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FSB Says Local Enterprise Partnerships Must Engage More With Small Businesses

A new report published by the Federation of Small Businesses (FSB) and the Centre for Local Economic Strategies (CLES) calls on Local Enterprise Partnerships (LEPs) to place small businesses at the heart of their plans for local economic growth. This is the first report of its kind and it stresses small businesses can’t be ignored as the economic recovery continues.

The FSB believes that LEPs are the right vehicle to deliver local economic growth across England but stresses that the voice of small businesses needs to be better represented within LEPs. Small and medium sized businesses have been responsible for four in five (84%) jobs created in the private sector between 2010 and 2013, and represent half (48%) of private sector turnover, however the report finds that large businesses are perceived to have most influence within LEPs. Two in five (39%) local authorities and two thirds (67%) of FSB representatives surveyed feeling that large businesses exert the greatest influence over LEPs.

The research finds that many LEPs would be better placed to maximise local growth opportunities if they consulted more effectively with the small business community. A case in point is around procurement support. Three quarters (77%) of small businesses want LEPs to offer procurement advice as part of their business support package, but only a quarter (25%) of LEPs are planning to offer this kind of service. While it is important for LEPs to reform their strategic role, the FSB wants to see them become more effective at providing the advice and services small businesses need.

In order for LEPs to be held accountable to businesses and their local communities, the FSB is calling for a national framework for assessing their performance. Currently this is not in place. This is important because LEPs will be responsible for £17 billion in public funds between now and 2021. There is clearly work needed to improve transparency and accountability as only 31 per cent of LEPs publish annual accounts and 44 per cent produce annual reports. The FSB believes that as LEPs are receiving increasingly large amounts of money to distribute at the local level, it should be made very clear how decisions are made on how to spend their funding

Key findings in the report include:

  • Just 18% of LEPs think they are adequately resourced
  • 88.5% of LEPs think their primary role is to provide strategic direction – 72.5% of councils and 63.5% of FSB representatives think this is the case
  • Just 31% of LEPs publish annual accounts and 44% produce annual reports
  • Despite small firms creating the vast majority of private sector jobs, 67% of FSB representatives feel large businesses exert the greatest influence over LEPs

John Allan, National Chairman, Federation of Small Businesses, said:
“LEPs are crucial to delivering local economic growth across England. While some have done a good job of reaching out to the small business community, others need to up their game. Small firms will ultimately be the ones creating most of the jobs and prosperity in the private sector, so it is absolutely essential that they are at the heart of all LEPs thinking and plans.

“LEPs will be handling £17 billion of public money between now and 2021. It is important and only right to understand how it is being spent. Because the sums of money involved will increase substantially, it is vital that LEPs are more accountable and transparent so local authorities, businesses and the public can be confident they will deliver for the local economy and are using taxpayer funds effectively.”

Neil McInroy, Chief Executive, Centre for Local Economic Strategies, said:
“LEPs have had a short life, but misunderstandings around their purpose and usefulness abound. They have been slow to get going, been stifled by centralism with a reluctance to devolve powers, responsibilities, or funding, and tend to be dominated by big business with little affinity to place. LEPs have gained the responsibility for European funding and other resources but without the statutory footing to be accountable for them.

“As powers to combined authorities and local government have developed, LEPs, in some instances are merely strategic vehicles, necessary because government wants them, but marginal in terms of the real business of local economic development and the everyday relationship with the business community.

“They must continue but we need fundamental change. LEPs should embed small business more effectively into their structures and activities and join up far more effectively than is currently the case with local government over economic development and wider social issues.”

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