Insider Media Limited

There is not enough money available for business support and local enterprise partnerships (LEPs) are "unproven as yet". That's according to Adrian Bailey, the House of Commons' Business Innovation and Skills Select Committee chairman, who told Insider he fears small businesses could "lose out" following the axing of the regional development agencies (RDAs).

They are being replaced by LEPs which come into force today while a £1.4bn Regional Growth Fund (RGF) has been set up for the partnerships to access cash to develop businesses. But Bailey, who is the MP for West Bromwich west,  is concerned that the RGF only covers a third of the funds previously available to the RDAs.

He also raised fears about the "danger" of a "patchwork quilt" of LEPs covering the country with some areas still left uncovered by a partnership that could miss out on much-needed funds.

Bailey said of local enterprise partnerships: "They are unproven as yet but there's an enormous desire within the business community to make them work which is very positive. I think they will be committed to the creation of the enterprise zones as well and want to make them work. But so far, it is early days and we need to establish them.

"I make no bones about it that on a personal level, I was a supporter of the regional development agencies and thought the government should have adopted a more evolutionary process. But that's not the position we are in in terms of economic growth and we have got to make whatever structures we have got work."

He warned that areas without LEPs risk being left behind as others make a "good head start".

On the issue of funding, he said: "My committee made the recommendation that there should be a fund for the LEPs to develop - especially for LEPs representing areas where traditionally there's not been strong infrastructure in terms of developing regional plans. If we are going to develop LEPs, there should be some funding available to them.

"The Regional Growth Fund is only one-third of the money available to the regional development agencies and there's going to be a lot of competition for funds. There's no guarantee that all the areas are going to get anything.

"My concern is that small businesses will lose out - they are struggling to get money from the banks and the regional development agencies would have been an obvious source. But that's no longer there and they have to go through the LEPs and prove themselves and that could be a problem for them."

Bailey said he accepts that RDAs would have had their budgets cut if they still continued. But he said: "I think there's too little money for the scale of the task that's confronting our business."