However, 38 other bids for LEP status were rejected and the opposition, not mincing its words, denounced the plans as a ‘pathetic fig leaf’. Furthermore, they come just months after the government announced the abolition of Regional Development Agencies, which played a similar role. So what can we expect from the LEPs?
A £1.4billion ‘growth fund’ has been made available by the government, which LEPs have until January 21 to bid for a share of. LEPs will be able to initiate programmes to support high-growth businesses, as well as making representations to government on issues such as planning and infrastructure projects or training issues.
The total amount of funding, however, is far less than what the previous government spent on RDAs – which the present government claims is because the new bodies will be less ‘top down’ and more efficient, but opponents argue will reduce their effectiveness.
What funding is available will not only be available to RDAs, with private groups and public-private partnerships also able to make bids. How much funding RDAs eventually get from central government may well determine their effectiveness, since it is unlikely that councils – facing their own funding squeeze – will be able to contribute significantly to their costs.
The government is also considering proposals for local authorities to keep the business rates they collect locally, rather than the rates being passed to central Government, as happens at present. This may make more money available for business development in some areas, but others could be left worse off.
How effective these new bodies will be remains to be seen but, with sources of new funding few and far between, businesses and their advisers would do well to keep them in mind and investigate what opportunities may exist in the future.
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The results of a new Boston Consulting Group (BCG) report commissioned by Google report make fascinating reading. It found that the internet is worth £100 billion a year to the UK economy, accounting for 7.2 per cent of our gross domestic product in 2009, a figure that BCG expects to grow to ten per cent by 2015.
What’s more, the report says that the UK is the world’s leading nation for e-commerce. For every £1 spent online to import goods, £2.80 is exported – reversing the trend in the offline economy, which the report says exports 90p for every £1 imported.
Internet companies now employ 250,000 people, according to BCG, with many of them working in small and medium-sized businesses.
Yet according to figures released in February as part of the launch of the Getting British Business Online campaign, 1.5 million small businesses have no web presence at all.
That campaign, which includes a tool to help businesses get online quickly, easily and for free, aims to get 100,000 British small businesses on the internet by the end of 2010, with the results due to be announced in December.
The message that’s coming across loud and clear is that the web can work wonders for British businesses. And that’s got to be more than just virtual food for thought for any firm that’s not yet online.
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Hot on the heels of yesterday’s announcement that GDP was up by 0.8 per cent in Q3 – better than expected and the fourth quarter in a row that the figure rose – the Daily Telegraph tells us that now interest rates could rise faster than previously thought from the 0.5 per cent at which they’ve been held by the Bank of England since March 2009.
It says little change had been expected before the end of 2011 but that following the strong showing from GDP, some traders are predicting two rate rises over the coming months, with a base rate of at least one per cent by the end of the year.
And it quotes Andrew Sentance, a member of the Bank of England's monetary policy committee (MPC), as saying: "I am in favour of gradually moving interest rates up from their very low level, which I think can be done without disrupting business or consumer confidence.”
Nobody doubts that getting the balance right between interest rates and inflation is a tough call.
But at the risk of repetition, the focus will be very much on the private sector over the coming months and years to drive the recovery and create jobs.
And the Federation of Small Businesses (FSB) says that those firms that use the banks as their main source of finance are being penalised by high interest rates, despite the base rate sitting at an all time low.
So they are hardly likely to welcome even a 0.5 per cent rise over the next 12 months, at a time when the FSB’s latest quarterly survey, published earlier this month, found that 10.4 per cent of firms expect to decrease employment over the next three months as business confidence in future prospects and revenue growth weakened during the third quarter.
The MPC’s nine members have a huge responsibility on their hands in nursing the economy back to full health. We can only hope that the decisions they make over the coming months will be the right ones.
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GDP grew by 0.8 per cent in the third quarter of 2010, admittedly down on the 1.2 per cent growth in Q2 but rather better than had been expected.
And the Office for National Statistics, which released its preliminary estimates for GDP today – including figures available up to 20 October – said that allowing for the bad weather at the start of the year, the underlying growth in Q3 is actually broadly similar to that in Q2.
GDP has now risen for four quarters in a row and although, as an estimate, the latest figures may change, that news will surely be music to the ears of David Cameron and George Osborne.
On the basis of these figures, the economy seems to be heading in the right direction, though the looming shadow of a double-dip recession still won’t go away.
Yesterday, Mr Cameron outline his “strategy for growth” to the CBI, designed to “create a new economic dynamism in our country”.
Confidence is key to getting Britain’s recovery really moving, coupled with Mr Cameron’s pledge to create “a competitive environment for private sector growth”. These latest GDP figures should deliver another much-needed boost in the tough job of rebuilding our rather battered national confidence.
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“I'm backing Britain
Yes I'm backing Britain
We're all backing Britain
The feeling is growing
So let's keep it going
The good times are blowing our way”.
David Cameron is unlikely to burst into song today when he addresses the CBI annual conference, but his speech will be very firmly in the “I’m backing Britain” camp.
He’s expected to say that the nation has an “incredible opportunity…for new start-ups to flourish, for innovations to drive growth and create jobs.
"To build that new dynamism in our economy, to create the growth, jobs and opportunities Britain needs, we've got to back the big businesses of tomorrow, not just the big businesses of today."
No doubt that will be music to the ears of the captains of industry gathered at the conference. With the government looking to the private sector to replace the 500,000 or so jobs likely to be lost in the public sector over the next few years, the business world will be expecting a helping hand in creating the right conditions to do just that.
As CBI director-general Richard Lambert says, the coalition government still has much to do to improve the UK’s competitiveness as a destination for investment, but he is upbeat about the future: “The stakes are high, but if the UK raises its game, the prize we reap in jobs and opportunities will be considerable.”
With the government and the commercial world apparently singing very much from the same hymn sheet, British business could soon be on its way to demonstrating its legendary bouncebackability…though it may take a little longer for the good times to be blowing our way.
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