Rural Growth Network Pilots

Five Rural Growth Network (RGN) pilots will be established during 2012/13 in Cumbria, Devon & Somerset, Durham & Northumberland, Coventry & Warwickshire and Swindon & Wiltshire. These Pilots, supported by £15 million of new government funding, will test different mechanisms by which Local Enterprise Partnerships and local authorities can support sustainable economic growth in rural areas.

 

More Info here: http://archive.defra.gov.uk/rural/documents/economy/regr-rural-growth-networks.pdf

Enterprise Zones

There are 24 Enterprise Zones in 22 LEP areas.

Local enterprise partnership	Enterprise Zone
Black Country	I54 and Darlaston
Cornwall and the Isles of Scilly	Newquay Aerohub
Derby, Derbyshire, Nottingham and Nottinghamshire	Boots Campus (Nottingham)
Greater Birmingham and Solihull	Birmingham (Birmingham City Centre)
Greater Cambridge and Greater Peterborough	Alconbury Airfield
Greater Manchester	Manchester Airport
Humber	Green Port Corridor
Humber	Humber Estuary Renewable Energy Super Cluster
Lancashire	Warton and Samlesbury
Leeds City Region	Lower Aire Valley
Leicester and Leicestershire	MIRA Technology Park
Liverpool City Region	Daresbury Science Campus
Liverpool City Region	Mersey Waters
London	Royal Docks
New Anglia	Great Yarmouth and Lowestoft
North Eastern	River Tyne and Nissan site
Oxfordshire	Science Vale UK
Sheffield City Region	The Modern Manufacturing and Technology Growth Area
Solent	Daedalus Airfield
South East	Sandwich and Harlow
South East Midlands	Northampton Waterside
Tees Valley	Tees Valley Enterprise Zone
The Marches	Hereford Enterprise Zone
West of England	Temple Quarter (Bristol)

Source: http://www.communities.gov.uk/regeneration/regenerationfunding/enterprisezones/

Growing Places Fund

 

Growing Places Fund – Final Local Enterprise Partnership distribution (£)
England	460,000,000
(The) North Eastern Local Enterprise Partnership	17,054,666
Tees Valley	5,798,759
Cumbria	4,505,274
Lancashire	13,092,450
Greater Manchester	25,258,817
Liverpool City Region	13,192,859
Cheshire and Warrington	8,901,948
York and North Yorkshire	6,330,582
Leeds City Region	24,485,284
Humber	5,917,641
Sheffield City Region	12,547,082
Lincolnshire	6,615,807
Derby, Derbyshire, Nottingham and Nottinghamshire	17,806,001
Leicester and Leicestershire	9,062,330
Stoke and Staffordshire	7,741,247
The Marches – Shropshire, Herefordshire, Telford and Wrekin	5,531,035
Black Country	9,786,886
Worcestershire	3,727,486
Coventry and Warwickshire	8,671,398
Greater Birmingham and Solihull	15,211,198
South East Midlands	12,689,036
Northamptonshire	3,995,321
Buckinghamshire	4,247,270
Greater Cambridge & Greater Peterborough	10,903,749
Hertfordshire	10,989,510
New Anglia	12,288,856
Pan London	41,434,489
South East	33,226,094
Coast to Capital	16,024,526
Enterprise M3	14,723,101
Solent	12,244,593
Oxfordshire	6,128,979
Thames Valley Berkshire	10,876,292
Gloucestershire	5,746,488
West of England	11,579,541
Swindon and Wiltshire	6,346,639
Dorset	6,512,960
Heart of the SW	14,510,481
Cornwall and the Isles of Scilly	4,293,329

source: http://www.communities.gov.uk/documents/localgovernment/pdf/2079058.pdf

Note of the LEP Network Conference on 26th April 2012

General points from the Event

•  It was a popular event with 37 of the 39 LEPs in attendance as well as three Cabinet Ministers, one Minister of State and lots of senior civil servants. Government is taking LEPs seriously.

• David Frost, Chair of the LEP Network, made a plea to government on behalf of LEPs about resourcing "Can they drive significant change while run on a shoestring" and requested a commitment of £250k per LEP per year for the next three years to help them reach their full potential. Here is a link to his blog http://lepnetwork.org.uk/leps-cannot-deliver-economic-development-on-a-shoestring.html on the issue.
• Eric Pickles responded to this request for funding with this statement: "if you push, some departments will give it to you, but it will rip the heart out of you, it will come with teeth". He then referred to delivery targets for central government and a warning of "then you will work for us". (This bit wasn't in the speech transcript!)

• The Full Transcript of Eric Pickles speech can be found here: http://www.communities.gov.uk/speeches/corporate/lepnetwork2012 the other point of note is "If you see rules break them. If there are obstacles - go through them...So take liberties. Tell us what you need to make progress".
• Mark Prisk went on to say that we must remember that locally the private sector is working in partnership with the public sector to make areas better: Local growth must be locally led. The one size fits all approach has failed. LEPs have a challenging agenda. There will be local difference based on local need and local resources. Whitehall is also learning to adapt to this different approach. LEP have the ability to pool resources and pool talent to affect change locally. We must remember that LEPs can't do everything. LEPs need to have a clear strategy and a clear idea of priorities in order to create the right conditions for growth.
• The idea of 'non city deals' was mentioned.
• Government recognises that the nature of bottom up approach means you are going to get an un even model
• Here is a link to Secretary of State for Transport Justine Greening's speech http://lepnetwork.org.uk/transport-secretary-justine-greening-addresses-addresses-lep-network-annual-conference.html she mentioned that some decisions will go to LEPs from 2015 and that LEPs will be a key player in this devolved process. There will be a managed handover to transport authorities when they are ready. I am sure I also recall her mentioning indicative funding to be announced later this year – although this doesn't seem to be written anywhere.
• Break out session were held on four topics. Here are the key points from each:
  
  • • Resourcing 1) Continuous financial support 2) competition vs. allocation 3) structures and accountability
      
    • Skills 1) youth unemployment crisis 2) provision of skills to economic need 3) role of LEPs in skills agenda
      
    • Business infrastructure 1) communication (esp. Broadband and mobile coverage) 2) transport (delay from statutory consultees) 3) key roads to be identified and improved 4) multiple initiatives from various departments to be coordinated
    • Planning and Economic Development 1) LEP role to be statutory, consultee or just to make it easier for business 2) how to unblock

There is lots of LEP best practice nationally. Here are a few highlights:

• • West of England LEP has established a web portal to support the SMEs http://www.businessnavigator.org.uk/
  • Leicester and Leicestershire Regulation Pathfinder project http://www.bis.gov.uk/assets/biscore/economic-development/docs/r/11-1066-regulation-pathfinder-project
  • The Black Country business friendly planning http://www.the-blackcountry.com/default.asp?PageID=325
  • Coventry and Warwickshire LEP Access to finance group http://www.cwlep.com/focus-group/access-to-finance
  
  
  So what next?
  
  
  Below I have put together some thoughts into possible next steps:
  
   
• LEPs should contact central government – all departments – and tell them what they want and what they will achieve – the door is open – it is up to LEPs to go through it. Be proactive.
• The flip side of the door being open is to understand that LEPs can't go through all open doors – they don't have the resources. Expectations need to be managed. Different LEP areas will have different priorities. The value of LEPs is greater than what funding they have or don't have. The ability to pool resources, pool talent and knock heads together shouldn't be underestimated. That said LEPs will need to have a clear strategy and a clear idea of priorities in order to create the right conditions for growth.
• All LEPs to be given RGF3 funding to replicate the successful RGF2 bid from Plymouth to support SMEs locally.
• The LEP Network to continue to share LEP good practice. LEPs to use/replicate this best practice where appropriate to do so.
• Recognise that the incentives on offer do not apply to all LEPs. Some will be all singing and dancing others will be a more basic model. All with have the same overarching objective.
• Central government to coordinate their requests of/to LEPs better. Some departments are better at this than others.
• Cut public sector red tape. The public sector should be able to operate at the same speed as the private sector whist providing transparency and VFM. Especially when contracting for services.
• Bureaucracy to be cut for LEPs where it makes sense to do this. If an element of competition adds nothing then start handing things out. This isn't too top down. Perhaps this could be applied to transport funding. Allocations given to LEPs for a particular purpose but decisions taken locally on exactly what will be delivered.
• Government is currently negotiating a deal with the EU for 2014 based on improving value for money, reducing bureaucracy and burden and allowing aligning of the funds. I think LEPs can have a key role.
• Perhaps the next stage for some LEPs will be to look at the 'city deals' which are all to be agreed by the summer and think about what sort of deal they want and then ask for it. This could be a 'LEP deal' a 'county deal' or a 'rural deal'.
  
• Will incentives such as business rate growth be ringfenced to ensure this is reinvested in the local economy/economic development?
• There was also talk about how do we know if LEPs are successful? What are the right things to measure? Over what time scale?
  
  
  
  Finally I had a lovely day.  It was a great event, really well organised and very interesting.
  
  As ever these are my personal views.

Regional Growth Fund checklist

Regional Growth Fund


Bidding Checklist (taken from BIS flyer)

Have you:
Completed Part 1 and Part 2 of the Application form?

Used the guidance to complete the form fully and correctly?

Made an application for at least £1 million?

Proposed an investment that will impact areas of England?

Described how you will directly leverage private sector funds?

Applied as a private sector body; a public/private partnership; or a social enterprise?

Complied with state aid and other restrictions?

Shown that RGF funding is essential to enable this project to proceed?

Attached CV's of key personnel?

Attached a simple project plan?

Attached an internal document for your investment committee / Board which sets out the rate of return on investment with and without RGF support?



The RGF team at BIS can be contacted on 0207 215 6758

Here is a link to a presentation by BIS on RGF3 roadshows http://www.bis.gov.uk/assets/biscore/economic-development/docs/r/regional-growth-fund-round-3-guidance-slides.ppt

Business Funding / Assistance April 2012

Advance manufacturing supply chain initiative

http://www.innovateuk.org/content/competition/advanced-manufacturing-supply-chain-initiative.ashx

The £125 million Advanced Manufacturing Supply Chain Initiative, which will open for applications from 29 March. There are two different funding Streams (£100m is available for 'Stream 1' and £25m for 'Stream 2') within this initiative and applicants will need to consider the eligibility criteria for each and which would be most appropriate to support the aims of the application.

Stream 1 has two rounds of funding with the deadline for applications of 13 June 2012 or 12 September 2012 (both deadlines are at 12 noon). Applicants for Stream 1 must choose which round they wish to enter. The deadline for applications for Stream 2 is 13 June 2012 at 12 noon. Please see Guidance for more information. A briefing day for potential applicants for both Streams of funding is on 27 April 2012.

Smart

http://www.innovateuk.org/content/competition/smart.ashx

Formerly known as Grant for Research and Development, Smart is available to single companies. Three types of grant are available:

• - Proof of market grant
• - Proof of concept grant
• - Development of prototype grant

Pre start-ups, start-ups, and small and medium-sized businesses from all sectors across the UK may apply for the Smart programme

Small Business Rate relief

Government has now doubled small business rate relief for two and a half years. http://www.communities.gov.uk/news/localgovernment/2124550

2012/2013 business rates deferral scheme

http://www.communities.gov.uk/publications/localgovernment/bril32012

Business Rates Information Letter (3/2012): The Business Rates Deferral Scheme and Confirmation of the 2012/13 Multiplier

Enterprise Finance Guarantee (EFG)

More information can be found at www.bis.gov.uk/efg

How does it work? EFG is a loan guarantee scheme designed to facilitate additional lending to viable SMEs lacking the security or proven track record for a commercial loan. It is not a replacement for commercial products and will account for 1%-2% of total lending to SMEs. The Government provides the lender with a 75% guarantee for each individual loan, subject to a cap on total claims arising from a Lender’s portfolio.

Who delivers the scheme? Accredited lenders. There are currently 45 accredited lenders, including all main UK High Street Banks. New lenders are being accredited, including Metro Bank, who will offer EFG guaranteed loans from January 2012. All lending decisions are made by the lender.

Who can apply? EFG is open to SMEs with an annual turnover of up to £25m [rising to £44m from January 2012] seeking loans between £1000 and £1m, repayable over a period of 3 months to 10 years.


Export Enterprise Finance Guarantee (ExEFG)

More information can be found at www.bis.gov.uk/ex-efg

How does it work? ExEFG facilitates the provision of short term export finance to viable SMEs which lack the security necessary to obtain such facilities commercially. As required by EU State Aid rules, the scheme operates on a commercial basis. The Government provides the lender with a 60% guarantee for each individual facility, subject to a cap on total claims rising from a lenders annual portfolio. The borrower pays an upfront 3% per annum (pro rata) premium regardless of facility utilisation or drawdown, to meet the costs of the scheme.

Who delivers the scheme? Accredited lenders, which are: Barclays, HSBC, Lloyds Banking Group, RBS and Santander.

Who can apply? ExEFG is open to viable SMEs with an annual turnover of up to £25m seeking short term export finance between £25,001 and £1million for terms of up to 2 years (available in increments of 3 months).


Enterprise Capital Funds (ECFs)

More information can be found at www.bis.gov.uk/policies/enterprise-and-business-support/access-to-finance/enterprise-capital-funds or http://www.capitalforenterprise.gov.uk/

What are they? For many young innovative firms equity finance is the best option to reach their high growth potential but many struggle to obtain this form of finance. This is often because the relative high costs of undertaking due diligence in early stage companies, in relation to the deal size, often means that investors prefer to make larger investments in later stage companies. This disconnect is called the 'equity gap'. Enterprise Capital Funds (ECFs) address this market weakness.

How does it work? The ECF uses government funding alongside private sector investment to bridge this gap. Nine such funds have been launched since 2006.

Who delivers the scheme? ECFs are administered by a government-appointed fund manager Capital for Enterprise Limited (‘CfEL’). CfEL can be contacted on 0114 206 2131 or by email on info@capitalforenterprise.gov.uk.

Informationon Notion Capital fund here:
http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=424106&SubjectId=2

Business Angel Co-Investment Fund

More information can be found on http://www.angelcofund.co.uk/

What is it? The £50m Business Angel Co-Investment Fund aims to support angel investments into high growth potential early stage SMEs, particularly in areas worst affected by public spending cuts.

How does it work? The fund has been created with a grant from the Regional Growth Fund and is able to make initial equity investments of between £100K and £1M in to SMEs alongside syndicates of business angels (subject to geographical restrictions and upper limit of 49% of any investment round). Investment decisions will be made by the independent Investment Committee of the fund based on detailed proposals put forward by business angel syndicates.

Who delivers the scheme? The fund has been designed and established by a consortium of private and public bodies with expertise in business angel investment. It is a private sector body with clear objectives to boost the quality and quantity of business angel investing in England, and to support long-term, high quality jobs in high growth companies.

National Loan Guarantee Scheme

More info http://nationalloanguaranteescheme.co.uk/

Background : http://www.parliament.uk/briefing-papers/SN06182

The scheme allows banks to raise up to £20bn of funding guaranteed by the Government, to lend directly to smaller businesses (who are more reliant on bank finance) at a lower cost than would otherwise be the case. UK businesses with a turnover of up to £50m will be eligible to benefit from the scheme.

Business Finance Partnership (BFP)

This is a new Scheme that was announced by the Government on the 29 November and will be launched soon.

How does it work? The BFP will invest an initial £1bn in loan funds, alongside private sector co-investors. These funds will then lend to mid-sized businesses, helping to diversify the channels of finance available to them. The Government will also consider options for investing through other non-bank lending channels that reach SMEs.

When will it be up and running? The Government is now engaging with relevant stakeholders on the BFP, and inviting expressions of interest from potential fund managers for the Government’s co-investment. Further details have been set out at http://www.hm-treasury.gov.uk/d/business_finance_partnership.pdf.

The Government expects to commit the first funding to loan funds in spring 2012.

Who will deliver the scheme? HM Treasury will operate the BFP, making decisions about which loan funds to invest in. However, the managers of those loan funds will then make individual lending decisions. It will focus initially upon co-investment, with private sector investors, in managed funds that lend directly to UK businesses. The Government is currently inviting expressions of interest from potential fund managers for the Government’s co-investment.

Who is eligible? Businesses in the UK with a turnover of up to around £500m. The exact definition will be set early in 2012.

How will businesses benefit? The BFP will aim to both increase the supply of capital through non-bank channels and, in the longer term, to help to diversify the sources of finance available to businesses.

Enhanced Capital Allowances

Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. There are three schemes for ECAs:


Energy-saving plant and machinery
Low carbon dioxide emission cars and natural gas and hydrogen refuelling infrastructure
Water conservation plant and machinery

Businesses can write off the whole of the capital cost of their investment in these technologies against their taxable profits of the period during which they make the investment.
This can deliver a helpful cash flow boost and a shortened payback period

http://etl.decc.gov.uk/

New Enterprise Allowance

On 5 October 2010 the Secretary of State for Work and Pensions announced that the Government will give extra help to unemployed people who want to start their own business, through the New Enterprise Allowance (NEA).


NEA is available to Jobseekers Allowance (JSA) claimants aged 18 and over who have been claiming for 26-weeks or more.

Participants will get access to a volunteer business mentor who will provide guidance and support as they develop their business plan and through the early months of trading. Once a claimant can demonstrate they have a viable business proposition with the potential for growth in the future, they will be able to access financial support. This will consist of:

a weekly allowance worth £1,274 over 26 weeks, paid at £65 a week for the first 13 weeks and £33 a week for a further 13 weeks, and

the facility to access a loan of up to £1,000 to help with start-up costs, subject to status.

The total package of support could be worth up to £2,274 to each participant who starts their own business.

http://www.dwp.gov.uk/adviser/updates/new-enterprise-allowance/

Seed Enterprise Investment Scheme (SEIS)

This is a new Scheme that was announced by the Government on the 29 November and will be launched soon.

How does it work? SEIS will provide income tax relief of 50% for individuals who invest in shares in qualifying companies, with an annual investment limit for individuals of £100,000 and cumulative investment limit for companies of £150,000.

In addition, the Government will offer a capital gains tax holiday for investments made into the new scheme. This will provide for a capital gains tax exemption on gains realised on disposal of an asset in 2012-13 and invested through SEIS in the same year.

When will it be up and running? The seed scheme will be operational from April 2012; the CGT holiday is time-limited to the tax year 2012-13 to 2013-14.

New Enterprise Allowance (NEA)

http://www.dwp.gov.uk/adviser/updates/new-enterprise-allowance/

Low Carbon and ‘green’ innovation funding

http://www.decc.gov.uk/en/content/cms/funding/funding_ops/innovation/innovation.aspx

Enterprise nation funding (open again in May)

http://www.enterprisenation.com/fund-101-open-again-soon/


RBS and Natwest regional growth scheme http://www.natwest.com/business/products/borrowing/government-lending-support.ashx

HSBC asset finance scheme

http://www.business.hsbc.co.uk/1/2/commercial-banking/loans-and-finance/asset-finance


Big Society Capital

http://www.bigsocietycapital.com/

They enable organisations tackling social issues to grow by encouraging investments made for social as well as financial return.

Funding only available in some areas:

Homeworking Fund (North East Only)

http://www.entrust.co.uk/people/home-working-fund

The innovative £1.1 million Fund will help organisations overcome the initial cost barrier of implementing a home working operation. The Fund is open to any appropriate businesses in the region and will provide direct financial support, up to a maximum of £3,000* per FTE home worker. This comprises of up to £2,000 for skills development and up to £1,000 towards capital equipment.* The capital equipment supported will be specific computer hardware, software, associated telephony and home office furniture. This Fund will operate on a "first come, first served" basis. Interested parties are encouraged to register interest early to avoid disappointment. For more information or to request a copy of the pilot evaluation findings to date, please contact:

Sarah Belton on 0191 244 4008 Email: homeworkingfund@entrust.co.uk


Regional Growth Fund for SMEs

Some Local Enterprise Partnerships / Local Authorities have managed to access RGF monies for the local area for SMEs:

Plymouth: http://www.plymouth.ac.uk/pages/view.asp?page=36701

Southampton: http://www.solentlep.org.uk/regional_growth_fund

Birmingham: This project is being supported by the Government’s Regional Growth Fund. Bournville College and Birmingham Post will be making further announcements in the coming weeks. For media and general enquiries, please contact Bournville College’s Press Office on 0121 477 1385. http://www.birminghampost.net/birmingham-business/birmingham-business-news/financial-business-news/2012/05/04/applications-flood-in-for-birmingham-post-business-growth-fund-65233-30895298/

Liverpool: http://liverpoollep.org/opportunities/rgf.asp and http://www.liverpoolecho.co.uk/liverpool-news/local-news/2012/02/02/get-your-share-of-the-1m-liverpool-echo-business-booster-fund-to-transform-your-business-100252-30243231/

East Kent: Expansion East Kent have £35 million available in the form of 0% interest loans to invest in East Kent.  http://www.kent.gov.uk/business/business_support_centre/help_and_advice_for_businesses/local_and_national_support/expansion_east_kent.aspx


Newcastle: watch this space!


Bristol Enterprise Development Fund

http://www.bedf.co.uk/

Rural Support

Big lottery fund SOS Village fund

Aims to support rural community enterprise

http://www.villagesos.org.uk/funding

Rural Growth Networks pilots

DEFRA are supporting five rural growth network pilots Cumbria, Devon,Somerset, Durham & Northumberland, Coventry & Warwickshire and Swindon & Wiltshire

http://archive.defra.gov.uk/rural/documents/economy/regr-rural-growth-networks.pdf

Rural Economy Grant (REG) (DEFRA)

Provides large grants of between £25,000 and circa £1 million (no set upper limit) to enable a significant ‘game-changing’, transformational performance in farm, forestry, tourism, agri-food businesses and micro businesses in rural areas in England. Project applications will need to demonstrate that as a result of a grant their business will achieve a significant step change in performance (such as job creation, increased turnover, access to new markets etc).


http://rdpenetwork.defra.gov.uk/funding-sources/rural-economy-grant


DEFRA - to be launched soon:

Farm and Forestry Improvement Scheme (small grants of between £2,500 and £25,000) due spring 2012

Rural Community Broadband Fund (grants to establish Superfast Broadband in hard to reach locations) due spring 2012.


Skills and Knowledge Transfer (up to £20 million) – a flexible and locally targetable skills training programme to enable rural business growth. To be launched Autumn 2012

An additional £3m will support schemes to improve footpaths and access, skills training for new entrants to the forestry workforce, and developing tourism support building on those being piloted by a leading AONB in the South East. The timing of the launch of these initiatives is to be confirmed.

http://www.defra.gov.uk/rural/rdpe/


The Key Fund

Key Fund provides investments from £2,500 to £150,000 to Social Enterprises based or working in the North and North Midlands.


http://www.thekeyfund.co.uk/


EU funding

Microfinance

http://ec.europa.eu/contracts_grants/microfinance_en.htm

Supporting Every Small and Medium-Sized Enterprise

http://www.gileschichestermep.org.uk/SESAME2011.pdf

Search for grants: http://ec.europa.eu/contracts_grants/index_en.htm

Also read:

BIS SME Access to Finance FAQs

http://www.bis.gov.uk/assets/biscore/enterprise/docs/s/10-1375-smes-access-to-finance-faqs.pdf

Skills

Apprenticeships
The National Apprenticeship Service will provide up to 40,000 Apprenticeship grants to smallmedium sized employers recruiting 16 to 24 year olds with a value of £1,500 to encourage new employers to take on new apprentices.


The £1,500 is in addition to the training costs of the Apprenticeship framework which are met in full for young people aged 16 to 18 and 50% for those aged 19 to 24.

http://www.apprenticeships.org.uk/Employers/The-Basics.aspx


Employer Ownership of Skills - Pilot


The Employer Ownership pilot offers all employers in England direct access to up to £250 million of public investment over the next two years to design and deliver their own training solutions. The pilot is jointly overseen by UKCES, the Department for Business, Innovation and Skills and the Department for Education.

http://www.ukces.org.uk/ourwork/employer-ownership

Manufacturing Advisory Service (MAS)

Subsidised consultancy support for SME's (in manufacturing sector) to help grow the business (funding can be used to susbsidise the cost of a consultant of a company's own choosing)

http://www.mymas.org/services/subsidised-consultancy-support-for-smes





Anything Missing?  Let me know at lorna_gibbons@hotmail.com

Strong local partnerships will not benefit from an elected mayor

New city mayors will add little to local governance – and may prove a costly extravagance
As published in The Guardian on 30th January 2012  http://www.guardian.co.uk/local-government-network/2012/jan/30/local-economies-partnerships-elected-mayor?INTCMP=SRCH  I would suggest reading the comments on the article via the link for interesting debate.

Lorna Gibbons

Guardian Professional, Monday 30 January 2012 09.05 GMT Article history

Elected mayors for England's cities will not prove comparable to London's Boris Johnson. Photograph: Dave Thompson/PA

The profile of local enterprise partnerships (LEPs) is on the rise. Boards and chairs are in place; funding has been awarded; a new project to support rural business is open to the partnerships; Greater Manchester has approved a new investment vehicle to spend £75m on economic growth; Cornwall and the Isles of Scilly have even taken their priorities out on the road.



It seems that LEPs can provide the "larger than local" geography needed to drive growth within economic areas. Funding is available, and LEPs are being trusted to deliver.



So how will a directly elected mayor fit with the LEP system? The coalition agreement set out a commitment to create directly elected mayors in the 12 largest English cities outside London. Referendums will be held in these cities to let local people choose whether they want a mayor.



A consultation, asking what a mayor can do for these cities, has recently been completed. Greater Manchester does not want a mayor; it says its 25 year history of voluntary collaboration puts it in a good position to deliver its economic priorities building on its LEP, rather than "create a new form of governance".



Barbara Janke, leader of Bristol city council, suggested that a mayor for the city would add very little without new powers from government – and even if they were granted, their partner unitary authorites would not agree to those powers extending into their boundaries.



It is also unlikely that Leeds will want a mayor, given that the LEP is at city region level, and councils outside of the city are unlikely to give up their powers to its newly elected chief. In Liverpool, Lord Heseltine is trying to encourage city leaders to elect a high-profile mayor as a way of attracting investment. Surely a high-profile LEP chair could do the same job?



Where an LEP works well, an elected mayor would not add very much except another costly layer of governance. Coventry city council has already earmarked £130,000 for a mayoral referendum; similar taxpayer costs will also go towards a second vote – on who the elected mayor would be – and a further £120,000 is set aside for a potential mayor's salary. Meanwhile, an LEP board member is appointed after a open and transparent recruitment process, and remains unpaid.



How does this all fit into cities minister Greg Clark's recently launched city deal? The eight core cities and their surrounding LEPs are being offered a menu of transformative new powers that the government wants to explore as the basis of a series of bespoke deals. The idea is that the government will free these cities from Whitehall control, with the aim of stimulating growth.



As with any deal, there is a trade off. Here, cities will have to offer something in return for their new powers and investment. They must guarantee they can provide strong and accountable leadership, improve efficiency and outcomes and be innovative in their approach. This wish list sounds like it has come straight out of the consultation document "What can a mayor do for your city?", which stated that mayors have the potential to provide strong and accountable democratic local leadership.



So what about where we already have an elected mayor? Stoke did have one but has abandoned the post due to the cost, the size of the job and the concentration of power in the hands of a single individual. Leicester has an elected mayor – but it no longer has a chief executive.



What about the London mayoral model? It is easy to argue that the capital does still have regional government. Among other things, the mayor holds almost all of the executive power in the GLA. In fact, the London set up is so different you could argue that it doesn't actually need an LEP. London already has all of the powers other cities might expect from the city deal.



What is clear is that a vote for an elected mayor is not the same as a vote for Boris Johnson or Ken Livingstone in London. The exact powers available to elected mayors are not yet clear, but via the city deal LEPs will also be able to negotiate with Whitehall for control in a number of areas to give local communities more flexibility, access to new opportunities and help to stimulate growth across the country.



We need to ensure that power is delegated to the most appropriate level. The solution seems to be to give LEPs at least some of the powers that may go to a mayor, providing they can show appropriate scrutiny arrangements. This works with existing structures, at minimal cost, and includes local authority leaders (via the LEP Board) in decision processes that are led by the private sector.