The role and remit of Local Enterprise Partnerships has grown significantly and rapidly since 2010, but as things stand, the approach taken by the Department of Communities and Local Government to overseeing Growth Deals risks future value for money, according to the National Audit Office.
The government encouraged the establishment of LEPs as private sector-led strategic partnerships which would determine and influence local growth priorities. With the advent of the Local Growth Fund, the amount of central government funding received by LEPs is projected to rise to £12 billion between 2015-16 and 2020-21 via locally negotiated Growth Deals. The Department, however, has not set specific quantifiable objectives for what it hopes to achieve through Growth Deals, meaning that it will be difficult to assess how they have contributed to economic growth.
Today’s report found that LEPs themselves have serious reservations about their capacity to deliver and the increasing complexity of the local landscape. To oversee and deliver Growth Deal projects effectively, LEPs need access to staff with expertise in complex areas such as forecasting, economic modelling and monitoring and evaluation. Only 5% of LEPs considered that the resources available to them were sufficient to meet the expectations placed on them by government. In addition, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that their staff were sufficiently skilled. The NAO found that LEPs rely on their local authority partners for staff and expertise, and that private sector contributions have not yet materialised to the extent expected.
In addition, there is a risk that projects being pursued will not necessarily optimise value for money. Pressure on LEPs to spend their Local Growth Fund allocation in year creates a risk that LEPs will not fund those projects that are most suited to long term economic development. Some LEPs reported that they have pursued some projects over others that, in their consideration, would represent better value for money. LEPs have also found it challenging to develop a long-term pipeline of projects that can easily take the place of those that are postponed.
The Department has acted to promote standards of governance and transparency in LEPs, and all 39 LEPs had frameworks in place to ensure regularity, propriety and value for money by March 2015. The Department, however, had not tested the implementation of such assurance frameworks at the time that Growth Deals were finalised. The NAO found that there are considerable gaps in LEPs’ compliance with the Department’s requirements in this regard, and that the availability and transparency of financial information varied across LEPs.
“LEPs’ role has expanded rapidly and significantly but they are not as transparent to the public as we would expect, especially given they are now responsible for significant amounts of taxpayers’ money. While the Department has adopted a ‘light touch’ approach to overseeing Growth Deals, it is important that this doesn’t become ‘no touch’. The Department needs to do more to assure itself that the mechanisms it is relying on ensure value for money are, in fact, effective.”
Amyas Morse, head of the National Audit Office, 23 March 2016
Notes for Editors
Number of Local Enterprise Partnerships (LEPs) in England
Local Growth Fund available to LEPs between 2015-16 and 2020-21
Up to 419,500
Jobs to be created by LEPs' Growth Deals according to LEPs
£7.3 billion Amount of the Local Growth Fund which has been allocated as of March 2016
£2 billion Annual funding to LEPs from the Local Growth Fund from 2015-16 to 2020-21
Largest Growth Deal awarded to a single LEP: Leeds City Region
45% to 80% Range of private sector board membership in LEPs
87% Percentage of LEPs for which we were unable to obtain information on senior staff remuneration from publicly available accounts.
68% Estimated real-terms reduction in local authority net expenditure on economic development between 2010-11 and 2015-16
42% Of LEPs say that they do not publish a register of interests
49% Of LEPs agreed or strongly agreed that there are clear lines of accountability from the LEP to the local electorate
£85 million Estimated underspend on Local Growth Fund projects for 2015-16
5% Percentage of LEPs agreed or strongly agreed that resources available to LEPs are enough to meet the expectations placed on them by government
8 Median number of full-time equivalent staff employed by LEPs.
1. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
2. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 810 people. 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 £1.15 billion in 2014.