LEPs ‘not ready’ for single pot reforms

3 Mar 14
Doubts about the ability of local enterprise partnerships to take on responsibility for administering public funds have prompted the Treasury to ask the Local Partnerships agency to help develop the organisations, Public Finance has been told

By Richard Johnstone | 03 March 2014

Doubts about the ability of local enterprise partnerships to take on responsibility for administering public funds have prompted the Treasury to ask the Local Partnerships agency to help develop the organisations, Public Finance has been told.

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The chief executive of Local Partnerships, Judith Armitt, warned that the success of the single pot for local economic development could be hampered by weak project management and accountability in business-led LEPs. 

Local Partnerships, which is jointly owned by the Treasury and the Local Government Association, has been authorised to help beef-up the 39 LEPs ahead of devolution of £2bn from 2015/16 through the Local Growth Fund, she told PF.

Under the government programme to agree a growth deal for every place, LEPs will be ‘really vital’ to future economic development, Armitt said. ‘Certainly this government sees LEPs as being the way to ensure the most appropriate infrastructure to support growth happens.’ 

However, she expressed concern that these plans – first set out by the former deputy prime minister, Lord Heseltine, in his No stone unturned growth review – could be hindered by cuts to local authorities and the lack of skills elsewhere. 

‘I do have a note of caution about LEPs. Most of them are very small organisations – though there are some exceptions – and it has taken a little while to sort out some of the governance and relationship issues. There are some LEPs that are only now turning their minds to how they’re going to secure their delivery capacity.’

She noted that LEPs could be dependent on councils as both delivery agents and accountable bodies for public funds. ‘That will be fine in some cases, but in some cases it won’t be fine because of the cuts local authorities have had to make. 

‘Some of them have had to remove the capacity they had for doing that kind of work, and if this all goes a little bit wrong it will be because people are not ready as the money becomes available.’

Similar problems existed in previous local growth schemes, she said. ‘I think it’s likely to be more marked this time because of the scale of the budget reductions that local authorities have had to make.’

This creates the possibility that LEPs will not be ready to take forward projects when funds are localised, she added. ‘That could delay progress on infrastructure development and it would be very sad if that happened.’ 

There remains just enough time to avoid this and the Treasury had been clear that it ‘very much wants’ Local Partnerships to help, Armitt told PF.

‘My fear is that in the time we have – the next year – the issue might not be grasped as firmly as it needs to. 

‘Let’s hope it is, and certainly we’re trying to do our part – we’ve offered assistance to a number of LEPs and we’ve also made it clear to the LEP Network that we would be able to help any LEP that would like support. That extends to local authorities working with LEPs up and down the country as well.’

Responding to Armitt’s concerns, David Frost, chair of the LEP Network, said the partnerships were ‘absolutely galvanised’ on developing their economic strategies, which will form the basis of bids for the growth deals.

‘Yes, the LEPs vary enormously in terms of size and scale – there’s very big city-based LEPs to some very small. 

‘Personally, I’m not concerned about delivery – I think they will find different models and they will deliver. The issue at this stage is really about ensuring their plans are coherent and linked into the wider vision they have for their area’s future.’

He confirmed that Local Partnerships has offered support to the LEPs, and added that it would be down to each area to respond.

‘The whole essence of localism is that there will be different structures, and that will be relevant to the area, the history and the nature of that partnership,’ Frost told PF.

‘You will get public-private vehicles, you will get local authority vehicles that deliver – there will be diversity.’

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