The FDI promotion structure of the UK underwent large changes when the Coalition government, elected in 2010, abolished the regional development agencies previously tasked with economic development and investment attraction, and decentralised the functions to smaller local enterprise partnerships (LEPs).

fDi Magazine set about analysing how effective the 39 newly created LEPs might be in attracting FDI through a benchmarking exercise which ultimately found the West of England organisation as the most promising. 

The good and the bad

Benchmarking the LEPs is complicated. fDi’s researchers looked at the geographies they cover in an effort to assess the attractiveness of the locations themselves, and then separately judged the strategies and plans the LEPs presented. The result is a top 20 ranking for the LEPs and also a top 20 for the locations they represent.

Adding to the difficulty is the fact that many of the boundaries drawn for LEP territories are artificial and overlap as economic regions. Not all LEPs are created equal; London, for example, was allowed to keep its broader development agency – now called London & Partners – to the annoyance of much of the rest of England’s investment promotion bodies.

There are weak locations that have potentially good LEPs as well as attractive locations with weak LEPs. This is the reason that fDi decided to look at the two in isolation. London has the strongest location offer, but its LEP is not particularly active in FDI promotion, as unlike most of its counterparts the London Enterprise Panel can rely on help from London & Partners. Conversely, Cornwall scores outside the top 20 for its location attributes, but its LEP put an impressive entry in for consideration and scored a top 10 ranking from the judges.

LEP mismatch

One of the members of the judging panel for the LEPs ranking, Paul Nunn, research director at location consultancy East West Locations, agrees that the strength of the LEPs versus their offerings does not always match up. He points to one LEP that came out poorly in the judging but has many high points within its location offering and cites “certain organisations that are performing well above their relative size/weight... Grimsby is a good example in this area”.

“The LEPs that cover an established inward investment agency patch (Liverpool, Greater Manchester, etc) fare better – as one might expect given that these areas truly understand FDI and have an established strategy for it, plus data tools to react to enquiries,” he says.

Nicola Kidd, another judge, observes that most LEPs seem parochial in their approach. “There is no understanding of whether or not they are nationally or internationally competitive. This is critical to their success in attracting and retaining good quality FDI,” she says. 

Few LEPs explained in their entry forms how they plan to market themselves internationally, which begs the question how they intend to attract FDI.

Lacking focus

Ms Kidd, formerly of the East Midlands Development Agency and UK Trade & Investment, who now runs her own business specialising in international economic business development, believes that LEPs lack vision. “Very few were truly visionary and saw their LEP area as an international investment location of the future,” she says. The overall feeling is one of focusing on the micro over the macro.

“LEPs list infrastructure projects without explaining the benefits to the local economy or FDI – no need to list minutiae of different developments. We want transformational activity and initiatives not [UK supermarket] Asda [-sponsored] roundabouts and new bus routes,” adds Ms Kidd.

Douglas Clark, director of FDI consultancy Location Connections, echoes this criticism: "Quite a few LEPs talk too much about their property and infrastructure development and not enough about the available skilled people that are critical for inward investors.  A lot of hope and big job creation numbers are being pinned on their enterprise zones. I wonder how realistic this is."

He adds: "Some of the LEPs seem to give the impression that they view inward investment as if it is an automatic right for their area. I don’t think they realise how hard they need to work to attract it. Only a few LEPs clearly demonstrate how inward investment is integrated in to their overall strategy and how it can make a significant contribution to their area’s economic development." 

However, despite this criticism, some judges were encouraged that several of the LEPs seem to recognise the importance of aftercare for existing inward investors.

Click on the link below for a PDF version of the complete results: