Ministers told to fund enterprise agencies

Local Enterprise Partnerships (LEPs) – led by councils and businesses – may need funding to get up and running as they take charge of economic development when development agency Yorkshire Forward is abolished.

The warning from the Business Select Committee comes after the Government said it will not fund running costs for the new organisations, although they will be able to bid for cash from the 1.4bn three-year regional growth fund.

The report said the Government should be "conscious" of a potential funding crisis as the partnerships are set up but before they become self-sustaining, and said "in certain cases" Whitehall should be willing to support the new organisations at inception.

MPs say it is vital the new partnerships – including ones based around Leeds and Sheffield – succeed as the coalition seeks to tackle the north-south divide.

"They also back Yorkshire-wide co-ordination between partnerships in the region if businesses show their support.

Committee chairman Adrian Bailey said: "LEPs have the potential to kick-start local growth by concentrating on local areas.

"But at the moment they are an unproven innovation."

Bradford East MP David Ward, a member of the committee, said it was time to "get on" with the new partnerships.

"We desperately need to have business growth and development and it's time to get on with it," he said.