CLES report calls on government to clarify LEPs’ role

The Centre for Local Economic Strategies and the Federation of Small Businesses are calling on the government to take a fresh look at the role of local enterprise partnerships (LEPs).

It follows a report by CLES and the FSB that reveals there is widespread confusion over the part LEPs should play in driving growth and prosperity.

Restricted by a lack of resources, the public-private bodies are viewed as too remote from their local economies – and this is causing friction on the ground with councils and businesses feeling left out of the loop.

Confusion over their role has led to a lack of accountability and transparency despite LEPs having significant influence over how £17bn of public funding will be invested to promote economic growth over the next six to seven years.

The findings come in a study by CLES involving surveys and interviews with 36 of England’s 39 LEPs along with 131 representatives from local government and the business community.

CLES and the FSB are urging the government to clarify what the purpose and remit of LEPs is, ensure they are adequately funded, and to take the lead on shaping guidance on what a transparent LEP should look like. Ministers should also put in place a wider set of performance measures to replace the narrow and inconsistent approach currently adopted.

The report calls on LEPs to ensure their priorities align with those of local authorities around social as well as economic outcomes. Too many are failing to engage with local economic development teams and make use of their knowledge.

LEPs need to be more consistent in the way they work collaboratively on a ‘whole place’ basis with a network of organisations from the public, commercial and voluntary sectors around shared priorities. The report recommends all LEPs appoint a stakeholder development manager to liaise with representatives of other organisations and ensure their feedback is reflected.

Key findings in the report include:

• just 18% of LEPs think they are adequately resourced
• 88.5% of LEPs think their primary role is to provide strategic direction – 72.5% of councils and 63.5% of FSB representatives think this is the case
• just 31% of LEPs publish annual accounts and 44% produce annual reports
• despite small firms creating the vast majority of private sector jobs, 67% of FSB representatives feel large businesses exert the greatest influence over LEPs

Neil McInroy, chief executive of CLES, said: ‘LEPs have had a short life, but misunderstandings around their purpose and usefulness abound.

‘They have been slow to get going, been stifled by centralism with a reluctance to devolve powers, responsibilities, or funding, and tend to be dominated by big business with little affinity to place. LEPs have gained the responsibility for European funding and other resources but without the statutory footing to be accountable for them.

‘As powers to combined authorities and local government have developed, LEPs, in some instances are merely strategic vehicles, necessary because government wants them, but marginal in terms of the real business of local economic development and the everyday relationship with the business community.

‘They must continue but we need fundamental change. LEPs should embed small business more effectively into their structures and activities and join up far more effectively than is currently the case with local government over economic development and wider social issues.’

John Allan, National Chairman, Federation of Small Businesses, said: ‘LEPs are crucial to delivering local economic growth across England. While some have done a good job of reaching out to the small business community, others need to up their game. Small firms will ultimately be the ones creating most of the jobs and prosperity in the private sector, so it is absolutely essential that they are at the heart of all LEPs thinking and plans.

‘LEPs will be handling £17bn of public money between now and 2021. It is important and only right to understand how it is being spent. Because the sums of money involved will increase substantially, it is vital that LEPs are more accountable and transparent so local authorities, businesses and the public can be confident they will deliver for the local economy and are using taxpayer funds effectively.’

The full report can be read here.

An article in the Guardian written by Neil McInroy, Chief Executive, CLES can be viewed here.

A blog by Matthew Jackson, Deputy Chief Executive, CLES can be read here.