Former minister urges LEP shake up

9 May 14
A radical reform to the role of Local Enterprise Partnerships, including giving councils sign-off of economic strategies, is needed to tackle the north-south divide, former Labour housing minister John Healey has said

By Richard Johnstone | 9 May 2014

A radical reform to the role of Local Enterprise Partnerships, including giving councils sign-off of economic strategies, is needed to tackle the north-south divide, former Labour housing minister John Healey has said.

In a report for the Smith Institute think-tank, Healey said the number of LEPs should be cut. There are currently 39 in England, but they should be reduced in number to ensure they match functional economic areas and can be given more resources to act as a ‘bedrock’ for local growth powers.

As part of reforms to ‘sharpen’ the bodies, town halls should sign-off on the LEPs’ strategies as part of the bid process to access funding from the government’s £2bn single pot for economic development from next April, he added. Currently, local authorities have input to the growth plans as members of the LEP, but do not give final, formal approval.

Healey said the central challenge for the next government would be to build a balanced and lasting recovery across the whole country. Although the creation of LEPs was flawed, a future Labour government should look to reform the existing bodies rather than creating new agencies. 

‘It is clear that regions and cities need a better framework to support businesses and local economic growth but going back to square one with each change of government is no recipe for success,’ he said.

‘The next generation of business-led LEPs must be stronger and cover areas which actually make economic sense. And ministers must make sure that LEPs have the extra powers and funds they need to deliver a better balanced recovery and stronger growth across the country.’

The Making local economies matter report was co-written with Les Newby, an ex-director of Yorkshire Futures, part of the former regional development agency for the region.

Its recommendations also included a call for a single government department to be given responsibility for LEPs to provide greater clarity on the role of bodies. Details were also needed on how LEPs will work with cities that have signed City Deals with government, and those that had formed combined authorities.

In a joint foreword, Labour’s shadow chancellor Ed Balls and shadow infrastructure minister Lord Andrew Adonis said the report set out the potential partnerships needed to make cities and towns ‘more effective engines of growth’.

They added: ‘The report provides three clear insights into how we can strengthen local economic leadership.

‘Firstly, our local economies cannot withstand another major upheaval of the local growth infrastructure... Evolution and not revolution is the right way forward.

‘Secondly, there needs to be a much bolder and simpler offer of devolution to city and county regions than what has been on the table so far. Third, not enough has been done to strengthen partnerships between local authorities and independent LEPs.’

Responding to the report, Graeme McDonald, the director of the Society of Local Authority Chief Executives, said he agreed there was an urgent need to realign LEP boundaries.

‘We are also pleased to see endorsement of more significant and long-term resources to be provided to LEPs as Lord Heseltine had already outlined, and for the use of alternative funding sources such as municipal bonds and local/green investment banks,’ he added. 

‘We would argue however that we need to go further in providing greater freedoms to councils over their own finances, including borrowing for infrastructure and housing investment. Economic success comes from the hard work of local communities, not the corridors of Whitehall.’

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