"Shoestring" budget of LEPs is holding back economic revival, say MPs

The funding of local enterprise partnerships (LEPs) is sharply criticised in a report by an all-party committee, which says it undermines efforts to revive the economy.

The LEPs – partnerships of business and local authority leaders – have each been offered £500,000 over two years, after ministers initially refused any funding at all.

But they must first find ‘matched funding’, usually from cash-strapped local authorities, and the allocations take no account of different needs, the report said.

Now the business select committee has urged ministers to set out funding for LEPs all the way through to 2020, to ensure they can drive “long-term growth”.

Adrian Bailey, the committee’s Labour chairman, said: “To do this, they require the confidence to make long-term investments. The current funding commitments fail to provide this.

“We urge the Government to support LEPs in delivering long-term growth by committing to the levels of their core funding for the five years from 2015.”

Three LEPs have been created in the region – Tees Valley, North Eastern (including County Durham) and York and North Yorkshire – replacing axed regional development agencies (RDAs).

But funding was cut enormously and ministers have acknowledged they have no powers – sparking criticism that they are “toothless talking shops”.

Last month, the think-tank IPPR North calculated that the loss of the RDAs’ ability to win foreign investment could cost the three Northern regions 12,000 jobs a year.

Today’s report backs the warning from the LEP Network that “economic development cannot be delivered on a shoestring” and recommends:

* Ministers explore whether the “matched funding” rule is a barrier as LEPs “struggle to find other willing investors”.

* A single minister, in the department for business (BIS), to oversee LEPs – to end the current “confusion”.

* LEPs prove they are working closely with schools, colleges and apprenticeship providers on the “core priority” of improving skills.

* LEPs publish easily-understandable “measureable indicators of their performance”.

* Ministers assess whether some LEPs should merge, to better match larger economic areas.

LEPs were all required to submit ‘growth plans’ by the end of last year, to show they were ready to up their game and were not simply a desk in the town hall.

George Osborne has backed the principle of Lord Heseltine’s call for the bodies to bid for larger ‘single funding pots’, to claw back Whitehall power-grabbing.

But the Chancellor yet to say how much they will receive – and appeared to back away from giving LEPs control over infrastructure spending, or job and business support schemes.