1Greater Cambridge Greater Peterborough Local Enterprise Partnership
Local Enterprise Partnerships
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).1 We also took evidence from the Chief Executive of Cambridgeshire County Council and the former Chair of Greater Cambridge Greater Peterborough Local Enterprise Partnership (GCGP LEP).
2.Local Enterprise Partnerships (LEPs) are business-led partnerships between the private sector and local authorities. Each operates across more than one local authority and is designed to cover a functional economic area. Following the abolition of Regional Development Agencies in 2010, LEPs were established in England as strategic bodies responsible for steering economic growth in local communities. LEPs have subsequently taken on increased responsibility for significant amounts of central government funding. Through its Local Growth Fund, since 2015 the government has awarded LEPs £9.1 billion of public money to invest in the development of local economies.
3.The Department relies on their National Assurance Framework for LEPs to ensure that money is spent appropriately. Each LEP in turn has its own assurance framework, and a local authority which is accountable for its expenditure and activities. It is the responsibility of the accountable body’s Section 151 officer to sign off on this assurance framework.2
4.The government also sees LEPs as key to the implementation of its industrial strategy, which was published in 2017. According to this strategy, LEPs will perform a role, often in partnership with mayoral combined authorities, in areas including improving workforce skills and the development of local industrial strategies.3
Greater Cambridge Greater Peterborough Local Enterprise Partnership
5.GCGP LEP consists of 15 separate local authorities, and covers all of Cambridgeshire along with districts in Norfolk, Suffolk, Essex, Hertfordshire and Lincolnshire, plus the unitary authorities of Rutland and Peterborough. Concerns about the governance of the LEP were raised locally in January 2017. In March 2017, Mr Stephen Barclay MP wrote to both the Comptroller and Auditor General and to the Department, raising concerns about GCGP LEP. Mr Barclay’s concerns were around matters including GCGP’s management of conflicts of interest, a perceived lack of transparency in GCGP LEP, and a perceived lack of clarity about the relationship between GCGP LEP and certain lobbyists. The National Audit Office began an investigation in March 2017.4
6.In parallel with the National Audit Office (NAO), the Department conducted its own investigation into GCGP LEP. In March 2017 it withheld most of its funding to the LEP, leaving only limited funding for its continued operations. In order to have GCGP LEP’s funding released back to it, the Department required the LEP to improve its transparency by publishing board papers, minutes, and decisions in a timely way, and to develop a comprehensive conflict of interest policy. The Department also required the LEP to demonstrate compliance with the national assurance framework by ensuring that board members and the GCGP LEP executive understood their obligations fully. In addition, the Department required the Chair to respond formally to allegations of a personal conflict of interest.5
7.GCGP LEP recognised that it needed to improve its processes, and published a revised local assurance framework which included amendments to ensure that papers were published in a timely fashion. In September 2017 the Department drew initial conclusions from its review and found that there was no evidence of the misuse of public funds by the LEP. However, the Department continued to have concerns about the LEP’s executive leadership capacity. In December 2017, GCGP LEP decided to go into voluntary liquidation.6
8.We discussed the allegations raised by Mr Barclay with Cambridgeshire County Council, the local authority responsible for GCGP LEP, and with Mr Reeve, the former Chair of GCGP LEP. Gillian Beasley, the Chief Executive of Cambridgeshire County Council and Peterborough City Council, told us that she had been concerned because the conflicts of interest policy “needed to be more detailed.”7 In her written evidence, she stated that the conflicts of interest policy “did not include other interests such as land, property and investment interests of board members.” Ms Beasley also provided us with a memorandum from the Leader of Cambridgeshire County Council, Councillor Count, to Mark Reeve about issues he identified in the governance of GCGP LEP in early 2017. The concerns raised by Councillor Count were wide-ranging, and included “some decisions being made by the LEP are done so without adequate supporting documentation”, “no forward plan for future agenda items”, “board papers and minutes not properly placed on the website”, “no verbal or written report from the Chief Executive on the National Assurance Framework” and a “rushed” approach to agreeing the local assurance framework.8
9.The former Chair of GCGP LEP, Mark Reeve, pointed out to us that he and other board members only performed their role alongside other positions, and were therefore unable to devote a significant amount of time and consideration to it. Mr Reeve stated that “the LEP chair and the LEP private sector board members were doing this on a part-time basis” and therefore “relied heavily not only on the accountable body but the executive of the enterprise partnership to ensure that governance was in order.”9 When pressed to describe exactly what he thought his role as Chair should have been in relation to ensuring that there was good governance and transparency around decision-making, Mr Reeve replied “Our view was that we had an accountable body, which took that responsibility.
10.The Chief Executive of Cambridgeshire County, Gillian Beasley, did not agree with Mr Reeve’s assertion that it was necessary for GCGP LEP to rely upon its accountable body, Cambridgeshire County Council. Ms Beasley told us that in her view and that of her officers, in the context of the conflicts of interest policy, it was “for the LEP to determine adequacy, because there was no standard set by the national assurance framework as to how those documents complied”.10 The Department endorsed the council’s position, stating that “it is the role of the chair to lead the culture and conversation around things like conflicts.”11 Mary Ney, a non-executive member of the board of the Department commissioned by them to conduct a review of LEP governance and transparency, expressed the view that “the culture around good governance and transparency is led by the Chair and Chief Executive of that organisation.” The Department did, however, acknowledge that in the matter of responsibility for effective governance of GCGP LEP there were “different views on different sides of the argument” locally going back at least to the summer.12
11.We asked the former GCGP LEP Chair repeatedly about his own potential conflict of interest, concerning his construction company having the contract to build on a site, while the LEP was advising on what infrastructure should be on that site. Mr Reeve refused to discuss the matter.13 He referred us to legal advice provided to the Department and to the LEP, but which had not been provided to us at the time of our evidence session, and which he declined even to summarise. He said that “advice has been taken by CLG and the enterprise partnership and both found the same: there was no conflict of interest.”.14 We pressed Mr Reeve specifically on when his construction company had signed the contract and when he became aware of the potential conflict of interest. We found it hard to understand how there could not be a conflict of interest if his construction company was building a site on which the LEP, of which he was Chair at the time, was putting in funds to the infrastructure, which was presumably increasing the value of the site. Mr Reeve would not provide us with any dates. We pointed out that Mr Reeve’s attitude to openness was not in keeping with the Nolan principles for holders of public office and that people in the local area are entitled to know the answer to when his company signed the contract. Mr Reeve commented “It is a private matter, it is not relevant and there was no conflict of interest.” We do not agree that it is a private matter.15
12.The Chief Executive of Cambridgeshire County Council told us that she was not aware of the specific date when the contract was signed.16 She also told us that “I don’t think there was a disclosable pecuniary interest” at the stage when the LEP discussed the interest. However, she also suggested that GCGP LEP’s board had not handled the matter with the level of transparency that she would expect councillors to take. With a councillor, if a contract had been entered into in which there was no financial benefit, under the Nolan principles in public life it would have needed to have been declared as a disclosable but not a pecuniary interest. Ms Beasley also took the view that this item of discussion at the LEP board “was not well minuted.”17
Oversight of Greater Cambridge Greater Peterborough LEP
13.The Department has previously informed this Committee that it did not consider there to be problems with its system of LEP governance and transparency. In 2016, during its inquiry on Cities and local growth, the Committee asked the Department about its oversight of LEPs and of conflicts of interest in particular. At that point, the Department confirmed that LEPs had to have a conflicts of interest policy.18 The Department wrote to the Committee in May 2016 and said that it “did not have any concerns to report about any individual LEP at that stage.”19 The Department told us that these statements were consistent with “the best of our knowledge at that time” and that “subsequent checks the following year drilled deeper and asked more of LEPs in a number of areas.”20
14.The Department relies in part upon local authorities working with LEPs on their assurance frameworks. In the case of GCGP LEP the Cambridgeshire County Council Section 151 officer signed off the framework in February 2017. The Department told us that it began its investigations when it discovered that “the section 151 officer assurance was not based on the sort of oversight of the documentation that we would have expected.”21 The Chief Executive of Cambridgeshire County Council told us that the Section 151 officer “took the view that his role was to check that the assurance framework had been agreed by the LEP and that the components within the national assurance framework were found in the local assurance framework. It was very clear to him at that time that he was not to look at the adequacy of those documents, because there was no standard against which he should judge that.”22 Mary Ney, a non-executive director at the Department charged with reviewing the governance of LEPs, told us that on this occasion “some of that the Department’s expectations of the Section 151 officer was not understood” locally.23
15.Stephen Barclay MP raised his concerns in January 2017 and this happened concurrently with a member of the LEP board writing an open letter raising their concerns about governance within the LEP. In March 2017, the Department carried out spot checks of LEP local assurance frameworks: GCGP LEP was one of 13 LEPs that were identified as having minor outstanding issues. Five LEPs were contacted to ensure their frameworks complied with the national framework and two had serious or red risks (GCGP was not one of these two LEPs).24 Mr Barclay’s concerns were the main trigger for the Department conducting an internal review of the GCGP LEP’s local assurance framework.”25 The Department told us that whilst the issues in GCGP LEP were “already on our radar”, Stephen Barclay’s letter “sharpened everyone’s mind.”26
1 Report by the Comptroller and Auditor General, Investigation into the governance of Greater Cambridge, Greater Peterborough Local Enterprise Partnership, Session 2017–19, HC 410, 29 November 2017
2 A Section 151 Officer is an officer appointed under Section 151 of the Local Government Act 1972, which requires every local authority to appoint a suitably qualified officer responsible for the proper administration of its affairs
3 HM Government, Industrial Strategy: Building a Britain for the Future, 27 November 2017
4 C&AG’s Report, paras 1–4
5 C&AG’s Report, para 3.17
6 C&AG’s Report, paras 3.19–3.20
7 Q 9
8 Gillian Beaseley (CCP0001)
9 Q 2
10 Q 9
11 Qq 63, 82
12 Q 102
13 Qq 13, 21–26, 42–45; Mr Reeve wrote to the Committee after our session stating that the LEP was not advising on what infrastructure should be put into the site in question
14 Qq 13, 21–23,
15 Qq 21,22, 42–45
16 Qq 47, 48
17 Qq 49, 50
18 Oral evidence, 25 April 2016, HC 913 (Session 2016–17), Q 136
19 Q 87
20 Q 87
21 Q 59
22 Q 9
23 Q 63
24 C&AG’s Report, para 3.9
25 C&AG’s Report, para 8
26 Q 80
16 March 2018