One Legal Sept 21 Director 600

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LEPs and public funding

A Government review of Local Enterprise Partnerships is expected to lead to significant changes in how public funding is delivered in England, write Jonathan Branton and Alexander Rose.

Councils may lose their role in the governance of Local Enterprise Partnerships under a Government led review that is expected to conclude in the coming months.  "All options" are said to be under consideration as the Government considers the role, function and structure of Local Enterprise Partnerships with the aim of ensuring that the organisations are positioned to 'support productivity and growth' most effectively and to complement Central Government policy in the coming years.  

What role do Local Enterprise Partnerships play in delivering public funding?

Local Enterprise Partnerships ("LEPs") are non-statutory partnerships formed between the public and private sector tasked with identifying local economic priorities and promoting initiatives which boost economic growth and create jobs.

The 38 LEPs have played a key role in English regeneration for over a decade. They have created local industrial strategies and allocated public funds such as Local Growth Funding.  The LEPs have not been able to directly make awards.  This is because, since their creation, LEPs have been required to establish accountable bodies (normally a Council or Combined Authority) which is responsible for entering into contracts and awarding funding on behalf of the LEP. 

In recent years questions have been raised about how the LEPs should interact with Mayoral Combined Authorities and Councils. This has become particularly pressing with the Government due to launch the UK Shared Prosperity Fund in late 2021. 

Who will lead the LEP review? 

The Government's plans for the future role of LEPs emerged as part of a large-scale Whitehall review and will be overseen by Secretaries of State Kwasi Kwarteng and Robert Jenrick, with the Minister for Small Business, Consumers and Labour Markets, Paul Scully leading the review on a day to day basis. 

What are the Terms of Reference for the LEP review? 

The terms of reference for the initiative are very broad, allowing the review to consider the form, functions and geographies of Local Enterprise Partnerships with the objective of enabling these to be amended to better support Central Government policy objectives. The Government plans to take account of the views of businesses, local authorities, LEPs and other stakeholders in deciding what changes to make. 

One element which will be considered is whether LEP geographies are effective, with speculation that Ministers may wish to reduce the number of LEPs. The review will also consider "funding models" ahead of the Comprehensive Spending Review which is expected to include information on the new UK Shared Prosperity Fund. 

How will the Government approach the LEP review? 

The Cities and Local Growth Unit are supporting Paul Scully, seeking views from stakeholders which will form a report that will be considered by Ministers. The report is expected to contain two sections, the first will focus upon:

  • "the most effective size and number of [LEP] institutions…with potentially more strategic institutions over wider geographies" while "taking account of the importance of functional economic areas";
  • how to "better align business support services with skills, innovation, net zero, trade and export support";
  • the future "purpose of evolved LEPs and how [they can] effectively support and represent local businesses"; 
  • "which government department should sponsor and support evolved LEPs"; and
  • "how best to harness LEPs’ strategic influence across [the above] themes and what influence they might have over future investment decisions".

The second tranche will focus on:

  • "the composition and breadth of business membership, including SMEs and sectoral diversity" with consideration as to how to "attract more young, entrepreneurial and diverse business leaders"
  • the level of funding LEPs require and "how [they] should be funded going forward"; and
  • how best to "transition from the current model to [the] future structure".

To support the review, the LEP Network have established the following working groups which will each be overseen by a LEP Management Board chair:

  • Objectives and Functions; 
  • Geographies and Accountabilities; 
  • Representation and Interaction with Local Government; and
  • Implementation and Funding.

Future governance 

A key issue set to be reviewed in the second tranche will be governance, in particular what safeguards will be put in place to ensure that public money is managed appropriately, for example that sufficient checks are carried out as to Subsidy Control compliance. At the moment, LEPs have accountable bodies, which are usually local authorities or combined authorities, that have sufficient legal resource and are able to provide assurance to Central Government through the S.151 Monitoring Officer.  

Comments 

The Local Enterprise Partnerships have played a vital role in regeneration for over a decade, including developing local industrial strategies to coordinate investment and being the fundamental channel through which funding is channelled and hence key decisions are taken. Staff within the LEPs have built up strong networks and made major contributions to regenerating their local areas. Therefore, the Government will need to be careful in its review to retain aspects that have worked well whilst strengthening how public funding is allocated and awarded.  

Jonathan Branton is a partner and Head of Public Sector and Alexander Rose is a Director at DWF.