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Since the deficit reduction measures have started to bite, and the size of the economic hole we're in has become more apparent, one of the criticisms most commonly levelled at the Government is that while it is clear on the priorities for deficit reduction, it lacks a plan for ec0nomic growth.

A lot of the heat in this argument - both attacking and defending the Government position - has centred on the national context, particularly with respect to the Government's likelihood of success in increasing bank lending to SMEs (Project Merlin), increasing apprenticeships, reducing red tape and creating a more growth friendly tax regime.

Clearly these and others are important policy levers for Government to deploy in the interests of stimulating the economy. A business-minded Government matters for growth. But one of the lessons of our recent economic woes is the extraordinary complexity and interdependence of our economic system, the limited power of centralised institutions, and the phenomenal cascade effects caused by local changes (e.g. in the US sub-prime housing market).

In such a context, faith in Government should not be overplayed to the detriment of exploring how smaller "agents" in the system can shape it to the good. As those closest both to problems as well as potential solutions it is vital that localities, their individual institutions and entrepreneurial citizens come to the fore in driving economic renewal. Complexity and local variation is as much a potential source of growth and innovation as a source of instability and economic vulnerability.

Jobs, wealth and growth, as well as solutions to ingrained social problems, are likely come from those localities that are able to cultivate rich local entrepreneurial ecosystems: the ability to blend local skills, talents, traditions and ideas from across sectors and to attract outside resources and investment to help enterprises grow, alongside enriching the community.

The Government hopes this will come about through schemes such as Local Enterprise Partnerships. But as with any complex intervention, their success will depend on the cultural and economic starting conditions in which they are attempting to function.

But some places are likely to be much more conducive to complex, 'messy' partnerships than others. Partners in Manchester, for example, seem to have a strong tradition of working to strengthen the ties between local businesses, public bodies, higher education and communities. And businesses like B&Q are themselves are increasingly reaching out to the communities on which they depend, recognising their interdependence.

But for many localities, the histories of such partnerships have not been so encouraging, and the current reality is that they are not sufficiently productive.

A report jointly published a couple of years ago by the LGA and BCC highlights these challenges, noting that the business sector is concerned that interacting with councils will result in them being caught up in overly bureaucratic procedures, such as time-consuming meetings, talking shops and tick-box consultations. Conversely, from the perspective of local authorities and other local bodies, businesses (especially large ones) can  seem like unaccountable, somewhat myopic and largely self-interested organisations with little long-term interest in their host communities.

As a result, the gap between the interests and activities of local 'commerce' and 'community' can often remain large, which does not bode well for the future success of LEPs or their local equivalents. Unless action is taken to understand why, any new efforts to encourage closer partnership working will fail. At an event I attended earlier this week, the co-author of a business-minded LEP "plan for growth" bemoaned the lack of similar plans emerging from LEPs, and the difficulty they experienced in trying to get the public and private sectors on the same page, and to share a common entrepreneurial vision. How common is this experience?

We are currently exploring project work in different localities to bridge this gap by understanding the different trajectories the private, public and voluntary sectors are on, and help to bring them into closer alignment.  This is as much a cultural challenge as an economic on, but is vital if we are to create more vibrant local economies.

It would be interesting to hear your examples of places that you know which seem to have got this complex chemistry right (and why) or wrong (and why not!). What general principles seem common to either? Over time we hope to find out.

 

 

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