Further development of Local Enterprise Partnerships
Initially, the LEPs had little or no access to public funding. However, the DCLG and the BIS came to recognise that some funding was needed and relatively small amounts began to be offered through the BIS Start-up Funding, Capacity Funding and the Regional Growth Fund. The breakthrough came with the publication of a report by a respected Conservative politician and ex-Minister (Heseltine, 2012b) which made a total of 89 recommendations for developing regional growth, including delegating more responsibilities from central government, 81 of which the government claimed to accept, in whole or in part. Following this, LEPs were given access to what was initially referred to as a Single Local Growth Fund of £1,400 million through a process of competitive bidding. There was also a realignment of how EU Structural Funds were to be managed in England in order to relate them to the plans of LEPs.
These Government plans were supported in principle but with reservations by the Local Government Association, which had for some time been arguing for the devolution of 'growth related powers and levers' (Local Government Association, 2013b). However, it also expressed a number of concerns, not least that central Whitehall departments would actually 'commit to the EU Growth Programme model, and not fund the majority of the provision through separate national contracts/programmes outside the model' (Local Government Association, 2013b). It also worried about possible conflicts with City Region Deals and the relationship between the two which we will discuss in Chapter 5. Another continuing major concern of the Local Government Association was the overall level of local government funding. It pointed out that 'local economic development is a discretionary service' (Local Government Association, 2013b) and so could be easily undermined by further reductions in the levels of local government funding.
In fact, some of the Local Government Association's fears were soon confirmed. By July 2013 the word 'Single' had been dropped from the title of the Local Growth Fund, and different allocation processes were being designed for different streams of funding within it (Local Government Association, 2013a). So, the Ministry of Transport was to be responsible for local transport funding through Local Transport Boards, the European Social Fund skills allocation would be administered through the Skills Funding Agency and the New Homes Bonus, which allocated funding to councils on the basis of number of homes built, would have £400 million of its funds pooled to support LEP plans. Furthermore, although strategic economic plans would be multi-year, the Local Growth Fund resources, which will finally be allocated for 2015–2016, are expected to be spent within that year. The idea that a single fund would be available with which LEPs could
finance coherent local developments appeared to be being interfered with by the
interests of Whitehall.
Quite what, precisely, the Growth Deals will involve is only just emerging at the time of writing, as LEPs are in the process of developing their economic growth strategies. The government assumes that they will involve influence over what are termed 'growth-related levers' and will be funded by a share of the Local Growth Fund. It has been made clear that only exceptionally would other resources be considered. It also requires co-ordination of approach within the LEP, including collective decision-making and agreement on the disposal of any assets. However, it does offer the carrot of 'greater freedoms and flexibilities'. At the time of writing, it is impossible to tell how this will work out in practice. The final drafts of European Union Structural Investment Plans will not be submitted to the government until January 2014, and the Assessment of the Strategic Economic Plans will not be completed until June 2014. The Growth Deals will not actually be implemented until April 2015.
Our interviews conducted in Autumn 2013 suggest that there remain issues about the ability of LEPs to successfully deliver. When LEPs were originally set up, they were to be bottom-up, had no real funding and had no required formal structure. Most appear either to have become a company limited by guarantee or to have created a limited liability partnership. Since then, the Regional Growth fund and various other sources, including the Local Growth Fund and a share of EU funding, have considerably increased their potential funding base. Whilst the amount of funding likely to be available for most LEPs remains less than that of RDAs, nevertheless, successful LEPs now have responsibility for growing amounts of public money and are likely continue to do so over the next several years. This appears in some cases to have raised issues of appropriate governance. Unlike local authorities, LEPs have no obligation to hold meetings in public or to publish their discussions or even their decisions. While the LEP Boards are responsible for overseeing the governance of the body, there is no necessary basis for overseeing the Boards themselves.
Where councils are not Unitaries, a great many local councils can be involved, and our general impression of LEPs is that they can suffer from antagonisms both between the different local authorities involved and between the Local Authorities and business representatives who are supposed to dominate. Nonetheless, some LEPs appear to have provided an opportunity for much better relations between neighbouring local authorities. In principle, they could also provide a location for better relations between local authorities and business – a sort of virtuous circle (Moore, 1995). However, that appears not always to be the case. An essential requirement for an effective LEP has to be that it has an effective chair and Board. As we observed, when they were first created there was a reluctance among some businesspeople of quality to engage with the LEPs. This appears to be reflected in the quality of some Board members and chairs. As a LEP Board member told us: 'for private sector representation they didn't go back to any of the people who had been involved in the local economic partnership. Those are the people who have got experience in economic development programmes.' The chair especially
must not only represent appropriate business interests but must also be able to engage with the local authorities and their staff. Many local authorities already had effective economic development units, and some now feared that they could find themselves in competition with the LEP. In practice, most economic developers within LEPs have a background in local authority work, and many continue to be paid by the member local authorities, so the ability of the Business chair to engage with them is crucial. Potentially, their responsibilities are substantial, yet as one of our interviewees said: 'they are not paid for it and it ain't a lot of fun' (LEP Adviser). A number of LEPs have had changes of chairmanship in the short period in which they have existed, which is perhaps indicative of the difficulties involved. As one Council Chief Executive told us: 'Being frank, the political view of the LEP is that it is dire. It is nothing at all. The private sector leadership is desperately weak … [and] … very different from what used to populate the local development partnership. There is also serious confusion as to their purpose.' In Autumn 2013, most were still developing their growth strategies and their European Strategies required to gain EU funding and appeared to be receiving confusing messages from the government. As one of our interviewees told us, 'They are suffering from mission creep … They are just stumbling along' (LEP Adviser). Another disgruntled informant said: 'Our LEP is nothing like local. It is too big an area. It
doesn't have a lot of enterprise and it isn't a partnership!'
There are two potential issues of this mission creep. They now receive some government funding for staffing while they develop their economic growth strategies. However, they were not originally created as strategic bodies, and some Board members expressed doubts to us about the abilities of the staff they have in post to fulfil this new role. The other aspect of mission creep is similar to that of the old RDAs. That is, that they could develop into delivery bodies for which they are definitely not equipped, in which case, the logical thing to do would be to use one or more local authorities within the LEP as the delivery bodies, since they do have the experience.