By Daniel Hunter

Local Enterprise Partnership (LEP) chairs and CEOs interviewed by PwC and the Smith Institute say urgent action is needed to address the skills crisis, which is holding back efforts to improve productivity and local growth.

In Delivering Growth - Where next for LEPs, LEPs report urgent action is needed to address the skills crisis, which is holding back efforts to improve productivity and local growth, including devolving a larger slice of the Skills Funding Agency budget to LEPs.

Interviewees said their success should be built on the pro-growth policies needed to support skills availability and improve productivity. Without them, the LEPs believe the ability to deliver their strategic plans might be seriously compromised.

Stephanie Hyde, head of regional business at PwC, said: “The private sector is a vital engine for job creation and growth, and the LEPs have a critical role to play in championing local infrastructure and skills investment — creating locally devised, business led solutions. While there are differences between the scale and resources of LEPs across England, what’s common in their plans is the focus on improving private sector productivity, and we're seeing encouraging links developing between local education and businesses.”

Most of the LEPs interviewed are already collaborating with universities and colleges, but they say it would make more sense to devolve a bigger slice of the Skills Funding Agency’s budget to the LEPs to drive further action on localised business skills.

Skills pilot schemes in the North East, Stoke-on-Trent & Staffordshire and West of England LEPs are already underway, using financial incentives to ensure that skills provision meets the needs of local businesses. Several LEPs are also running Enterprise Adviser pilots, which advise school leaders on how to better link their schools with local businesses.

LEP chairs and chief executives called for more coherent planning between government departments on how individual LEP programmes fit into investment plans for national projects including skills, housing, investment, and broadband roll out.

Amongst other themes highlighted in the interviews:

- Many LEP chief executives are concerned about the amount of red tape involved in bidding for funds and feel project funding and delivery rules can be over-prescriptive.

- 24 LEPs have established or partnered in new Enterprise Zones (EZs), which offer various other incentives, including business rate discounts, reduced planning restrictions, superfast broadband and (in some areas) tax relief for new investment.

- Many of the LEPs have set up Growth Hubs offering one stop support for small firms, with some LEPs, including Greater Birmingham & Solihull actively encouraging larger firms to buy local.

- Opinion is divided on the impact of Combined Authorities on LEPs. Most want to stay as they are and there was concern that further empowerment of Combined Authorities might disadvantage and marginalise those LEPs that are smaller and less well resourced, which would have to work with multiple local authorities, typically not city regions.

Few chairs support the idea of the LEPs having a bigger and more formal planning role, similar to Development Corporations, with most feeling it would create unwanted change, and tension with local authorities.

- Most LEPs are hesitant about taking on new powers, which may not come with extra resources, with concerns that ‘mission creep’ would add extra layers of bureaucracy and detract from their private sector remit.

While the analysis underlines that the development of LEPs has not been uniform across the UK, the report concludes that in general LEP geographies are better matched to functional economic areas, than their Regional Development Agency predecessors, allowing them to be better focused on specific sectors and business needs within their area. LEP chairs further argue that such diversity “is the hallmark of decentralisation”.

Jonathan House of PwC’s Government & Public Sector practice, said: “LEP skills and resources remain concerns for many, alongside the need for multi-year budgets, but we cannot underestimate their influence and potential within the government’s localism agenda. They will play a critical role in bringing together disconnected public and private sector agencies to drive development and delivery of local ‘place’ plans. In that respect, arguably some LEPs are under powered and under resourced for the tasks they face, yet all have the networks, local know-how and business links to have an impact. We are likely to see more collaborative working across LEP boundaries, possibly in LEP federations, rather than forced mergers between them.”