The Chamberlain News

From zero to £10 billion in four years – the rise and rise of LEPs

The country’s 39 Local Enterprise Partnerships have shared £7.3 billion from the Government’s growth fund deals since 2015, and a further £1.8 billion pot is now up for grabs. Chief blogger Paul Dale examines how the LEPs have become key financial and political players in a short space of time.

Four years ago, Tory grandee Lord Heseltine was commissioned to produce a report for the Chancellor and Secretary of State for Business, with a brief to provide ideas to stimulate economic growth at a local level.

The former cabinet minister, known throughout Whitehall as an arch-interventionist, based himself in Birmingham and duly produced a report which he called ‘No Stone Unturned: In Pursuit of Growth’. It made 89 recommendations on how to stimulate economic growth and wealth creation, most of them involving transferring powers and budgets from central government to the regions.

Among these was a recommendation to combine separate funding streams which support growth into a “single funding pot” for local areas. Heseltine reasoned that local decision making was likely to be better when it came to deciding how best to spend economic development cash.

In normal circumstances, that might have been that with Lord Heseltine’s report destined for a dusty berth at the top of a shelf somewhere in H M Treasury.

On this occasion, however, No Stone Unturned fitted in perfectly with George Osborne’s emerging devolution strategy and was accepted as part of the 2013 Spending Review and detailed in the Treasury document Investing in Britain’s Future:

The Government agrees with Lord Heseltine that local leaders are best placed to set the strategic direction for an area, and has accepted his recommendations to devolve economic power to Local Enterprise Partnerships (LEPs) through the creation of a Single Local Growth Fund and Growth Deals.

This document confirmed the creation of a Single Local Growth Fund (SLGF) with a budget of £2 billion drawn from the existing skills, housing and transport budgets from 2015-16 and a Government commitment of £5 billion of transport funding to the SLGF between 2016-17 and 2020-21 and a pledge to maintain the SLGF at a total of at least £2 billion each year in the next Parliament.

LEPs would also be asked to develop “multi-year strategic plans” detailing funding proposals for the SLGF and plans for EU Structural and Investment Funds, covering 2015-16 to 2020-21.

In turn, these plans would be used as the basis for negotiating Growth Deals between central government and each LEP.

It was by no means all new money and a certain amount of sleight of hand from the Treasury could be detected, not to mention plenty of smoke and mirrors. Critics of the growth funds said then, and repeat today, that this is not really devolution at all since the Government has the final say on the LEPs strategic economic plans so the final decisions about spending still rest in Whitehall.

To quote the Treasury:

Growth Deals will be a partnership between the Government and Local Enterprise Partnerships, where the Government will respond to the offers made by Local Enterprise Partnerships in pursuit of the shared objective of growth.

LEPs were given a deadline of March 2014 to submit final versions of their Strategic Economic Plans, which would then be assessed by central government. In March 2014, all 39 LEPs submitted Strategic Economic Plans for approval.

In July 2014, the Government announced details of funding secured by each LEP over the period 2015 – 2021. In January 2015, the Government expanded the deals, with LEPs securing a further £1 billion in total investment between 2016 and 2021.

As well as financial clout from the growth deals, most LEPs are beginning to experience political clout from the roles they play in combined authorities and city regions. The three Midland LEPs for example – Greater Birmingham and Solihull, Coventry and Warwickshire and the Black Country – will have seats at the top table when the West Midlands Combined Authority gets underway on June 1.

A brief glance at the Midland LEPs Strategic Economic Plans suggest self-confidence, if nothing else, given the titles attributed to the SEPs are anything to go by. Greater Birmingham’s is “The SEP to Change Britain”, while the Black Country goes by the title “Sold Around the World”, Coventry and Warwickshire favours “Bringing Manufacturing Home”, while Worcestershire is simply “World Class Worcestershire”.

Not everyone is convinced about the ability of the LEPs to deliver change.

In March 2016, the National Audit Office published the report Local Enterprise Partnerships, which examined the extent to which LEPs have funded and implemented Growth Deals “in a way that is likely to deliver value for money.” Doubts were also expressed about the LEPs’ transparency and accountability to the public given that such large sums of money are involved.

The NAO concluded:

• The DCLG has not set specific quantifiable objectives for what it hopes to achieve through Growth Deals and that it will be difficult to assess their contribution to economic growth
• Pressure on LEPs to spend their Local Growth Fund allocation in-year creates a risk that LEPs will not fund projects most suited to long-term economic development
• There is a risk that LEPs do not possess the resources necessary to deliver Growth Deal projects.

The report added that while the DCLG expects LEPs to deliver growth deals effectively, LEPs do not have “an established track record of delivery” and LEPs themselves “have serious reservations about their capacity to deliver” and there is a risk that projects being pursued “will not necessarily optimise value for money.”

Growth Funds – the story so far:

Greater Birmingham and Solihull

The Greater Birmingham and Solihull LEP was awarded £357.4 million from the Local Growth Fund over the period 2015-2021. In January 2015, a further £21.4 million of funding was awarded between 2016 and 2021. The LEP estimates up to 29,000 jobs could be created, 7,000 homes built and up to £170 million of public and private investment generated as a result. Projects include maximising the benefits of HS2, extensions to the Midland Metro and redevelopment of Birmingham’s wholesale markets site.

Black Country

The Black Country LEP was awarded £138.7 million from the Local Growth Fund over the period 2015-2021. In January 2015 a further £24 million of funding was awarded between 2016 and 2021. The LEP estimates up to 5,000 jobs could be created, 1,400 homes built and up to £310 million of public and private investment generated. Projects include a centre for advanced building technologies and construction, improving Junction 10 of the M6, and redeveloping Wolverhampton railway station.

Coventry and Warwickshire

The Coventry and Warwickshire LEP was awarded £74.1 million from the Local Growth Fund over the period 2015-2021. In January 2015 a further £15.3 million of funding was awarded between 2016 and 2021. The LEP estimates up to 4,000 jobs could be created, 1,400 homes built and up to £220 million of public and private investment generated. Projects include Coventry city centre access improvements and the Coventry City College Skills Hub.

Worcestershire

The Worcestershire LEP was awarded £47 million from the Local Growth Fund over the period 2015-2021. In January 2015 a further £7.2 million of funding was awarded between 2016 and 2021. The LEP estimates up to 4,000 jobs could be created, 1,200 homes built and up to £100 million of public and private investment generated. Projects include development of the Malvern Hills Science Park and a new Worcestershire Parkway station as well as improvements to Kidderminster railway station.

Stoke-on-Trent and Staffordshire

The Stoke-on-Trent and Staffordshire LEP was awarded £82.3 million from the Local Growth Fund over the period 2015-2021. In January 2015 a further £15.4 million of funding was awarded between 2016 and 2021. The LEP estimates up to 7,000 jobs could be created, 1,000 homes built and up to £70 million of public and private investment generated. Projects include an advanced manufacturing and growth hub and access improvements to Stoke city centre.

The Marches

The Marches LEP was awarded £75.3 million from the Local Growth Fund over the period 2015-2021. In January 2015 a further £7.7 million of funding was awarded between 2016 and 2021. The LEP estimates up to 7,000 jobs could be created, 3,000 homes built and up to £50 million of public and private investment generated. Projects include transportation improvements for Telford, Shrewsbury and Hereford.