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Funding and structures for local economic growth

It has not yet been demonstrated that Local Enterprise Partnerships, Enterprise Zones and City Deals, and funding mechanisms for supporting local economic growth, such as the Regional Growth Fund, are capable of delivering value for money, according to a report today from the National Audit Office.

In 2010, the Government set out a new approach for local economic growth, in the White Paper Local growth: realising every place’s potential. This involved the closure of the Regional Development Agencies and their replacement with new local growth organizations and funds, such as Local Enterprise Partnerships and the Regional Growth Fund.

Three years on from this initial announcement, the new Local Enterprise Partnerships and Enterprise Zones are taking shape. However, Local Enterprise Partnerships are making progress at different rates and the Growing Places Fund has been limited to date in spending money and creating jobs.

The NAO report found that the Enterprise Zones and the Regional Growth Fund have also been slow to create jobs and face a significant challenge to produce the number of jobs expected. The estimate of jobs to be created by Enterprise Zones by 2015 has dropped from 54,000 to between 6,000 and 18,000.

There is also no plan to measure outcomes or evaluate performance comparably across the range of different local growth programmes.  Departments cannot therefore show value for money across the programme of local growth initiatives or be sure about where to direct their resources to achieve the most impact.

While the Government closed the Regional Development Agencies effectively, it did not establish the new local programmes covered in today’s report in time to avoid a significant dip in local growth funds and jobs created. Direct central government spending on local economic growth through the initiatives fell from £1,461 million in 2010-11 to £273 million in 2012-13, but will rise to £1,714 million in 2014-15.

Central government needs to plan such reorganizations more effectively, to ensure that sufficient capacity is in place both centrally and locally to oversee initiatives and that accountability is clear. The Department for Business, Innovation and Skills and the Department for Communities and Local Government also need to address how they intend to evaluate performance and monitor outcomes.

“Three years on from the 2010 White Paper, the new local Enterprise Partnerships are taking shape and jobs are being created. But the transition from the old to the new schemes has not been orderly and there has been a significant dip in growth spending. To secure value for money from both the existing schemes and the new £2 billion Growth Deals, central government needs to make sure that there is enough capacity centrally and locally to oversee initiatives, that timescales are realistic and that there is clear accountability.”

Amyas Morse, head of the National Audit Office

Notes for Editors

  1. Government plans for local growth have evolved and developed since the 2010 Local Growth White Paper as new initiatives and funds have been added. There is no single definition of local growth policy. For the purposes of this report, the NAO examined the five largest new local growth programmes comprising Local Enterprise Partnerships, Enterprise Zones, the Growing Places Fund, the Regional Growth Fund and City Deals.
  2. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.org.uk

PN: 71/13