1Oversight and assurance
1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities and Local Government (the Department) about Local Enterprise Partnerships (LEPs).1
2.In 2010, the government set out its plans for local economic growth in the white paper, Local growth: realising every place’s potential. This focused government’s policy on achieving “strong, sustainable and balanced growth of income and employment over the long-term.” It also set out the government’s new approach to local economic growth, under which power is devolved to communities to ensure that “where the drivers of growth are local, decisions [are] made locally.”2
3.LEPs are private sector-led partnerships between businesses and local public sector bodies. They were established in 2011 to drive economic growth in local areas. There are 38 LEPs in England, each operating across functional economic areas that reflect labour markets and offer economies of scale. They cross administrative boundaries, covering more than one local authority. Some LEPs operate alongside or within a combined authority.3
4.The government has committed £12 billion in local growth funding to local areas in England between 2015–16 and 2020–21, and of this £9.1 billion has been allocated through Growth Deals negotiated between central government and individual LEPs. The Department is accountable overall for the Local Growth Fund and the delivery systems within which LEPs operate and invest public funds. The Department considers LEPs are key to developing local industrial strategies which will be used as a gateway for accessing future funding after the UK exits the European Union.4
5.In 2018, following its review of LEPs, the Ministry of Housing, Communities & Local Government (the Department) published a policy paper, Strengthened Local Enterprise Partnerships, setting out new governance and accountability standards for LEPs to adhere to. It also committed to working with LEPs to strengthen their leadership, clarify their role and remove geographical boundary overlaps where they existed.5
Oversight of value for money
6.The Department’s accounting officer is accountable for the Local Growth Fund delivered through LEPs. However, the Department has made no effort to evaluate the value for money of nearly £12 billion in public funding, nor does it have robust plans to do so.6 The Department told us that its assertion that every £1 of Local Growth Fund could generate £4.81 in benefits is an untested estimate, but that it is in line with evaluations of the regional development agencies nearly twenty years ago.7 The Department says it intends to do more to evaluate the impact of future funding schemes, specifically for the upcoming the UK Shared Prosperity Fund. It intends on using the “repository” of information it holds on “what works wel”’ to inform this work, drawn from LEPs’ individual strategies.8
7.The Department is unable to give assurances that individual LEPs are making the best use of significant amounts of public money and contributing as much as possible to the overall objective of local growth.9 The Department does not use aggregate information to report on the impact of Growth Deals, but it does use the information LEPs report to hold them to account in their annual performance reviews.10 LEPs submit data quarterly to the Department along with an indication of each project’s delivery risk. The Department accepts that there is more it could do to pull together the information they receive from all LEPs and not only restrict their view to the performance of individual LEPs.11
8.The capacity funding received by LEPs requires match funding from the private sector.12 The NAO reported in 2016 that contributions from the private sector had not materialised as the Department had intended.13 The Department was not able to give us examples of the type of private sector match funding and investment generated through LEPs’ activities or their management of local growth funds. Annual match funding returns submitted by LEPs to the Department only show the source of match funds. The Department could not explain what role LEPs have had in attracting additional private sector funding, or whether the private sector would have invested in these projects anyway through other funding arrangements.14
Scrutinising the work of LEPs
9.The Mary Ney Review of LEP Governance and Transparency examined whether the system that the Department had in place to assure itself of LEPs’ performance and governance was sufficient. It reported in October 2017 with 17 recommendations across eight areas including LEP culture and accountability; structure and decision-making; managing conflicts of interests; and transparency and government oversight.15 The Department wrote to the Committee in June 2018, confirming that the Department had addressed most of the Ney Review’s recommendations through publishing best practice guidance.16 The Department addressed the remaining recommendations through reissuing a National Local Growth Assurance Framework, which set out the new minimum standards for LEP governance and transparency.17
10.In July 2018 the Department committed to supporting LEPs to set out how they will ensure effective scrutiny and oversight of their investment decisions.18 It is up to each individual LEP as to which of three scrutiny models they adopt: an open offer to attend individual local authority scrutiny committees; setting something up with the local authorities covering their areas; or a joint committee with business representatives. “The Department reported that all LEPs have now set up the necessary scrutiny committees but said that LEPs are still “finding their way”.”19 Given this requirement is in its infancy, there is room for LEPs to become more robust in their approach.20
11.In May 2019 the Department updated its guidance on scrutiny arrangements for local authorities which includes references to LEPs. However, it said it did not know how many scrutiny committee members have received support or training on how to effectively carry out their function and that the responsibility falls to the accountable body of an individual LEP, typically an associated local authority or combined authority.21 The Department did not take into account the capacity of local scrutiny committees to do this work as it expected them to “take it in their stride” despite acknowledging the extra burden it creates.22 The Department accepts the need to keep challenging LEPs on their scrutiny arrangements.23
1 C&AG’s Report, Local Enterprise Partnerships: an update on progress, Session 2017–19, HC 2139, 7 May 2019
2 HM Government, Local growth: realising every place’s potential, Cm 7961, 28 October 2010
3 C&AG’s Report, paras 1, 1.2
4 C&AG’s Report, paras 1, 9
5 C&AG’s Report, para 1.3
6 C&AG’s Report, para 1, para 13
7 Q 83
8 Qq 80, 89–90
9 Qq 82–83
10 Qq 85- 86
11 Q 80
12 Q 32
13 C&AG’s Report, Local Enterprise Partnerships: an update on progress, Session 2015–16, HC 887, 18 March 2016, para 16
14 Qq 33–42
15 C&AG’s Report, para 4
16 Letter from Melanie Dawes, the Ministry of Housing, Communities & Local Government’s accounting officer, to the Committee of Public Accounts, June 2018
17 C&AG’s Report, para 4
18 HM Government, Strengthened Local Enterprise Partnerships, July 2018
19 Q 73
20 Q 48
21 Qq 72
22 Qq 75
23 Q 48
Published: 5 July 2019