Ms Constance Hanniffy:

On behalf of the association, I thank the Acting Chairman, Deputy Lawlor, and the members for affording us this opportunity to address them. I will deal first with the local enterprise offices and how they have come to fruition and then deal with the county enterprise boards.

As the members will know, the local government reform programme, as specified in the Putting People First document, is a wide-ranging programme embracing many aspects of the local government services to the community. We, as an association, welcome the commitment to tangible action in reforming the Irish local government system within the wider context of the reform of the public service as a whole. A key requirement of any modern local government sector is that it is empowered to deliver a wide range of devolved functions from central government. Therefore, we acknowledge the commitment made jointly by the Minister for Jobs, Enterprise and Innovation and the Minister for the Environment, Community and Local Government to move towards integrating the functions of the existing county enterprise boards into the local authority framework under the title of local enterprise offices.
This transition makes great sense as it will bring the support services for small and medium-sized industries and businesses into close co-ordination with the local authority sector which already delivers a range of aids and services to the business community. We fully endorse the wording in paragraph 3.1.1 of Putting People First, which states that local government has "unique characteristics and a strategic position that make it well placed to lead economic development ...". That is very true. The local knowledge inherent in local government will complement the enterprise promotion experience of the enterprise boards. It has been estimated that 95% of businesses in this country, of which there is more than a quarter of a million, employ fewer than ten people. Therefore, it follows that these businesses are at the heart of local communities where they are a source of valuable employment.

However we, as elected representatives, are concerned that the local knowledge available within the local authority system will be limited because the new arrangement for the local enterprise offices does not provide for a meaningful input from the democratically elected councillors in each county and city council. As the members will know, nobody knows the nature and nuances of local communities better than local elected members who are elected by those same people who form the environment in which many businesses flourish and in which many enterprises provide an economic boost to their communities. In the current situation, as the members will know, the elected members are members of the county and city enterprise boards and sit at the board table where decisions on grant aid are agreed and endorsed. They bring the process of democratic accountability to the enterprise boards.

In the proposed situation with the new local enterprise office configuration, there will be no board or democratic input into the granting or refusal of assistance to small businesses. It will be an executive function for the county and city managers to perform as a member of an evaluation committee. The evaluation committee will change and will now become an evaluation and approval committee and I understand its members will come solely from the business sector. The members of the evaluation committees have always come from the business sector. In fact I sit on the evaluation committee in Offaly as a representative of small business. This will mean that the local knowledge and the democratic accountability embodied by the elected members will not be a factor in the new local enterprise offices. We see this as a deficit. We believe it is important that the elected members have an input into the assessment of projects to be supported by the local enterprise offices. Councillors have been members of the county enterprise boards since they were first set up in 1993. Their input was considered very valuable up to this point today but when the new local enterprise offices take over they will no longer be needed. They will be surplus to requirements.

Whether the funding is sourced from local government, enterprise funds or Europe, as part of the money which funds the enterprise boards comes from European funding, it is still public money being expended at local level and it is vital that there would be a strong level of democratic endorsement in this process.

There is a need for an input from the elected members into the decision-making on support for small business not less than that provided by elected members in county enterprise boards. Such democratic involvement will also provide for an effective link with other local authority processes which underpin the promotion of business at local level. The making of the county or city development plan is one such example of a major local authority process which has a significant impact on business development and is the responsibility of the elected members to decide and to make.

The Putting People First document envisages an indirect role for elected members through a new strategic policy committee in each county and city council. However, the function of this new committee is not spelled out and it falls short of giving an opportunity to bring specific local knowledge to bear on a case-by-case basis as happens in the case of the enterprise boards.

While the strategic policy committee will report to a parent council on local polices to support small business, the new local enterprise offices, LEOs, will take their detailed guidance from the Department of Jobs, Enterprise and Innovation. Such multiagency operations are not new to local government, but the potential for ambiguity in the delivery of the service needs to be rectified. The limitation of local discretion in the support of small business is also exacerbated by the proposal to reduce the limit of assistance which can be approved at local level from €80,000 to €40,000. In other words, the existing county enterprise boards could offer support up to €80,000, but the new LEO structure will be limited to a €40,000 ceiling. Any request for support above that sum must go to Enterprise Ireland for approval. This is a retrograde step in terms of devolving responsibility to the local government sector.

A further distancing of the enterprise develop function from the county and city councils could result from the emphasis in Putting People First on giving binding economic policy functions to the regional authorities. The proposed authorities will be the link between development agencies and local government. This used to happen through the county development board structure. While regional strategies certainly have a place, it surely is working against the intention of the LEOs as a flexible business support unit integrated within the county and city councils to bind them with plans made a considerable distance from the reality on the ground.

The process of relocating the enterprise offices under the title of LEO in the local authorities is at an advanced stage and a service level agreement has been finalised between the local authorities and the Department of Jobs, Enterprise and Innovation. While we welcome this transition as a positive and sensible reform, its potential will not be realised without the input of elected members in a specific and tangible way. We understand legislation underpinning the transition is being drafted. We urge the members of the committee to look towards securing a role for their democratic counterparts at local level in the processes of the new LEOs.

On 31 December 2012, in the BMW region, we had a total of 3,153 new businesses supported by county enterprise boards. Up to 33% of the assistance given was to businesses involved in manufacturing, which is positive for job creation. I note with interest that the new dedicated microenterprise and small business unit has been established in Enterprise Ireland with a new focus on the microenterprise and small business sector. Within it is a centre of excellence which will have a key role to play in maximising the impact of each LEO. If the LEOs are to reach their full potential, it is important that the strength of the county enterprise boards which had a local focus and an ability to respond to local issues and demands is fully harnessed.

I thank the committee for allowing me to make this submission on behalf of the Association of County and City Councils.