London Enterprise Partnership proposal In October, the Government invited the Mayor, London Boroughs and business leaders to consider the case for whether and how local enterprise partnerships could be formed in London. In response, we consider that there is a strong case for a single pan-London Enterprise Partnership to complement existing working arrangements between London business, the Mayor and the boroughs. We therefore welcome this opportunity to submit a proposal to form a Local Enterprise Partnership for the London region as a vehicle for further double devolution from central Government to the Mayor and to the boroughs. In London there is a strong history of joint working between business and the public sector working to deliver economic growth and regeneration. The recent White Paper Local growth: realising every place’s potential explicitly recognised London’s World City role, and the roles of both the Mayor and the boroughs in supporting business growth. We support the government’s focus on working more closely with the private sector and undertaking activity at the appropriate spatial scales. This proposal reflects the fact that London is a single functional economic area. We welcome the commitment given in the White Paper to the creation of new financial tools such as TIF and are keen to progress towards the next steps in devolution to the GLA and boroughs. This document sets out a direction of travel and the Mayor, boroughs and business will continue to work together to finalise proposals and confirm delivery arrangements over the coming months. What London needs to support growth London is the powerhouse of the UK’s economy. London’s total economic activity is substantially higher than any other UK region accounting for over 21 per cent of total UK GVA with workers in London on average 30% more productive than elsewhere. London contributes significantly more in tax revenue than is spent in the region each year. London’s global city-region activities and growth will be the driving force of the UK’s recovery from economic recession. Unlike most other regions, London’s economy is led by the private sector. London’s regional and local government has a successful track record in supporting business growth. The Mayor’s Economic Development Strategy (EDS) sets out five economic objectives: promoting London as the world capital of business; ensuring that London has the most competitive business environment in the world; making London one of the world’s leading low carbon capitals; increasing economic opportunity; and maximising the return from investment in the 2012 Games. The London Enterprise Partnership will operate within the framework of the EDS. In order to fulfil its global role and lead the UK through recovery London needs

- a strong, collaborative relationship between business, the Mayor and boroughs on economic development

- devolved responsibility, funding and fiscal responsibilities from national government

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- a set of ambitious, shared objectives to maximise London’s growth potential including investment in London’s talented people, supporting growing businesses and investment in opportunity areas in particular the Thames Gateway.

This document sets out the direction of travel in developing an Enterprise Partnership to support this in London. It is not the final word given that this is a period of significant organisational change in London. Supporting businesses to succeed Businesses need a number of conditions to flourish. In London, we know from the evidence summarised in Annex A, that agglomeration economies – the proximity of firms to their suppliers and customers, access to a large pool of labour and the dense web of connections in key sectors are the key to London’s continuing success. Businesses are the source of growth – employment, supply chain opportunities, investment in people and infrastructure. London’s economy is predominantly private sector and unlocking further potential is key to continued growth. Business needs will therefore be at the heart of the Enterprise Partnership board work. Fundamentally, London has to provide a competitive business environment. London remains at the top of many international surveys of business attractiveness. But we are not complacent. A London First survey showed that over three quarters of businesses in the capital believe that doing business in London is getting harder. The major risks identified were regulation and tax but transport in London, finding skilled labour and cost of premises also feature (CBI London Business Survey 2008). There have recently been well publicised issues relating to cost and availability of finance and there are long term issues faced by smaller business in being able to raise development finance. The LCCI’s Entrepreneurship Report based on interviews with 170 business leaders found that for now, London's position as a hub for global business remains strong (key strengths included: existing reputation; connectivity; accessibility; professionals; networks and stability). But there are concerns over the growth opportunities available; 35 per cent of business owners rated growth and investment opportunities in London as "poor" and only 20 per cent described the opportunities as "good". (Entrepreneurship Report, November 2010.) By some measures the Greater South East region is only middle ranking in terms of other competitive global city regions and London faces a challenge to continually improve its competitiveness as a place to do business. Businesses already play a strong role in driving economic development in London through a range of mechanisms including the Mayor’s London Business Advisory Council and London Skills and Employment Board, sub regional and local business led business support agencies. The Mayor has established particular initiatives with a business interface such as the Mayor’s Fund and encouraging businesses to take on apprenticeships. The Enterprise Partnership will complement these existing relationships.

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What are the aims of the London Enterprise Partnership? The London Enterprise Partnership will help to maintain and develop London’s competitiveness and economic growth. We need to supplement our existing strengths in financial and business services, media, creative and cultural, and tourism with exciting new opportunities building on London’s knowledge base and its world-class HEI institutions. The LEP will also support the government’s commitment to foster growth and support private sector job creation. The LEP can support the government’s ambitions

By supporting a dynamic business environment, where it is easy to set up in business and thrive

By supporting the Government’s forensic approach to uncovering missed growth opportunities

By helping to maximise London’s economic growth By piloting and developing proposals for new and innovative ways of raising

public finance By ensuring a business-led and devolved agenda for economic development in

London By working with Local Enterprise Partnerships in the rest of the country, as

appropriate, to promote growth for example through networked or hub and spoke arrangements.

Analysis by the sector skills councils for the London Skills Priorities Statement suggests significant growth in employment in a range of sectors to 2020 including business services (404,000 new jobs); creative and cultural industries (70,000); hotels and restaurants (35,000); retail (32,000); transport and communications (30,000); and low carbon (18,000 new jobs by 2013). London is exceptionally well placed to benefit from over 40 higher education institutions (HEIs), including many world class establishments in their field, the highest level of HE Research & Development (R&D) spend in the UK, clusters of global excellence in bio-sciences, financial services, ITC and creative industries. The Mayor has set a challenging target of a 60 per cent reduction in London’s CO2 emissions by 2025 and has committed to positioning London as a leading low carbon capital for the provision of finance, business services and innovation within the low carbon economy. London faces particular challenges, for example its high levels of worklessness given the city’s particular labour market characteristics. After accounting for housing costs, London has the highest rate of child poverty in the country. There are also significant spatial disparities across London. For instance, Tower Hamlets, Hackney, Islington, Newham and Haringey are the five boroughs with the highest rates of children living in poverty in England with at least 44 per cent of children living in poverty. London’s strength lies in its diversity, different parts of London have a significantly different make up of sectors and concentrations of activity and this presents particular challenges and opportunities, often crossing administrative boundaries. London’s mix

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and diversity requires local and sub regional partnerships to develop their own approaches to promoting business growth and employment. These should be linked to national and regional priorities and also ensure that local business priorities are clearly fed in. The London Enterprise Partnership will work from the vision set out in the London Plan and the Economic Development Strategy to promote economic growth across the whole of London and to make this vision a reality. The London Enterprise Partnership will contribute towards specific ambitions at the local and sub-regional level including those set out in the London Plan, in particular to achieve convergence between the inner East and the West of the City. It will have a specific focus on maximising the potential advantages and growth potential in the London Thames Gateway. Research suggests that if Gross Value Added (GVA) per head were on par with the GSE average, the Thames Gateway could contribute an additional £12 billion per annum to the UK economy. A city-wide approach with strong local partnership arrangements will increase coordination, leverage and economies of scale in economic development activities in London. The London Enterprise Partnership will focus on the public sector services and activities that support the conditions for business success and add value through providing:

- A forum for the private sector to raise and discuss business growth and competitiveness issues with the Mayor and borough leaders

- Increased coordination between London wide strategies in particular the

London Plan and Mayor’s Economic Development Strategy and local development to support integrated investment planning for example in Opportunity Areas.

- A strong voice to government on economic development in London, making

the case where necessary about the specificity of London’s needs and helping government ensure that national programmes maximise impacts and benefits at city and community level.

- Support for partners to access public and private investment for economic

development in London including supporting London applications to the Regional Growth Fund.

- A focus on a key number of areas around enterprise and investment

identifying or responding to growth opportunities and priorities for example Thames Gateway, through investment in hubs and innovation centres, through growth sectors and through investment in people and supporting businesses with a capacity to grow. We shall work with the private sector to bring forward projects that are attractive to the market or address market failure.

How will the London Enterprise Partnership work? The London Enterprise Partnership will use a flexible approach that supports local partnerships as they emerge and evolve for example around major growth opportunities. We would welcome further details and timetable from the Coalition Government as to which additional powers and funding it will move to devolve from central government to Local Enterprise Partnerships in line with its commitment to localism and decentralisation.

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With strong local representation and approach, the London Enterprise Partnership will support the effective delivery of local and sub regional ambitions in the context of the Mayor’s London Plan and Economic Development Strategy. London is a single functional economic area – a pre-requisite for this LEP proposal – with strong sub-regional characteristics. The London Plan recognises five sub-regions in London with strong sub regional partnership arrangements.

The London Enterprise Partnership will be able to bring strategic leadership and focus, and support the alignment of multiple programmes of activity. The London Enterprise Partnership will enable local areas the freedom to develop innovative programmes whilst ensuring that there is an appropriate aggregation and, or scaling up of successful activity to benefit the wider city. London is diverse. Outer London is where over 60 per cent of Londoners live and over 40% of jobs are located. The economic performance of outer London, in particular slower levels of growth, has given rise to some concerns explored in more detail by the Outer London Commission. The Outer London Commission found significant variations in economic performance across London; in levels of productivity/business formation/deaths etc; reliance on public sector employment, skill levels. Poverty and worklessness are concentrated in inner East London in particular (see Annex A for evidence base). As set out in the London Plan, the overall ambition of the host boroughs, shared by the Mayor and Government, is to achieve convergence in quality of life with the London average across a range of key indicators. These issues need to be addressed if London’s economic growth is to be enhanced. The London Enterprise Partnership will provide a means for greater local coordination around the areas for growth outlined in the London Plan and also, working with LEPs across the Greater South East support cross-boundary working in the growth corridors that stretch from London into the Greater South East

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The London Enterprise Partnership will work with and through a range of partners including but not limited to businesses, business organisations, boroughs, the GLA, sub regional or multi borough partnerships, further and higher education institutions. It will not set in stone who it works with as partnerships will emerge around different opportunities. The LEP will be an enabling framework for local activity. It will have priority themes but seek to generate a productive conversation between London businesses, the Mayor and local government leading to practical objectives and proposals. There will be a number of business led thematic working groups under the main Board. In order to maximise future opportunities, we will need to move on from a target driven contractual approach to economic development to a more light touch, open/collaborative approach driven by generating shared value for businesses and London. What are the priorities for the London Enterprise Partnership The London Enterprise Partnership will avoid duplicating the work of existing organisations and partnerships. It will focus on those areas where it can genuinely add value. We have collectively identified a small number of key issues where the LEP can play a significant role, both in responding to London needs and opportunities and in helping to deliver the Government’s growth agenda in London. These are: (1) Investment London needs constantly to upgrade and improve its platform for business. As public funding becomes much more scarce, London needs to look at its investment priorities, the ways in which public and private resources are used and identify new sources of investment. The Mayor’s Economic Development Strategy sets out how the Mayor will vigorously promote London as the world capital of business, the world’s top visitor destination and the world’s leading international city of learning and creativity. The new Single Promotion Agency will ensure there are consistent and effective messages promoting London as a leading place to live, work, study, invest in and visit, building on the work of Think London, Visit London, Film London and Study London. The Mayor would seek to align the ERDF Operational Programme (2007-2013) with the objectives of the Local Enterprise Partnership and would want to see proposals that support achieving the LEP's goals in future ERDF bidding rounds. The priorities of the ERDF London Operational Programme (2007-2013) are:

1) Business innovation and research and promoting eco-efficiency 2) Access to new markets and access to finance 3) Sustainable places for business

Within this context, there are a number of roles we see the Enterprise Partnership playing in relation to investment.

Encouraging proposals for national funding where they support private sector jobs growth in London for example from the Regional Growth Fund

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Creating and supporting investment vehicles to support the LEP’s objectives for London, building on the success of approaches such as the Small Business Loan Fund, JESSICA/Green Fund and network of Business Improvement Districts.

Attracting resources from a wider range of sources, e.g. the European

Investment Bank The use of new tools such as Tax Increment Financing where local partners will

benefit from sharing best practice and expertise, in particular business expertise

Pro bono support, for example leveraging trusted expertise and knowledge from London’s world class business base

Maximising the opportunities of major events and investments in particular

hosting the London 2012 Olympic and Paralympic Games and the development of Crossrail.

(2) People Business, boroughs and the Mayor believe that the success of London in a knowledge based economy rests in large part on its people. London has significant labour market opportunities and challenges. Some 240,000 people would need to be supported into work to close London’s employment gap with the UK. The government is planning significant change to the delivery of welfare to work support and adult learning and local and regional partners stress the importance of making this work in London. London and sub regional activities will support the government’s policy of moving to a more demand led model for training and the development of a Single Work Programme to assist out-of-work Londoners into employment. The development of the London Enterprise Partnership presents an opportunity for a greater connection between enterprise and business growth activity and employment and skills. We will look to make strong strategic and operational connections between the work of the Mayor’s London Skills and Employment Board and the London Enterprise Partnership, including the option of merging the LSEB into the LEP. The complexity of London’s geography, demography and labour market make it vital that local areas are fully engaged with welfare to work provision. At the local level London Boroughs and where appropriate sub-regional partnerships will work to support the DWP Work Programme. This will involve developing strong relationships with delivery organisations, the provision and alignment of wrap around support and the development/provision of local jobs for workless Londoners. On skills, we will play a facilitative role supporting colleges, Work Programme providers and businesses to work together. At the London level, we need local intelligence to be able to determine how the new demand led system is operating and whether London’s needs are being met. (3) Enterprise and innovation

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The London Enterprise Partnership will support proposals for activities that create the right environment for business and growth in London. The Mayor’s Economic Development Strategy for London sets out to ensure that London has the most competitive business environment in the world. Activities will aim to maximise the contribution of innovation and technology transfer to business success, focus on businesses with the potential to grow and support people to start up in business. Supporting an entrepreneurial culture and encouraging enterprise is vital to a vibrant economy. SMEs account for about half of all private sector jobs. London’s business base has grown more than that of any other UK region over the past decade and has 1 in 5 of the UK’s high growth businesses. High-growth businesses provide the greatest impact on jobs, productivity and wider economic development, outperforming average firms or other SME types.1 In London there were 1,900 high growth firms between 2005-08 and these were responsible for around 200,000 new jobs. This represents 50% of the net increase in jobs for that period. There remains a gap between London’s current performance and the highest performers globally in terms of innovation and knowledge economy competitiveness. Developing innovation is a key element of ensuring that London has the most competitive business environment in the world. The LEP will support the co-ordination of the extensive innovation assets across London to facilitate the commercialisation of London’s innovation capabilities. As business support growth products will be commissioned nationally, the London Enterprise Partnership’s role will be to support local provision and to feed information to national Government about pan-London and sub-regional business support needs. The LEP, working with boroughs and SRPs will

Seek to influence national activity to meet London’s specific needs requesting devolved responsibility where appropriate for example on growth hubs and future sector growth activities to increase the competitiveness of key job creating sectors, Technology Strategy Board and Technology Innovation Centre policy.

Maximise the potential for effective collaboration between the HEIs and

business to stimulate and exploit ideas and to raise productivity.

Coordinate improved access for London’s SME and micro businesses to supply and value chains and local procurement schemes.

Identify ways to foster an entrepreneurial culture encouraging the development

of these skills amongst the young, including those not in employment education or training and ways to help the unemployed those from excluded communities to start a business, become self-employed or improve their business knowledge and employability skills.

The wider business environment and promoting sustainable growth The London Plan provides the spatial framework for London’s economic growth and regeneration complementing the Mayor’s Economic Development Strategy. The London

1 (NESTA 2009, BIS 2008, and OECD 2002).

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Enterprise Partnership will support the ongoing relationship and dialogue between the private sector, GLA and London boroughs and sub regional partners on economic development and the London Plan. This relationship is vital to accommodate the growth anticipated in the London Plan and aligning investment planning and regeneration objectives. The London Plan provides the spatial framework for unlocking potential in particular through development corridors, town centres, Strategic Outer London Development Centres, Opportunity and Intensification Areas, Strategic Industrial Locations and the Central Activities Zone. Sub regional partners and boroughs are already working to provide business environments that will be attractive to businesses and which will give business the incentive and infrastructure to grow. London boroughs and the Mayor recognise the interconnected nature of London’s economy, including the role of outer London in supporting London’s economic success. The London Enterprise Partnership will provide a forum for partners to share information and coordinate and collaborate on economic development issues across local boundaries.

Sub regional and local partners will continue to work with the GLA on sub regional and local planning, transport and economic development matters. There is a strong track record of sub regional engagement where partners have facilitated the discussion and public consultation on the Mayor’s Draft Replacement London Plan, facilitated regional responses on the EDS and influenced and informed the Mayor’s Transport Strategy. The London Enterprise Partnership will build on existing relationships with local authorities which have functional economic linkages to London and will work with the four Local Enterprise Partnerships that have already been approved bordering Greater London to coordinate activities across the Greater South East. The London Enterprise Partnership will aim to maximise opportunities from cross borough working and join up with opportunities in the wider South East especially the Thames Gateway. The London Enterprise Partnership will support cross border working along the main growth corridors going out of London with districts and counties surrounding London. A priority here will be to explore how more effective coordination of transport infrastructure and development can realise greater opportunities for growth. The functional economic area of London operates on a different scale and with a different dynamic to those of the other UK City Regions. London is the dominant economy within a very large region, the Greater South East (GSE). Within the Greater South East is a collection of areas that have especially strong links with London, commonly known as the Outer Metropolitan Area and includes areas directly surrounding Greater London as diverse as Southend-on-Sea, Crawley, and Reading. The Western Wedge, an economic corridor with historical specialisation in information technology, stretches from Central London through Heathrow and into the Thames Valley, is the biggest employment centre within the Outer Metropolitan Area. The area is significantly influenced by Heathrow Airport with the area of the Wedge within London containing much employment integral to the airport’s supply chain and

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logistical network. To the west of Heathrow the Thames Valley has become a key centre of international headquarters. Outer Metropolitan Area map

How can Government support our ambitions? We look forward to working with government to deliver the aspirations of the London Enterprise Partnership within the framework set out in the White Paper on sub-national growth. In particular we are seeking the following support from government:

Devolve a fair share of the regional growth fund and any future funding for economic development to London for the Mayor to administer via the London Enterprise Partnership. London's economy historically has been around 24% of England's economy and London’s allocation should reflect this. Growth in London generates tax surpluses for the rest of the UK.

Provide London with its fair share of the £200m innovation pot.

The London Enterprise Partnership will support boroughs in looking at how to

maximise the new tools for investing in economic development in particular Tax Increment Financing. We believe that in London the Government could pioneer expanding the scope of TIF to other locally raised taxes and the LEP would be keen to contribute to this debate.

The Government is committed to introducing incentives to promote local

business growth and is examining ways of enabling councils to retain locally-

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raised business rates. We want clarity on this and want to be part of discussions on the next steps on fiscal devolution.

The London Enterprise Partnership, which will represent a quarter of the English

economy, would like to work with the Government, as part of its local government finance review, to commission a comprehensive review of the potential for fiscal devolution for London.

Ensure that the National Enterprise Allowance scheme for jobseekers allowance

claimants is offered in London and designed in partnership with the London Enterprise Partnership and the boroughs.

Governance of the London Enterprise Partnership The London Enterprise Partnership will be co-chaired by the Mayor and a leading business person. The membership will include business leaders from across London and representative of London’s growth and employment sectors. Pan London Business Leadership organisations will also be invited to propose a member. London Councils will be invited to propose three Borough leaders as members and we will also seek representation from the third sector and Higher Education institutions. We shall aim to keep the Board small and strategic. Business representation will have a majority on the Board. The Enterprise Partnership Board will have a number of operational working groups to be determined by the Board. Relationship to other activities There are significant changes underway in London related to economic development on housing, regeneration, Olympic legacy delivery and Skills and Employment. Governance and organisational relationships in London already differ from the rest of the country and will differ further with the folding-in of the LDA to the GLA and the additional powers and responsibilities to be devolved from the Government to the Mayor in the Localism Bill. The partners recognise that it is not realistic at this stage to identify definite working relationships but intend to identify the broad role of the LEP in relation to this. The London Enterprise Partnership will work within the framework provided by the statutory London-wide strategies. These include the Mayor’s Economic Development Strategy, the Mayor’s Transport Strategy and the Mayor’s Housing Strategy. These strategies have been widely consulted on with the private sector, Boroughs and Sub-Regional Partnerships. Annex A Evidence Base Annex B Existing arrangements for Mayor of London and London Councils to work with business Annex C City Charter