need to develop face-to-face contacts with these firms.
“With so many firms in their area, they can only do this with targeted companies. They will need to develop targets that fit with the way they see their area developing.”
And for LEPs to inspire growth means they risk wasting some taxpayers money on schemes and experiments that don’t come off to find the right industries.
Dr Mole, who is Associate Professor of Enterprise, said: “They will have to focus on change in the economic structure of their areas whether comparatively wealthy or poor.
“That means that they will have to support newer industries that face high uncertainty, which will leave them open to claims of wasting public money when inevitably some of these companies fail.
“And it means that business people will have to overlook their own firms and industries which is a difficult ‘pill to swallow’.
“Lord Heseltine saw the ‘rain forest’ as a metaphor of the economy, where the canopy shelters the small plants beneath and they all rely on each other.
“I think Lord Heseltine was making the point that large firms are what matter but to continue his metaphor, when large trees fall it opens up light through the canopy for the plants at the lower levels to grow.”
Warwick Business School board member Denys Shortt was chair of Coventry and Warwickshire LEP and agrees they will need more funding if they are to make contact with SMEs. But he says the biggest barrier to firms growing is a lack of local affordable housing.
“LEPs by their nature are short of staff, have a small infrastructure and do not have the time or the energy to engage with SMEs,” said Mr Shortt.
“My view is LEPs need smaller focused local bodies working in each district and with local district councils.
“I have been working with my local area Stratford-upon-Avon and the two biggest issues with business are - lack of local affordable housing for employees and lack of employment land for growth.
“Other challenges include - revival of the high street shops, poor transport infrastructure and cost of parking for employees.
“LEPs need to have this very local understanding to properly deliver growth.”