Denham claims new enterprise partnerships are 'a shambles'

Shadow Business Secretary condemns the low number of businesses covered by LEPs

Nearly 800,000 businesses have been excluded from the Government's plans for local economic growth, according to figures obtained by the shadow Business Secretary, John Denham.

Ministers announced the creation last week of 24 Local Enterprise Partnerships (LEPs) in England, which will be given powers to help businesses, including easing planning regulations and financing low-carbon projects. More than 60 local partnerships applied to be LEPs, which in 2012 will replace the geographically broader regional development agencies (RDA) beloved by the Labour government.

According to Mr Denham, who obtained the figures from the House of Commons library, nearly 21 million people will not be covered by the first wave of LEPs. The Business Secretary, Vince Cable, has claimed that they will cover 60 per cent of England outside of London and most major cities.

However, Mr Denham said: "The Government's so-called plan for growth is a shambles. Leaving huge areas without an organisation supporting economic development proves the Government has given up on growth."

The figures suggest that the North-east and South-west will be the worst hit areas outside of the capital, with depressed cities and towns like Burnley and Hull not represented at all. In the North-east, 74 per cent of the population will not be covered by an LEP while 69 per cent will be excluded in the South-west. The South-east, North-west and Yorkshire and the Humber are the best covered, with more than three-quarters of inhabitants in a designated growth area.

LEPs will apply to the new £1.4bn regional growth fund for finance. The fund is run by Lord Heseltine, the former deputy prime minister who led regeneration of London and Liverpool docklands in the 1980s and 1990s. First round bids are due in January.

The coalition has defended the plans, which are the cornerstone of the White Paper on Local Growth, with the Communities Secretary, Eric Pickles, particularly damning of the RDA structure. "Over the past decade, the country's economy became skewed by artificial boundaries and top-down prescription that did not work," he said. "We want to create a fairer and more balanced economy driven by private-sector strength."