LEPs might need cash kick-start, say MPs

8 Dec 10
The government needs to be on standby to inject extra funding into fledgling Local Enterprise Partnerships, MPs have warned
By Lucy Phillips

9 December 2010

The government needs to be on standby to inject extra funding into fledgling Local Enterprise Partnerships, MPs have warned.

In a report published today, the Commons business, innovation and skills select committee says there is a potential funding gap between the start-up of LEPs and an eventually self-sustaining financial model. It ‘strongly recommends’ that the government set aside funds to support LEPs that lack capacity to establish themselves at inception, saying future dividends from their success is too great ‘to permit them to fail for lack of small amounts of transition funding’.      

LEPs are joint local authority and business ventures being set up to promote local economic growth. They will replace regional development agencies by 2012. A first wave of 24 has already been given the green light.  

The select committee report, The new Local Enterprise Partnerships: an initial assessment, adds: ‘LEPs will not necessarily require large budgets to run their operations, but they will need a degree of independent financing which will take time to develop on a sustainable basis. Innovative funding methods such as tax increment financing will need to be trialled before being applied generally, and in any case will probably not be suitable for all local economies.

‘Furthermore, the private sector might not be willing to stump up cash until LEPs have a track record of success, so there is a risk of a short-term funding gap.’

The MPs also warn that LEPs run the risk of being undermined by political instability.

Committee chair Adrian Bailey commented: ‘To succeed, LEPs will need the powers and recognition required to give substance to their visions for turning local economies around. They must also overcome local rivalries and politics and collaborate with many partners for the benefit of the local area.

‘Making this a reality will present substantial challenges to central and local government, LEPs and the business community, but the economic prize is too important for them not to meet those challenges head on.’ 

Did you enjoy this article?

AddToAny

Top