Khalil Souki 19 June 2014

Make it world class, not just best in class

Make it world class, not just best in class image

The funding environment for local economic growth in the UK has changed dramatically over the past four years. If Local Enterprise Partnerships (LEPs) want to be the bodies behind growth at a local level, they need to think internationally.

Most of the funds available for LEPs to drive growth now have a competitive element to them. According to the National Audit Office, of the forecast £1.7 billion directly allocated to local growth in 2014/15, LEP budgets amount to less than 1%. This means that LEPs must win the funding they need to drive local growth. In competing for these funds, it is easy to see other LEPs as the competition and design an offer to simply beat theirs.

However, this isn’t the whole story. Bids are considered not only for their local impact, but on how that location can drive the nation’s growth. Those reviewing LEP bids will be looking for world class growth strategies, not just best in class.

A global competition

LEPs are now competing for growth with other countries, cities, states and regions. The pursuit of growth is therefore a global contest and in these austere times funding and opportunities are finite with fierce competition. This is particularly apparent when looking to secure match funding from big business. If LEPs want the private sector to invest more locally to match their own plans, they need to present a globally compelling proposition.

Coast to Capital, the LEP covering Brighton and Hove, Croydon, Gatwick Diamond, East Surrey, Lewes and West Sussex, sets a good example of this. They plan to build on new links with South East Asia by utilising a national asset – Gatwick Airport – to create a distinctive offer with a clear proposition for the private sector. This is an approach any LEP can adopt by framing a business opportunity around something distinctive about their local area.

Our national assets are vital for winning a greater share of global growth, but in order to realise their potential LEPs must consider these assets in relation to their international position.

The Port of Felixstowe is the busiest container port in the country and is the only UK port in the top 50 busiest globally. In their funding strategy, New Anglia LEP refers to the port as number one in the UK, but they are missing a trick - the port’s position in the global top 50 is the more powerful offering. Any New Anglia plan becomes world class when it considers how to capture a larger market share from international competitors, bringing growth to both the local economy and the UK.

Maintaining perspective

However, our national assets in isolation won’t be enough. A world class strategy can’t ignore its neighbours’ capabilities and ambitions. Those assessing funding bids from LEPs will be coming from a national perspective, so appealing to the bigger picture can only improve the bids.

A recent Economist article proposed that our lack of local collaboration is putting the UK at a disadvantage globally. The article compared the North West of England to Greater Chicago, which has a population comparable to the English North West but with approximately 80% higher real incomes than those in the UK region. One of the biggest differences between these areas is connectivity. Most of the Greater Chicago area is linked by a single transport system, in contrast to England’s North West. While LEPs may not be able to replicate Chicago’s transport system, they can create much greater collaboration across the region in other ways.

For example, the various LEPs in the North West could work together on propositions which connect a business in the Cheshire and Warrington LEP with customers in Greater Manchester while providing workers in Liverpool City’s LEP with new opportunities for work. This kind of ambition would help LEPs win the funding they need by showing the cross-LEP working that central government is asking for.

The relationship between local and national growth is a challenging balancing act. A world class local growth strategy will not only show how a LEP can use national initiatives, it will show how a local solution can better achieve national ambitions. For those assessing funding bids, a plan which generates net economic growth for the country will be far more compelling than one which could be attracting growth away from neighbouring LEPs.

The Humber LEP recently outlined their intention to establish the area as a centre of excellence for renewable skills. This is a great example of how local strategy, private investment and national ambitions can drive economic growth. The LEP is working with central government to align a set of national skills and funding programmes with a £310m investment from Siemens and ABP in Hull.

This helps national government achieve its skills agenda, demonstrates the UK’s commitment to a growing industry and creates a world class renewables offer which can attract further growth.

LEPs have come a long way since their inception but if they want to be the driving force behind local economic growth, they must now join the global race. LEPs need to understand their local assets in a global context and produce world class strategies to bring growth to Hull over Hanoi. Once they do this and work with - not against - their neighbours, LEPs can secure the funding they need to bring growth to the country as well as their locality.

Khalil Souki is a government expert at PA Consulting Group.

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