If ministers are serious about the localism agenda, they need to make long-term funding commitments to Local Enterprise Partnerships. Otherwise, LEPs will not be able to effect real change in their communities and drive growth
Sustainable growth, whether it be local or national, relies on a combination of strategic long-term planning and investment. In its recent report, the Business, Innovation and Skills Committee assessed the state of Local Enterprise Partnerships (LEPs) – the coalition’s flagship localism scheme. Committee Chair Adrian Bailey said that LEPs ‘are expected to deliver long-term growth. To do this they require the confidence to make long-term investments. The current funding commitments fail to provide this.’
Since the introduction of LEPs in 2011, critics have alluded to the lack of, and limit to, sustainable funding streams open to these local bodies. While the government was keen for them to be locally driven, their inability to raise and attract finance has prevented many LEPs from effecting real change in their communities that would drive growth.
The announcement of core funding and plans for the £20bn Single Local Growth Fund seemed to indicate a change in government approach, but with the 2015 General Election rapidly approaching, no long-term commitments have been made for these two new funding streams. This leaves the 39 LEPs left wondering where they will be in two years’ time – it is vital that committed long-term funding proposals are set out that support their existence.
In his No Stone Unturned report, Lord Heseltine highlighted many of the problems LEPs were experiencing in supporting their day-to-day operations. He recommended that the government provide an annual funding stream of £250,000 for each LEP until 2020.
The government acknowledged the importance of such a fund, but announced that it would be provided during the next two financial years, 2013-14 and 2014-15. Furthermore, the funds would only be allocated if a LEP was able to match-fund this £250,000.
While some commentators have attacked the latter proposal for pushing more power into the hands of local authorities, which could be a major source for this match-funding, it equally opens up the possibility for more private sector funding and a correspondingly greater influence over decision-making. The two fundamental problems associated with core funding concern the short-termism of funding plans and the one-size-fits-all approach.
Each LEP varies in size and has differing local issues and priorities to address. Furthermore, as the BIS Committee report found, each LEP faces different ‘investment barriers’ that will affect the level of core funding needed. Different barriers require different approaches to tackle them and it may take years before progress is made in some areas. It is for this reason that a long-term commitment is needed.
A report published by Insight Public Affairs, Clarity or Confusion, LEPs at the Crossroads, makes two key recommendations: firstly, core funding should be allocated over a five-year period, allowing LEP boards to plan and deliver projects that can properly drive local growth; secondly, the government must assess each LEP’s funding needs on a case-by-case basis, accounting for the breadth of local issues and requirements.
The Single Local Growth Fund (SLGF) was another idea put forward by Lord Heseltine in his report, calling for the creation of a £70bn funding pot dedicated to LEPs that would be allocated from 2015-16, up to 2020. The government again agreed with this proposition but reduced the total pot to £20bn. Despite this commitment, at present only £2bn has been set aside for 2015-16.
In our report, Andy Sawford, a member of the Communities and Local Government Select Committee, argues that the current government position on LEPs funding, and in particular the SLGF, is ‘localism-lite’ and a more ‘consistent and focused’ approach is required. In order for LEPs to produce worthwhile strategic plans for the long term, which include preparing to bid into this competitive fund, long-term funding allocation needs be set out and secured for the SLGF for the rest of the decade.
While some have criticised the competitive nature of the bidding process for the SLGF, it does encourage a more effective and focused planning process and can result in better value-for-money projects winning funding. The real issue concerns the long-term nature of the funding allocation and we would like to see all parties commit to secured long-term funding for the SLGF over a five-year period.
If the government is serious about pushing on with the localism agenda, and wants to avoid the claims that LEPs were always only a shell of local power, it needs to make these long-term funding commitments. Only certainty, sustainability and continuity will enable them to build on the progress to date.
John Lehal is the managing director of Insight Public Affairs
