The LEPs, which were set up to take over from regional development agencies in boosting economic redevelopment and job creation, are over-reliant on grants from local councils and are failing to find significant private sector support.
The Federation of Small Businesses, in a submission to an all-party parliamentary inquiry into the progress of LEPs, warns of growing frustration at the lack of progress.
LEPs were at risk of becoming “too preoccupied with having to bid for access to or influence over pots of money rather than on what can be delivered”, the FSB claimed.
Although England’s 39 LEPs were handed £5 million by the Government to cover start-up costs, the organisations are supposed to be business-led and self-funded.
The FSB is calling for annual public funding of around £250,000 for each LEP, pointing out that this would be a small fraction of the administrative costs of the former regional development agencies.
A similar plea was put forward to the inquiry by the Engineering Employers’ Federation, which warned that limited funding would create a risk that some LEPs would “struggle and become reliant on local authority funding”.
The Greater Birmingham and Solihull LEP (GBSLEP), in common with all other LEPs, receives about £80,000 from central government funds to cover administrative costs, but the money is spread over three years.
GBSLEP has succeeded in attracting some of the country’s most experienced business figures to its board, which is chaired by John Lewis chief executive Andy Street. Other members include Kraft Foods President Nick Bunker and JLR Operations Director Alan Volkaerts.
GBSLEP’s investment plan for the Birmingham City Centre Enterprise Zone aims to create 40,000 new jobs, contribute over £2 billion to the economy in GVA per year, and generate over £700 million in additional business rates.
The LEP’s overall aim is to “create a globally competitive knowledge economy with greater Birmingham and Solihull recognised as the natural home for Europe’s entrepreneurs and wealth creators”.
GBSLEP says it will increase GVA by 30 per cent and create 100,000 new jobs by 2020 across its member local authorities, which are Birmingham, Solihull, Lichfield, Tamworth, East Staffordshire, Redditch, Bromsgrove and Wyre Valley.