1. Introduction

1.1     The Government has announced the creation of 24 Local Enterprise Partnerships or LEPs.  These are intended, in part, to take over some of the functions currently undertaken by the soon to be defunct Regional Development Agencies – RDAs. Others will follow throughout England with the exception of London where other arrangements will apply.

1.2     These are brand new organisations intended to focus economic development and related activities on more coherent and geographically accessible areas. This paper explores the extent to which these new bodies will need to engage with the communities which they serve. It examines the submissions made by the successful bidders, seeking clues as to the engagement they have already undertaken and their ideas on future relationships with key stakeholders.

1.3     Section 2 outlines developments to date and provides an overview of the emerging economic development and related policy landscape. In Section 3 we present our brief analysis of three aspects of the successful submissions. These are:-

• Governance
• Engagement
• Big Society

In Section 4 we make the case for early and best practice engagement by, or on behalf of, the new LEPs and Section 5 will consider some of the challenges of Implementation. Section 6 presents our overall conclusions.

1.4     Initial thoughts on this were published in the Institute’s Tuesday Topic No 174.

1.5     Gareth Hill of Sauce Consultancy, which is the first Practitioner Partner of the Institute, organised the research and contributed to the Briefing Paper’s conclusions.

2. The Story so far

2.1     The process leading to this announcement was that, in late June, the Government invited bids from geographically logical areas, for Partnerships where local authorities and business leaders can come together to ‘create the right environment for business and growth in their area’. A deadline of 6th September meant that only two months (July and August) were available for Councils and the business community to reach agreements, and the shortage of time is evident in the variable quality of the submissions made. In total 62 were received and reviewed by Central Government Ministers using four criteria points:

• Support from business
• Economic geography
• Local authority
• Added value and ambition

Unsuccessful bidders have been encouraged to submit revised proposals, and areas of the country not covered by the first tranche will in due course presumably be covered. London is excluded from this mechanism and discussions are continuing as to how economic development can best be supported in the Capital.

2.2     The intention is that LEPs seek to deliver a more localised service, especially as RDAs were perceived to have been too large and too remote. LEPs were, for example, invited to consider which of the long list of RDA functions they might wish to continue. These include:-

• Business Advice
• Innovation
• Low carbon enterprise & growth
• Inward investment & international trade
• Tourism
• Skills
• Regeneration

RDAs also have on-going projects and facilities which LEPs may take over, though they have all been advised that the new organisations must be lean in structure and non-bureaucratic in style.

2.3     The White Paper Local growth: realising every place’s potential 1 – published alongside the announcement of the first 24 LEPs – explains how they fit into the Government’s overall strategy for economic development. Although required to pay for their own day-to-day running costs, LEPs will have access to the new Regional Growth Fund of £1.4 billion as a means to fund major investment projects

1 Cmnd Paper 7961 – published 28 October 2010

2.4     In keeping with the Government’s commitment to localism, LEPs have some flexibility as to their governance and accountability. They have to be led by a private sector-based individual and will surely need to reflect local political as well as geographical realities. Nowhere will this be more sensitive than in the role LEPs are likely to play in the area of spatial planning. The abolition of Regional Spatial Strategies leaves open the question of how major areas of the country should plan for those infrastructure or other developments which serve areas beyond a single Planning authority’s boundaries. In the White Paper (pp 49 and 50), there are many suggestions that LEPs may need to play an influential role. Note the following:-

• Partnerships will be free to develop strategic planning frameworks to address economic development and infrastructure issues…. (Par B.47)
• … by engaging with local transport authorities on their local transport plans and partnering for bids to the Local Sustainable Transport Fund (Par B.49)

• The more strategic role for housing and planning at the level of LEP could also be an important part of the process to increase investment in housing… (B.54)

On any reading, these imply that LEPs have the potential to be highly influential, reflecting the priorities of the business community in partnership with elected Councils.

2.5     An excellent analysis of the initial submissions by SQW2 earlier in the autumn concluded that the speed with which they had been prepared had limited the contribution of the private sector. Other critics have argued that the concept has failed to excite the commercial sector and that they are far from being convinced that they can achieve the high hopes of the politicians. For example:

“LEPs hope to work with businesses, but there seems little incentive for businesses to engage particularly the small privately-owned ones that make up the bulk of the private sector. With no budget or real teeth, it appears that they will be little more than talking shops, which is not what the business community wants or needs at this point in time.”

Alan Williams, Buss Murton Law’s Senior Partner As reported in www.thisikent.co.uk

2 Local Enterprise Partnerships. A New era begins? SQW Group; see www.sqw.co.uk

2.6     Despite this, LEPs are likely to figure prominently in the Government’s growth policies in coming months, being seen as a major element in the Localism strategy. It must also be remembered that their introduction coincides with massive cuts in local government funding. With headcount reductions likely in economic development and allied functions, it is quite possible that LEPs may preside over shared services as attempts are made to reduce overlapping or duplicated activities and to minimise the bureaucracy of existing structures.

3. Analysis of LEP submissions

3.1     Given the speed with which these were produced, it may be unfair to lay too much emphasis upon their details. However, it is clear that much thought has been given to many of them, and the range of ideas and approaches is in many ways impressive. Our purpose here is not to find fault but rather to highlight some of the issues that arise as these organisations start work in earnest.

3.2     Governance and Accountability

3.2.1       In our view, 19 of the 24 submissions are reasonably clear in their governance intentions but it is plain that much is still to be decided. Some are specific about the composition of the LEP Board, but others admit to the possibility that full engagement with the private sector will be needed before they attract the best people to these new Partnerships.

As an example, in one case, the Board, once established, intends that “Clear guidance will be put together and circulated widely, setting out the role and responsibilities of the LEP and making clear its areas of action and influence and how it will operate, including mechanisms for accountability, consultation and feedback. At the same time businesses will be encouraged to be actively involved through putting forward prospective representatives, engaging in their selection and being engaged in consultation.” (Cumbria)

3.2.2       Some submissions have been able to build upon existing structures, or on partnerships that already address skills or related subjects that may be relevant to the LEP mission. For example, the Cornwall/Isles of Scilly bid states “We envisage that the Cornwall and Isles of Scilly Economic Forum will develop into the governance structure, with the CDC and private sector organisations delivering on the ground.”

Areas with an existing track record of significant inter-working clearly have an advantage, and in Greater Manchester, the bid states that “The shadow LEP will be chaired by the private sector chair of the Business Leadership Council and include members of the Business Leadership Council, the private sector chairs of the Manchester family of organisations including the Greater Manchester Chamber of Commerce, along with the Chair and Vice Chairs of AGMA, ensuring cross party political representation.

3.2.3   In most cases, it is acknowledged that legitimacy will depend upon the recruitment of Private Sector individuals being transparent and representatives drawn from a wide pool of eligible business leaders. An emphasis on knowledge industries and new technologies results in a very visible presence for Universities and innovation-led enterprises.

“Whilst an open and robust recruitment process will be undertaken, it is envisaged that the Partnership Board will consist of top ranking individuals led by a private sector Chair.” (Cheshire & Warrington)

There will also in the formation of a “private sector led ‘Innovation Council’, alongside the two excellent local Universities … to exploit the practical application of our significant innovation assets.” (Coventry & Warwickshire)

3.2.4       Accountability follows from governance, and several submissions make a plea for light-touch audit – or its equivalent. Others are bolder and offer a suggestion as to how the LEP would prefer to proceed. Having stated that it will hold a bi-annual open meeting, the Coast to Capital submission (Brighton, Croydon, Gatwick Diamond & West Sussex) makes the point that it intends to hold others accountable to our strategic priorities and principles in so far as their activities impact on business success.

3.2.5       In practice, sorting out governance is likely to prove a trickier issue than many admit. Not all Councils have had an equal role in preparing the successful submissions, and it will be rare for all interested parties to feel comfortable with their representation from day one. A further complication is that the desire of different institutions to become involved may well depend upon the goals and activities the LEP sets for itself. And these may in turn depend to a great degree on who become the initial leaders of their respective LEPs.

This chicken-and-egg situation has been seen before where Whitehall, from the best possible motives, declines to promote a particular governance model and lets local bodies find their own consensus. In the case of Local Involvement Networks or LINKs, it took a year or more of wrangling before the dust settled and these bodies started to address substantive issues.

The desire to avoid becoming ‘talking-shops’ and the reputed intolerance of business leaders to territorial gamesmanship should ensure rapid progress, but many proposed LEPs straddle political boundaries and will have to work with Councils of different political complexions and policies. These are bound to result in governance-related challenges.

3.3     Public & Stakeholder engagement

3.3.1       Resolving the issues of governance along with the numerous other areas of consideration will be much easier if LEPs recognise the need to engage successfully with stakeholders. An examination of the 24 successful submissions reveals that 50% of the bid documents relied to one extent or another upon an engagement process in determining its content. This might support the notion that they, at any rate saw the benefit of inviting

a range of views upon what they should propose to the Government.

For example, three consultation events were held on the proposal for a “Local Enterprise Partnership … These consultations were led by the Cheshire & Warrington Enterprise Commission and were attended by 143 delegates … This helped develop the proposal and governance of the LEP.” (Cheshire & Warrington)

“Our proposals have been developed in  consultation with the wider business community and their representative organisations, the Business Leadership Council, and with the private sector led Manchester family of organisations, including  Marketing  Manchester,  MIDAS,  the  Greater Manchester Chamber of Commerce, Manchester Solutions, Manchester Knowledge Capital and the Commission for the New Economy.” (Greater Manchester)

“Among engagement practices the LEP have sent a survey of over 700 employers in  Herefordshire, held  a  Business  Summit  in  Shropshire attended by  over  60  of  the  county’s leading businesses, numerous business breakfasts and a business survey in Telford with 170 respondents and an online survey of the membership of the 2 local Chambers of Commerce with 290 business from Shropshire and Telford and 100 from Herefordshire responding.” (The Marches)

“The LEP held various meetings and engagement events to formulate their

Statement of Ambition. These are as follows:

• Tees Valley Voluntary and Community Sector Forum – 22nd June 2010
• North East Chamber of Commerce Darlington Committee meeting -24th June 2010
• Catalyst Stockton – 5th July 2010
• North Yorkshire County Council – 8th July 2010
• North East Chamber of Commerce Tees Valley Committee – 14th July 2010
• Stockton on Tees BC 14-19 Partnership – 21st July 2010”

The Local Enterprise Partnership proposal website was also launched for further engagement. (Tees Valley)

3.3.2       Perhaps a greater test of a proposed LEPs’ willingness to engage is more apparent when their future intentions are considered. Again, about half – 13 out of the 24 – specifically indicated the need for on-going engagement. To some it reads as an integral and essential aspect of doing business; in others it looks more like an optional extra, an add-on that fails to carry total conviction.

“The Partnership will have a Stakeholder Forum to ensure that the wide range of local interests are fully engaged and that the Partnership Board is locally accountable.” (Cheshire & Warrington)

“…Firming new enthusiasm and engagement between the private and public sectors by ensuring that private sector partners are truly able to shape the local enterprise agenda, with demonstrable results and more effective interventions to support growth.” (Cumbria)

“… In particular, the LEP will make concerted efforts to engage with smaller businesses as well as large companies and multinationals.” (South East Midlands)

3.4     The Big Society

3.4.1       ‘Localism’ is a theme that occurs in a great many of the successful submissions. Many LEPs obviously find the devolution of decisions to local areas a fundamentally attractive idea, and there are many references to the need for ‘bottom-up’ thinking – or its equivalent.

Not everyone makes the connection between this and the Government’s

Big Society concept.

Some, however, clearly do, equating the removal of RDA’s and the creation of more local mechanisms with the shrinking state and a greater emphasis on communities (including the business sector) doing things for themselves

For example,

“We strongly support the Government’s policy of decentralisation and localism, developing the concept of the Big Society and strengthening local delivery and accountability. The development of a LEP which would effectively combine economic development, regeneration and planning at local level fits perfectly with this agenda.” (Cornwall & Isles of Scilly)

3.4.2   Joining up the economic development agenda with the Big Society will appease Government Ministers but the vague references to the concept in some proposals opens the question of whether those developing these LEPs fully understand what the primary objectives of the Big Society actually are. This may explain why only 8 of the 24 submissions explicitly refer to the Big Society.

Nevertheless, some bids were clear that this is a central theme of their submissions.

“This is fully in-line with the ‘Big Society’, where people and communities take responsibility for their own futures and determine what is best for them.” (Coventry & Warwickshire)

“…our LEP proposals are rooted in the Government’s Big Society and Localism ambitions, reflecting the need for greater efficiencies, devolution and local leadership in enabling greater private business growth.” (Leeds City Region)

3.4.3     An increasing number of local authorities are developing Big Society programmes, and seeking to involve a range of local organisations which they may not have previously been in effective dialogue with. Part of the thinking is that by motivating such bodies, there may be opportunities for them to undertake tasks that have hitherto been auctioned or funded by the public sector.

So the rationale for linking LEPs to the Big Society is more about drawing the private sector closer to the functions of Government per se. The SQW analysis of 50 LEP bids clearly shows that many of them highlighted priorities that go wider than the narrow definition of economic development. 39 of the 50 identified housing as a key priority; the same number mentioned ‘employability’, ‘worklessness’ and ‘labour market inclusion’ – all issues where Big Society thinking seems poised to make a contribution.

3.5     All three issues identified in this Section will have a bearing upon what follows, namely our argument for significant engagement between the

fledgling LEPs and a whole range of other local and regional stakeholders. Each will clearly develop its own distinctive approach reflecting the choice of its governance options, its interest in the Big Society and its commitment (or otherwise) to an engagement-led style. For many this will be a challenge.

4. The case for an engagement-led approach

4.1     It is gratifying to note that LEPs have in many areas committed themselves to engaging with a variety of interests, and that several have already demonstrated this in organising their bids, and securing support for it. (See 3.3 above). What is outlined in less clarity in the proposals is whether the new organisations are aware of the magnitude of the task that this may imply.

To take one example, of a medium-sized submission, the Coast to Capital submission, which outlines an impressive level of optimistic growth predictions and action related to the LEP, will serve 1.7 million people and over 79,000 businesses!

Obviously, not all these will want to be involved with the LEP, but if a key critique of the predecessor, Regional Development Agencies, is that they were too remote for private sector firms to relate to and engage with then the inference is that by bringing economic development functions closer, then there is a greater opportunity to work constructively with them.

Considering the numbers in the areas of West Sussex, Brighton & Hove, Croydon and the Gatwick Triangle, the Coast to Capital submission probably includes over a thousand Trade Associations of one description or another. That means the LEP will not be able to engage will all these associations but instead seek representatives that speak for many.  Firms – especially large corporations may wish to engage directly with the LEP, not just rely on intermediaries. In this context the submission’s commitment ‘to hold a regular Forum … not less than once a year…’ whilst welcome – hardly meets the enormity of the challenge.

4.2     Of course there are many ways to engage with the business community, and new technology will no doubt play an important role in hosting the dialogues which need to take place – but these are not cost-free. Social media is also expected to play an increasingly prominent role in debates over any contentious issue. Elected members are already learning by the week how potent Facebook, Twitter and other tools can be if citizens wish to lobby for or against particular causes. LEPs may find they are similarly targeted.

4.3     This may be uncomfortable for those who imagine that LEPs can be a bureaucracy-free zone, unencumbered by the practices of the public sector.

For some, a formal consultation comes well within the category called bureaucracy. For others, even the more informal varieties imply unnecessary tick-box processes which are optional at best and expendable at worst.

However, the truth is that it is inevitable that the new Partnerships will be drawn into a significant amount of consultation – and with a wide variety of stakeholders. There are many reasons for this. Here are five:-

4.3.1       New bodies of all kinds have to establish their credibility. In this case, they will be heavily dominated by Private Sector figures, many of whom will be relatively new to high-profile public roles. This is certainly a time to be cautious in ensuring that key stakeholders are comfortable with what is proposed. A willingness to listen and be guided by the many experienced individuals and organisations already involved in economic development of the local area will attract support. Alienating these key local decision- makers and business leaders will only make the process more difficult.

4.3.2       There has yet to be the full appreciation that the role the LEPs will play regarding planning. This is suggested on pp 49/50 of the Growth White Paper, which clearly outlines that LEPs will ‘be free to develop strategic planning frameworks.’ It will catapult them straight into the midst of the most contentious local issues such as waste management, housing and transport, but without direct democratic accountability. Well prepared Partnerships will definitely engage extensively – to avoid being seen as top-down as their predecessors, the RDAs.

4.3.3       Although designed to harness the enthusiasm and talents of the private sector, LEPs will still have to balance competing commercial interests. The sector is not homogeneous; the interests of small business can be very different from that of major international manufacturers or even out-of- town retailers. Developing agreed LEP policies will require sensitive consultative machinery with the sector’s stakeholders. This has already been planned for through Business Forums outlined in some LEP proposals.

4.3.4       Enterprise Partnerships are essentially collaborations between Councils and the commercial world; each brings different things to the party. For Councils that have run professional consultations for years, part of the value they will add is the insight and knowledge of the need, preferences and concerns of local people. A well-organised and logical LEP will want to absorb this material, and build on it.

4.3.5       It is important to remember that the aim is to change the culture of local decision-making by involving different kinds of people. It is in the best interests of business leaders and entrepreneurs to embark upon a significant new venture with suitable market research being instigated and LEPs should be no different. Indeed much of the tools and techniques that are used in public engagement come from the market research industry and the knowledge and expertise of utilising this form of engagement will be paramount in assisting the LEP to find the correct business focus.

4.4     Taken together, this amounts to a powerful – if diverse – case for engagement. LEPs have already outlined many different engagement methods but overall it seems that the majority will concentrate more on stakeholder consultation and less on public consultation. Timescales are urgent in this time of economic uncertainty but most LEPs have outlined strong ambitions despite the tight budgets. For these objectives and aspirations to be fully realised there will have to be dialogue and it will need to start immediately. Shadow Boards are being established, and business leaders and public officials who commit their time to these new Partnerships will need to move quickly to establish momentum and to influence local decisions.

5. Implementation challenges

5.1     Local Enterprise Partnerships will all be different. The lack of a common blueprint is meant to reflect the new emphasis on localism, but it carries the risk that some areas will get it right, and others will struggle. Given the critical importance of economic development in the years to come, the stakes are high, and if LEPs fail, they will seriously inhibit growth and enterprise in their areas.

5.2     The question that we raise in this paper is this. To what extent will effective consultation and engagement be a critical success factor for LEPs?

5.3     The answer has to be an unequivocal YES. It is not foolproof, and no amount of stakeholder engagement can make up for ineffectual implementation of other policies. For success, it needs to be integrated into all other LEP processes, and needs to be the foundation for all that the Partnership seek to do with local communities and councils. Getting to this point does, however involve taking early decisions and in particular overcoming a ‘catch-22’ situation, made worse by the proposed timetable for introducing the LEPs.

5.4     The catch-22 is that on the one hand, LEPs need to consult extensively to determine their key priorities and their modus operandi. Contrarily, it may not be easy to organise the most appropriate consultations until the overall shape of the LEP’s agenda is clear.

5.5     In terms of what is needed first, the answer is that those LEPs that have not yet engaged with a sufficiently broad spectrum of stakeholders will need to do so immediately and preferably in the period between now and their start date in April 2011. This may be difficult for organisations yet to be formed, with staff not yet in place and no budgets yet realised. This means having to use resources and capabilities already in place, probably, through but not exclusively local authorities.

5.6     One of the difficulties will be that councils themselves do not have a great track record of co-ordinating their public engagement, particularly in two-tier areas. The average LEP will involve anything from four to fourteen councils, who rarely share stakeholder databases or consultation calendars. Private Sector leaders will be rightly intolerant of territorial-based inefficiencies, and will wish to present one common LEP interface to those with whom they wish to hold dialogues.

5.7     An immediate step will be for LEPs to create websites through which they can invite interested people and organisations to register their interests and maybe develop issue or geography-specific networks. A variety of specialist public engagement software vendors provide these products that can host discussion forums and other dialogue methods. Seldom has there been a more appropriate use for this technology, and given that these Partnerships are starting with an almost blank sheet of paper, the construction of a LEP- specific stakeholder database would be of great advantage.

5.8     Board members are currently being recruited, and are likely to include many who may be unfamiliar with modern consultation practices. It might therefore be useful to organise briefing sessions for Shadow Boards, and maybe a Workshop to determine what engagement should be prioritised in the immediate future.

5.9     There may also be an important role for elected councillors. Whilst democratic accountability is still opaque – and will, to an extent vary from LEP to LEP – elected members know well that they will need to face the electorate and convince them about decisions that affect employment and infrastructure – two topics that will feature strongly in many Partnerships. Having campaigned for a more local alternative to the RDAs, many councillors will be anxious to help LEPs become a visible success. They will benefit from briefing sessions that will help them set public expectations and establish processes to influence LEP decisions and actions.

6. Conclusions

6.1     Local Enterprise Partnerships face an exciting challenge and almost all will need to carve their own niche in the economic/political culture of their areas. As such, they will individually need to assess the extent and nature of the public and stakeholder engagement required to establish the LEP and carry the influence they seek.

6.2     The early actions of LEPs will have a positive or detrimental effect on setting the tone for their future reputation. Some LEPs will reflect business and other groups’ interests more than others and some will be known for ‘listening’ more than others. A few may decide to forego consultation altogether in the certainty that firm leadership will carry public and professional opinion with them regardless.

6.3     Whichever approach is selected, the time to consider the options and to formulate a LEPs initial communications strategy is now. It may be possible to fine tune the approach later, but for many businesses and individuals that

wish the LEP success, the first few months will be pivotal, and set expectations for future developments.

6.4     Local authorities that have played an important part in devising the LEP submissions and who may have existing resources focused on economic development and related issues, have an important role to play at this time. In many cases, they have experience and expertise in engaging with a wide

range of interested organisations; many also have well-established machinery for interfacing with specific business or industry groups. These must now be placed at the disposal of the emerging LEPs. Indeed there may be a case for rationalising the plethora of historical forums or consultative committees and agreeing new arrangements that are considerate and complementary with the newly agreed LEP boundaries.

6.5     In all this activity, the Consultation Institute is happy to lend its expertise to advise and guide those who have to make difficult judgements at this time. Similarly Sauce Consultancy, as the Institute’s first Practitioner Partner, is able to assist LEPs with organising specific consultation exercises or other engagement actions that may be necessary.

The Consultation Institute

Founded in 2004, the Institute promotes best practice in public engagement and consultation and is the largest provider of specialist training courses on this subject in the UK. With hundreds of members from central and local government, health police and stakeholder organisations, it has its finger on the pulse of professional opinion and advises many organisations on improving their engagement practices.

Over recent months the Institute has invested a considerable amount of time on assisting public and voluntary sector organisations to implement their Big Society agenda. The Institute is also assessing the impact on Planning in a new age of ‘Localism’ and is eagerly awaiting the arrival of the Decentralisation and Localism Bill.

Rhion Jones is the Consultation Institute Co-Founder and Programme Director. For more information see: www.consultationinstitute.org   or call 01767 318350

Sauce Consultancy

Sauce Consultancy is a specialist environmental communications company. Sauce works with clients to develop and deliver simple messages around complex sustainability issues, providing the bridge between the technical and the communications requirements of projects. Sauce’s consultants draw on years of experience of working in the environmental sector. Sauce doesn’t have a large in-house team but collaborates with other experts when necessary. “Action speaks louder than words” is Sauce’s maxim for a very good reason – Sauce delivers campaigns, consultation and corporate communications using a variety of innovative tools and techniques and has the knowledge and skills to deliver messages with intelligence, precision and impact.

Gareth Hill is a Political Researcher and Policy Officer at Sauce Consultancy. For more information see  www.sauceconsultancy.co.uk or call 020 7061 6351

This is the 24^th Briefing Paper; a full list of subjects covered is available for Institute members and is a valuable resource covering so many aspects of consultation and engagement