Next big leap for LEPs

Leps analysis

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Next month £2bn of Growth Deal funding will be shared with Local Enterprise Partnerships whose bids have hit the right buttons in terms of aspirational vision. Antony Oliver reports.

UPDATE: The Labour Party has vowed to shift some £30bn of central transport and infrastructure spending to boost the funds available to Local Enterprise Partnerships and help stimulate growth across the regions.

In March 2011, as the “worst economic crisis in modern times” continued to impact the UK’s growth ambitions, Chancellor George Osborne commissioned Tory grandee Lord Heseltine to prepare a report on what could be done to mobilise the nation’s businesses behind growth. 

The result was the seminal “No Stone Unturned” report published in October 2012. At 225 pages it is a weighty and comprehensive tome, including 89 recommendations and considerable criticism and challenge to the government.

Core to the report’s findings was the need to decentralise local business support and place more funding directly with the local people capable of effecting change. 

In its wide-ranging response to Heseltine’s report, Government committed to negotiating a Growth Deal with every Local Enterprise Partnership (LEP), through which, it insists “LEPs can seek freedoms, flexibilities and influence over resources from government, and a share of the Local Growth Fund to achieve their identified growth priorities”.

[LEPs: Changing the game at local level - question and answer with Geoff French of M3 Enterprise LEP, Robert Hough of Liverpool City Region LEP and Chris Webster of Greater Solihull and Birmingham LEP]  

Government envisages that Growth Deals will include:

- greater influence over key levers affecting local growth and freedoms and flexibilities;

- a share of the Local Growth Fund for Local Enterprise Partnerships to spend on delivery of their Strategic Economic Plan;

- commitments from Local Enterprise Partnerships, local authorities and the private sector on their resources and levers for delivery of the Strategic Economic Plans, including through;

-better use of local authority assets to unlock resources to be reinvested in growth

-commitments to pro-growth reforms, for example, through local planning reform

-commitment to collective decision making involving all local authorities within a LEP.

LEPs have a key role to provide the leadership and to establish a strategic vision of growth across the regions of the UK which lever in funding and support from public and private partners across the each area. 

As Heseltine puts it in his report, what is needed is “a very significant devolution of funding from central government to Local Enterprise Partnerships so that government investment in economic development is tailored directly to the individual challenges and opportunities of our communities, and can be augmented by private sector investment”.

[Q and A | Lord Heseltine, chair of the Regional Growth Fund Advisory Panel - his thoughts ahead of next week's decision on LEP funding]

Thus over the last 12 months the LEPs have been putting together their Growth Deal bids amounting to substantial amounts of money. Bids are now being assessed competitively by government ahead of funding decisions being made in July. The best will
win most.

Funding for these Growth Deals amounts to some £2bn a year, in every year of the next Parliament, drawn from the existing Local Growth Fund, and will be competed for annually by the 39 LEPs across the UK. In addition, up to £5bn of the £10bn identified for 2016/17 to 2020/21 in support of multi-year capital programmes in Local Enterprise Partnership plans, could also be made available.

Alongside this share of the Local Growth Fund, government has now also given the LEPs responsibility for drawing up investment plans for over £5bn of European Structural and Investment Funds for 2014 to 2020. 

This funding will sit alongside the local Growth Fund to give each LEP, as government explains it, “the flexibility to use their Growth Deal funding on combined or complementary activities”.

So while not perhaps quite up to the levels demanded by Heseltine in his report, which called for up to £70bn of funding responsibility to be devolved to the regions, the amounts available to drive investment out into the regions is now vast. 

The “key principle” says Government, is for LEPs to create a partnership with the Government “in pursuit of the shared objective of growth”. 

In return, Government said, it expected the LEPs “to demonstrate that they are committed to the growth agenda, by developing ambitious, multi-year strategic economic plans…..” and to “prioritise economic development and work collaboratively across the
LEP area”.

Assessment of Strategic Economic Plans will be based round three core themes:

A – Ambition and rationale for intervention for the local area

B – Value for money

C – Delivery and risk

In a bid to ensure that the impact of these new Growth Deals are clear and long-lasting, LEPs have also been asked to put together so-call Strategic Economic Plans detailing how the investment will unlock and lever in additional funding to support public funding and truly support local growth through innovative planning and investment strategies.

These plans will draw on and variety of funding sources including the private sector, local authority and central funding pots such as the Growing Places Fund, Enterprise Zones retained business rates and City Deals plus the Local Sustainable Transport Fund and match funding from other local partners, such as Housing Associations, universities and colleges. 

However, critically government also advises that LEPs come up with “ambitious” plans to make use of surplus and redundant public sector assets. 

What's next?

July 2014 Local Growth Fund offer made to Local Enterprise Partnerships Growth Deal negotiations completed

Mid-2014 Spending of European Structural and Investment Funds 2014-2020 begins, subject to approval of the European Commission

April 2015 Local Enterprise Partnerships and Government implement Growth Deals

If you would like to contact Antony Oliver about this, or any other story, please email