Confusion over the role of local enterprise partnerships (LEPs) is hampering business growth and undermining the Government's rhetoric about a private sector-led economic recovery, local business groups have warned.
Gaps are already appearing in business support services as the Regional Development Agencies (RDAs), which have been scrapped by the Coalition Government, are wound down. And uncertainty over how the LEPs set up in their place will function, or what powers they might have, is leaving a "vacuum" at a local level.
Adam Marshall, the director of policy at the British Chambers of Commerce, said: "There's a stand-off between the Government saying 'get on with it', and the LEPs saying 'get on with what?'"
The confusion is a drag on activity just as the Chancellor, George Osborne, needs rising exports and business investment to offset waning consumer confidence that helped, at best, flatten GDP growth at the end of last year, as shock official figures revealed last week.
"This is already costing the national economy, as businesses are waiting to see what happens before making investments," Chris Fletcher, the deputy chief executive at Greater Manchester Chamber of Commerce, said. "At a time when there are such concerns about the economy, to be in a situation of 80 per cent hunch and only 20 per cent fact is not a good place to be."
The warnings came as the CBI's new director-general, John Cridland, called on the Government to put a "relentless focus on growth", and to use the forthcoming Budget to set out a clear vision for the UK economy.
Business leaders have been quick to stress that their criticisms are not an opposition, in principle, to LEPs – which will be made up of local business people and council representatives, rather than the permanent staff of the RDAs. There is also support for the government allowing organisations on the ground to set their own priorities, as part of the Coalition's broader "localism" agenda.
But there are overarching questions which need answers from central government, critics claim. One concern surrounds funding, and whether the LEPs will have access to anything more than the £4m Capacity Fund announced by the Government last month. But money is not the only gripe. More significantly, it is unclear if LEPs can expect to have any of the statutory powers of the RDAs, and what they will be able to accomplish without them.
And although the Government has put forward various proposals – including national delivery of services such as trade promotion and the 40,000 business mentors proposed in January's "Bigger, Better Business strategy" – there is nothing on how, or when, such theories might translate into practice.
"We all want the LEPs to succeed, but the lack of clarity from government is leaving a vacuum," Mr Fletcher said. "There is also an appreciation of the local focus, but if there is a lack of central government support, and a lack of power, then the LEPs will quickly lose their sparkle."
The Department for Business denies that the LEPs have no central support, claiming proposals already submitted by the embryonic partnerships as evidence of the activities they will undertake. "The framework we have established for this policy is designed to ensure that business is at the heart of decision-making in these partnerships," a spokeswoman said.