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Seconds out for the great Local Growth Fund fight

Seconds out for the great Local Growth Fund fight

🕔25.Jul 2013

Half of the £2 billion a year Local Growth Fund earmarked for Local Enterprise Partnerships will be subject to a competitive bidding process, the Government has confirmed.

The country’s 39 LEPs are being invited to fight each other for a share of £1 billion and decisions on awarding cash will be based on the robustness of local strategic economic plans.

A further £1 billion a year is to be allocated by Whitehall for major transportation schemes, housing and the development of workforce skills.

Initial guidance for LEPs on growth deals released by the Department for Business Innovation and Skills (BIS) makes it clear there will be winners and losers: “Competition is an important means of driving better investment, collaboration, commitment, ambition and innovation.

“To allocate what is likely to be an oversubscribed and finite Local Growth Fund in a fair way through a competition, the Government will assess each Local Enterprise Partnership’s Strategic Economic Plan according to the criteria.”

BIS makes it clear that LEPs selected for growth deals can expect to take greater control of their own destiny through “freedoms, flexibilities and influence over resources from Government”.

The guidance adds: “In return, the Government will expect evidence of real commitment from Local Enterprise Partnerships to the growth agenda, including the development of ambitious, multi-year Strategic Economic Plans.

“We will also expect the local authority members of Local Enterprise Partnerships to take up the challenge of putting economic development at the heart of all they do and work collaboratively across the Local Enterprise Partnership area.”

The key principle of growth deals, according to BIS, is a partnership between the Government and LEPs, where the Government will “respond to the offers made by Local Enterprise Partnerships in pursuit of the shared objective of growth”.

The Greater Birmingham and Solihull LEP (GBSLEP) is expected to bid for road and public transport investment to boost job creation in the M42 Corridor, as well as a number of other projects involving skills and housing development.

The Government insists it is fully supportive of the Heseltine Review, which suggested a single pot of funding for LEPs amounting to £60 million. In fact, the ‘pot’ will be £10 billion over the five years of the next Parliament.

BIS makes it clear that further devolution of powers and budgets beyond that already proposed will be the “exception rather than the norm”.

The briefing note states: “The Government is decentralising through the Local Growth Fund those funding streams that we believe are appropriate for devolution. Requests for resources outside the Local Growth Fund will therefore have to clearly and demonstrably offer better growth outcomes/value for money than continued national delivery.

“The Government expects agreement to such proposals will be the exception rather than the norm. Where Local Enterprise Partnerships make a compelling case, as set out in their Strategic Economic Plans, we will be ready to make a deal. The burden of proof in deciding against the cases made by Local Enterprise Partnership will rest on Government.”

LEPs are told they will need to draw on a range of resources to fund the priorities identified in the Strategic Economic Plans. These will include:

  • Private sector investment.
  • Local authority funding, including resources acquired through retained business rates.
  • Resources from revolving funds such as Growing Places Fund, and also from Enterprise Zones retained business rates and City Deals.
  • Support from the Department for Transport’s Local Sustainable Transport Fund.
  • Match funding from other local partners, such as housing associations, universities and colleges.
  • Selling surplus and redundant public sector assets.
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