Small firms ‘must be at heart of LEP plans’
15:21 12 September 2014
Small business leaders have called on Local Enterprise Partnerships (LEPs) to put small firms at the heart of their plans following the launch of a new report.
Comment: All is no rosy for smaller companies
The recession is over, the economy is growing, and business confidence is on the increase. So, for Norfolk’s smaller firms, is everything in the garden rosy?
Unfortunately, not quite. There are still plenty of problems facing the county’s small businesses, and many are problems which central and local government could do a lot to alleviate. In 2008, when the crisis first hit, it was small firms which felt the pinch first.
They were the ones who got the call from their bank, which in some cases said they wanted a loan repaid. For others the squeeze came later when they found their usual source of new loans had dried up. Even if loans are history at least grants of various kinds are available to small businesses, but our members say it is often hard to find out what is on offer and how to get access to it. Cash is king, they say, and cash flow is certainly vitally important to businesses of all sizes, but especially those which can’t get credit.
So when customers take months to settle accounts, things can get very tight, which in turn can add to running costs. Bigger companies, which are better able to withstand cash flow problems, are often the culprits.
Meanwhile, just keeping in touch is one of the big issues for smaller players. They are often located in rural areas, where broadband speeds are typically a lot slower. But broadband is vital for most firms, and especially those which rely on e-commerce. Usually the big companies make the headlines, but it is actually the small businesses which are the backbone of East Anglia’s economy. Unless we support them, from those employing a couple of dozen people right down to micro-businesses, we are doing a disservice to the people of Norfolk.
• Martin Lake, Chairman, Mid Norfolk Branch, Federation of Small Businesses
Big business is perceived as dominating the agenda at local level through its influence over LEPs, the regional bodies set up by the Coalition Government to replace regional development agencies, according to the study, entitled The Future of LEPs: The Small Business Perspective.
The report, by the Federation of Small Businesses (FSB) and the Centre for Local Economic Strategies (CLES), calls on LEPs to place small businesses at the heart of their plans for local economic growth.
The FSB says LEPs are the right vehicle to deliver local economic growth across England.
But while small and medium sized businesses have been responsible for four in five (84pc) jobs created in the private sector between 2010 and 2013, and represent nearly half (48pc) of private sector turnover, large businesses are perceived to have most influence within LEPs.
Two in five (39pc) local authorities and two thirds (67pc) of FSB representatives surveyed believe that large businesses exert the greatest influence over LEPs.
“Small business involvement in LEPs has been questionable in many areas. LEPs face problems as a result of lack of clarity as to how small businesses should be involved in LEPs and the future of local economic growth,” the report said.
Three quarters (77pc) of small businesses want LEPs to offer procurement advice as part of their business support package, but only a quarter (25pc) of LEPs are planning to offer this kind of service, it found. The FSB called on them to become more effective at providing the advice and services small businesses need.
Chris Soule, the FSB’s East Anglia policy chairman, welcomed New Anglia LEP chair Mark Pendlington’s plans for a Business Consultation Board and said the local organisation was “ahead of the game in so many areas”. However that didn’t mean improvements could not be made, he said.
“LEPs are crucial to delivering local economic growth across England. Small firms will ultimately be the ones creating most of the jobs and prosperity in the private sector, so it is absolutely essential that they are at the heart of LEPs’ plans,” he said. “LEPs will be handling billions of public money between now and 2021 and it is important to understand how it is being spent.
Mark Pendlington, chairman of New Anglia LEP, pointed out that his organisation has three board members running small firms.
“New Anglia LEP has a strong track record of working with small businesses and the FSB has positively influenced both the shape of LEP strategy and the delivery of our projects across Norfolk and Suffolk,” he said.
“Last year we commissioned them to research how the LEP could best support small businesses. The LEP accepted the report in full and has been working to implement its findings.”
Do you have a business story for the EDP? Contact Ben Woods on 01603 772426.