The New Shape Of Economic Promotion In Britain
Everyone is feeling the pinch these days, and it is not only due to the global recession. For decades, government spending has outweighed revenues, and many governments are now facing wide sweeping cost-cutting initiatives and austerity measures to bring balance sheets in line with reality.
Rhode Island just went through a painful, yet productive, pension reform initiative and passed a measure which will do a great deal to close their budget gap. Billed by TIME in its Dec. 5, 2011 issue as “The Little State That Could,” Rhode Island’s officials were able to accomplish what many national and regional governments haven’t been able to.
Driven by a great deal of grassroots work, town hall meetings, and tough negotiating, the Rhode Island legislature passed, by overwhelming margins, what may be the nation’s most comprehensive state public employee pension reform ever.
The process was not born out of politics, but by the fact that state leaders where finally confronting their inherited fiscal nightmare.
States across the United States and markets around the world, especially in Europe, are all grappling with this same issue, public-sector debt and budget issues. One of the most widely publicized is the United Kingdom, which is implementing some tough austerity measures in a valiant effort to bring government balance sheets back into the black.
UK Chancellor of the Exchequer George Osborne outlined the austerity drive, which will reduce Britain’s public debt from 11 percent of gross domestic product to 2 percent by 2015. It raises taxes, cuts numerous social benefits, sheds up to half a million public-sector jobs, and cuts the budgets of government departments. All told, it is predicted to save $130 billion. The austerity plan represents the largest cuts to public spending in Britain since World War II.
Business And Economic Developers Create LEPs
It goes without saying that the UK’s economic development agencies have not been spared by the wide sweeping spending reform. In June 2010, the UK government announced the abolition of regional development agencies in England, which are being replaced by Local Enterprise Partnerships (LEPs).
Local Enterprise Partnerships are locally owned partnerships between local authorities and regional businesses. The idea is to partner the public sector and private sector together for the economic benefit of their respective regions. The new LEPs will play a central role in determining local economic priorities and undertaking activities to drive economic growth and the creation of local jobs. They will essentially be responsible for defining their own economic strategies and the delivery against these strategies. This platform is viewed as a vehicle for local organizations to work together with business in order to quicken the economic recovery.
The LEPs structure gives a great deal of autonomy to economic areas and is similar to the structure we have in the United States on a state and regional level. The feeling is that these organizations will be better placed to determine the needs of the local economy and play a larger role in ensuring the success of their local industries and sectors. They will be primarily investment focused, although their structures may vary slightly from market to market to include some trade-related work.
There is a national component to this new English LEP structure. The Local Enterprise Partnerships will also play key roles in delivering macro government objectives for economic growth. The UK government estimates that in all, 39 LEPs will be formed, representing almost all the regions and metros in England. UK Trade & Investment (UKTI), the government’s national economic development organization, will continue to operate as it currently does in British embassies and consulates around the world. UKTI is responsible for delivering the UK’s trade and inward investment program, essentially developing national strategy and promoting the United Kingdom’s economic proposition and interests around the world.
As foreign direct investment leads and economic growth opportunities are identified, UKTI will work with the LEPS and their devolved administration counterparts of Wales, Scotland and Northern Ireland, to determine which market represents the best “landing” place for the company. The concept is heavily dependent on a “client first” mentality, which calls for the UK to put its best foot forward to secure the investment project and to ensure that the business needs of the potential investor are paramount, not the economic development needs of any region or city. They have developed an integrated data and management network to support this new delivery structure.
UKTI is signing memorandums of understanding with the LEPs that essentially outline the rules of engagement on investment promotion, data and information sharing, and how the new system will work. Each region has dedicated UKTI support in the form of an Investment Services Team, a Local & Sub-National Policy Team, International Trade Advisors, and a network of other UKTI national advisors and experts.
LEPs Provide Greater Value To Businesses Involved In Site Searches
In theory, the LEP system will give corporate investors a great deal of value-added information and services, and eliminate regional competition as the location for each project will be determined by the company profile and location attributes that best suit the needs of the company.
“The new LEP structure is a departure from the way most national investment promotional agencies operate,” says Martin Phelan, director of investment, UKTI. “The UK is now one of only a handful of countries which is able to focus entirely on the requirements of potential investors without the distractions of regional politics.”
“This is a client first strategy,” Phelan explains. “Our goal is to make the company successful in the UK and as a result further grow their business in the UK, so our economy will be benefiting from their success.”
Marketing Birmingham is the strategic marketing partnership for Birmingham, the UK’s second-largest city and one of the nation’s prime investment locations. The organization runs the inward investment program Business Birmingham, which recently signed a memorandum of understanding with UKTI on behalf of the Greater Birmingham and Solihull LEP area, as part of the UK First approach.
Business Birmingham will manage inward investment activity for the region and be the main point of contact for UKTI in the new LEP structure and the roll out of the UK First approach.
“It’s really up to us,” says Wouter Schuitemaker, director of investment for Marketing Birmingham. “We will conduct business development activities to identify our own prospects, and for leads developed within the UKTI network, we will have to compete heavily to demonstrate the Birmingham and Solihull advantage. We must develop value propositions that make the case for our region as the best business destination for the company.”
Schuitemaker says Marketing Birmingham embraces the new structure because it has one of the strongest markets in Britain. “We compete strongly against other European destinations as well as other UK domestic markets, and working closely with UKTI further enhances our reputation on a global scale.”