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Is the future of LEPs any clearer?

The Spending Review on 25 June included the amount that Local Enterprise Partnerships (LEPs) will receive for 2015/16 and outlined the commitment for the following five years. But it could all change after the 2015 election. For fuller details see the attached summary.

Investing in Britain’s Future – Chapter 9 Local growth and the Devolved Administrations

City Deals

9.4 The Government has already agreed deals with the core cities2 that devolve over £500
million of funding over a ten year period and provide greater flexibility and autonomy. As part of this process, the Spending Round confirms up to £30 million in 2015-16 to support the Greater Manchester Combined Authority’s commitment to longer-term infrastructure investment through the innovative Earn Back deal. The second wave of City Deals, giving more cities the power to strengthen their local economies, is expected to conclude by March 2014.

Enterprise Zones

9.5 Enterprise Zones have already created over 3,000 new jobs and secured almost £229 million of extra private sector investment.3 Responding to high demand, the Government will increase the Local Infrastructure Fund (LIF) by a further £50 million in 2014-15 to ensure that Enterprise Zones have the infrastructure they need to attract businesses. This is in addition to the £59 million awarded to successful Enterprise Zones in June 2013 to allow them to fund local infrastructure projects.

9.6 The Government will also make available £100 million in 2014-15 to Zones that can identify sites with high growth potential which are experiencing significant market challenges.

Growth Deals and the Single Local Growth Fund

9.8 Recognising their central role in promoting growth, the Spending Round increases the resources under the strategic direction of LEPs to more than £15 billion in the years to 2021 as set out in Table 9.B.

9.9 In response to Lord Heseltine’s review the Government is creating the SLGF to support investment in economic priorities and stimulate growth across local areas, with funding allocated to LEPs on the basis of a “Growth Deals” negotiation with central Government. The
Spending Round announces that over £2 billion of funding from across the transport, skills and housing budgets will be included in the SLGF in 2015-16 as set out below

Regional Growth Fund

9.7 The Government has so far allocated £2.4 billion through the Regional Growth Fund to 300 projects and programmes, which have pledged to deliver 500,000 jobs and £13 billion of private sector investment. Building on the success of these previous rounds, the Spending Round announces £300 million funding a year for a refocused Regional Growth Fund (RGF) in both 2015-16 and 2016-17 to support projects and programmes to create economic growth and sustain private sector employment.

Summary – government initiatives to date

There is a powerful case for giving local business and political leaders the levers they need to create jobs and drive growth. The Government agrees with Lord Heseltine that these local leaders are best placed to set the strategic direction for an area, and has accepted his
recommendations to devolve economic power to Local Enterprise Partnerships (LEPs) through the creation of a Single Local Growth Fund and Growth Deals. The Spending Round confirmed this Government’s commitment to local leadership on economic development,
giving greater power and influence to business-led LEPs, by:

  • bringing the resources under the strategic influence of LEPs to at least £20 billion in the years to 2021;
  • creating a Single Local Growth Fund (SLGF) with over £2 billion of budgets from skills, housing and transport for 2015-16;
  • making a further commitment of £5 billion of transport funding in the SLGF from 2016-17 to 2020-21 to enable long-term planning of priority infrastructure while also committing to maintain the SLGF at a total of at least £2 billion each year in the next Parliament; and
  • giving LEPs responsibility for how €6.2 billion (£5.3 billion) of EU Structural and Investment Funds is spent.

Consistent with this approach to local growth in England, the Government is working to ensure that the right funding and decision-making powers are provided to Scotland, Wales and Northern Ireland to drive growth across the U

9.1 Over recent decades, London and the South East have been relied on as the primary source of economic growth in the UK. Despite significant investment in the regions, London, with around 13 per cent of the population, produces around 21.5 per cent of UK Gross Value Added (GVA), and has the highest GVA per head of all regions. But countries can be more successful when they are driven not just by their capitals, but by broader based growth across sectors and regions.

9.2 Every locality must be able to fulfil its potential by taking responsibility for decisions and resources that affect their local economies. The Government has already taken action, including:

  • promoting the establishment of Local Enterprise Partnerships (LEPs) – 39 strategic partnerships between local business leaders, local authority leaders and other partners;
  • allowing the local retention of business rates – incentivising local areas to prioritise growth and keep 50 per cent of the proceeds;
  • creating the Growing Places Fund and the Regional Growth Fund – providing support to businesses, LEPs and local authorities for local projects and programmes;
  • introducing City Deals – negotiating bespoke deals with cities and their LEPs to give them the powers and tools they need to drive local economic growth;
  • establishing Enterprise Zones – areas around the country that support both new and expanding businesses by offering incentives, creating local jobs and growth; and
  • removing £7 billion of ring-fences from local government at Spending Review 2010.

9.3 In his report, Lord Heseltine made a powerful case for building on these reforms and going further in decentralising economic powers in England. Budget 2013 confirmed the Government’s support for Lord Heseltine’s recommendations.1 This document sets out the
further development of existing reforms, along with new steps to significantly extend their scope and ambition, through giving LEPs greater control over the key local economic levers of skills, transport and housing.

Outcome of spending review (Expenditure in 2015/16) (CL TABLE)

Funding Stream Heseltine £m Spending Review £m
Skills £4,358 £500
Local Infrastructure £3,705 £1,119
Employment Support £1,367
Housing £1,700 £400
Business Support Services £735
Innovation and commercialisation £403
Single Pot Total £12,268 £2,019

Of the total of £2,019m announced for 2015/16, £1,449m (72%) was capital.

Annex: LEP allocations for ERDF and ESF 2014 to 2020

LEP Allocation €m
Black Country 177.4
Buckinghamshire Thames Valley 13.9
Cheshire and Warrington 142.2
Coast to Capital 67.3
Cornwall and the Isles of Scilly 592.9
Coventry and Warwickshire 136.0
Cumbria 91.4
Derby, Derbyshire, Nottingham and Nottinghamshire 249.7
Dorset 47.3
Enterprise M3 45.7
Gloucestershire 38.3
Greater Birmingham and Solihull 255.8
Greater Cambridge & Greater Peterborough 75.5
Greater Lincolnshire 133.5
Greater Manchester 415.6
Heart of the South West 118.3
Hertfordshire 69.5
Humber 102.4
Lancashire 266.3
Leeds City Region 391.2
Leicester and Leicestershire 126.3
Liverpool City Region 221.9
London 748.6
New Anglia 94.5
North Eastern 539.6
Northamptonshire 55.0
Oxfordshire LEP 19.4
Sheffield City Region 203.4
Solent 43.1
South East 185.9
South East Midlands 88.3
Stoke-on-Trent and Staffordshire 161.6
Swindon and Wiltshire 43.6
Tees Valley 202.6
Thames Valley Berkshire 28.7
The Marches 113.7
West of England 68.6
Worcestershire 68.1
York and North Yorkshire 97.5