Government remains unaware of LEP impact

The Ministry of Housing, Communities and Local Government does not know how effective £12 billion of funding has been for local economic growth.

The Public Accounts Committee has warned that Local Enterprise Partnerships (LEPs) have considerably underspent – a sign that capital projects are not coming through quickly enough. The latest report from the group of MPs says that £9.1 billion has been allocated to the 38 Local Enterprise Partnerships (LEPs) in England so far through growth deals, with another £3 billion allocated via other means.

The committee remains concerned that LEP boards are not yet representative of their local areas and business communities and that local scrutiny and accountability arrangements are not strong enough considering the significant sums of public funding that LEPs manage. Furthermore, the government’s decision not to evaluate the Local Growth Fund means it has no understanding of what impact spending through LEPs has on local economic growth.

The PAC says that, in the absence of national evaluation, the government should use the performance data it receives from LEPs to build a national picture of what is working most effectively in boosting growth and use this to inform the design and plans for evaluation of the UK Shared Prosperity Fund. Furthermore, the Ministry of Housing, Communities and Local Government should set out a clear timetable showing how it will meet the April 2020 deadline and what action it will take if local authorities fail to agree on overlapping boundaries.

It should also support LEPs to develop robust local industrial strategies based on the economic need of their areas and clearly set out how they will ensure a balance between supporting both high performing areas and areas which are lagging behind.  

Meg Hillier, chair of the committee, said: “Local Enterprise Partnerships have been given £12 billion of taxpayers’ money to support local economic growth. But LEPs have underspent their funding allocation by over a £1 billion in the past three years, raising questions about their capacity to deliver complex projects.

“The committee has previously raised concerns about the transparency and governance of LEPs and more action is needed to ensure they are held properly accountable for spending. LEPs are supposed to be an engine room of local economic growth but they have been dogged by a lack of local accountability and there is little evidence that they have levered in the promised private sector funds."

Mark Hawthorne, chairman of the Local Government Association’s People and Places Board, said: “The substantial levels of growth funding awarded to Local Enterprise Partnerships (LEPs) not only places real emphasis on local capacity to deliver desperately needed investment in infrastructure and skills training, but also underlines the importance of clear democratic accountability.

“With recent research carried out by the LGA revealing that just 20 per cent of people know that their LEP exists or what it is responsible for, this report shows that councils are right to be concerned that the government does not fully recognise the stretched capacity of individual LEPs to carry out their work or meet new governance standards.

“The announcement of additional LEP capacity funding for 2018-20 is a positive step, but with Local Enterprise Partnerships expected to play a central role in the delivery of the UK Shared Prosperity fund, the government needs to go further and ensure that local arrangements for delivering future funding for growth are placed on a sustainable, democratically accountable and effective footing.”