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LEPs only ‘half way to success’ and still under Whitehall control, study warns

LEPs only ‘half way to success’ and still under Whitehall control, study warns

🕔02.Mar 2015

Local Enterprise Partnerships are only half way to being a success story because they do not have sufficient funding to make a real difference and are subject to too much Whitehall decision making, a major study has concluded.

A survey of more than 150 key stakeholders by the Localis think-tank found that while LEPs were broadly popular and thought to be doing a good job, they had failed to “reflect the localist rhetoric upon which they were formed” and should be handed at last £12 billion a year in devolved funding.

The survey of council leaders, council chief executives and LEP board members suggested that if LEPs get the devolution that they have requested from the Government, England’s regions could be contributing an extra £144 billion a year to the economy by 2020.

To enhance the role LEPs play in growing local economies, the report recommends that:

  • The next Government should strengthen LEPs by devolving down £12 billion of funding annually, doubling the £6 billion proposed by Lord Adonis in 2014
  • Local economic spend should be characterised by a ‘dual lock’ approach where both council leaders and the LEP have to sign off on annual budgets, so ensuring that LEPs continue to play a strategic role while maintaining local government’s democratic importance
  • Skills should be a fundamental element of the devolutionary push. The report argues that by abolishing the Skills Funding Agency and transferring its £4 billion of funds to the LEP level, skills programmes can be tailored to help local supply best meet local demand
  • By making available £280 million of annual capital spend to LEPs, they can help deliver treble the current number of University Technical Colleges by 2020.

Greater Birmingham and Solihull LEP chair Andy Street, in an introduction to the Localis report, said he believed LEPs would have a bright future whichever party won the General Election.

Mr Street added: “The concept that local business leaders can effectively collaborate with public sector leaders to determine what is right for their area has been proven to be true. In reality this should be no surprise, but that should not take away from the originality of the idea.

Local Authority leaders have welcomed the business input, and in fact often LEPs have been the catalyst for improved collaboration between authorities.

Mr Street said LEPs had shown a:

remarkable ability to “convene, to make connections, and make things happen.

He cautioned against LEPs taking sole credit for economic growth:

No one in any LEP is going to claim a direct link between their activities and improving local economic performance – proving such causality is always impossible.

But it is true to say that strong growth is returning to many of our city regions, and rural areas, just at a time when LEP activities are beginning to make an impact; so perhaps there is a valuable contribution. For sure the effort to rebalance the economy looks more set for success now than for a generation.

Mr Street urged the next Government to stick with LEPs, adding that business leaders would not want to return to “a limp consultative role” and would want to build on what has been achieved. “Remarkably across the country the commitment to LEPs and the levels of participation are powerful. People feel involved and feel valued for their contribution, and that’s got to be a force for good,” he added.

Six West Midlands LEPs are already administering Growth Deals worth almost £1 billion, with GBSLEP’s deal the largest at £378.8 million.

The Localis report provides a framework for devolution to LEPs over the next five years and highlights the economically important strategic role that LEPs play in local areas across the country, successfully marrying private sector entrepreneurial vision with public sector know-how.

It recognises that any devolution of funds and powers must be counterbalanced by greater transparency and accountability within LEPs, recommending that LEPs publish their accounts, minutes and board member email addresses.

The report also suggests the possibility of directly electing LEP chairs, and encourages LEPs to address the lack of representation from BME communities and women on LEP boards so as to better represent their local business communities.

Alex Thomson, chief executive of Localis said: “The key finding is that LEPs need to remain nimble and un-bureaucratic, while retaining their crucial strategic input into local economies. Our research shows that they have the potential to make a massive impact on our national economy in the next parliament if they get the devolution they’re looking for.”

Chuka Umunna, Shadow Secretary of State for Business, Innovation and Skills, commented: “Local Enterprise have a crucial role to play in driving local growth and ensuring that areas can make the most of their strengths.

“As part of Labour’s drive to decentralize power to local communities we would ensure LEPs have the powers and budgets they need, helping them represent local businesses and building on best practice across the country.”

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