Government funding commitments for local enterprise partnerships are too short-term, according to a new report by the Business, Innovation & Skills Committee.
The report welcomes the Government's commitment to providing core funding for LEPs for the next two financial years, but argues that the timescale is too short to allow LEPs to make long-term investments.
The committee called on ministers to provide greater certainty and security for LEPs to drive long-term growth by setting the levels of their core funding for the five years after the current deal ends in 2015.
LEPs are also currently unclear where responsibility for their work lies in central Government, the committee members said. The report recommends that the Government appoints a single minister with responsibility and accountability for LEPs. This minister should be based in the BIS department as should all LEP contact officers.
Adrian Bailey MP, chairman of the BIS Committee, said: "LEPs help drive the local economic growth on which national growth relies. They are expected to deliver long-term growth. 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.
"Different LEPs face very different investment barriers. This makes a one-size fits all approach to their funding misguided; the minister [ Michael Fallon, minister for business and enterprise, appeared before the Committee 16 October 2012] failed to convince us otherwise when he appeared before us. In the future, the Government should consider funding allocations on a case by case basis.
"Shared responsibility between BIS and DCLG has resulted in confusion about where responsibility for LEPs lies in central government. Confusion must be replaced with clarity. A single BIS minister should be clearly identified as responsible and accountable for the work of LEPs. Similarly, all LEP contact officers should be based in BIS."
The report also highlights concerns about the current mechanisms in place to hold LEPs to account. It calls on Government to take a more active approach to monitoring LEPs and to take opportunities, such as future funding rounds, to ensure that value for money is achieved and all LEPs remain fit for purpose. Furthermore, the report encourages LEPs to engage with all their stakeholders more effectively and to publish measureable indicators of their performance in a format easily accessible to local communities.
Bailey added: "It is encouraging that LEPs agree they should be held to account. What is not encouraging is the current lack of any actual mechanisms by which to do so. LEPs have a significant impact on their local community; they would be failing if they did not. Despite this, the ability for the local community to scrutinise their performance is patchy.
"If LEPs are to be held accountable for their performance, measureable indicators of that performance are needed. And they are needed in a format easily understood by local communities.
"LEPs receive considerable amounts of public money from central government. Being free to react to local issues does not absolve them of accounting for how it is used. Value for money must be demonstrated.
"The Government has so far been overly hands-off. It should, from now on, take an active approach to monitoring LEPs and must ensure that value for money is being achieved."
Amongst the report's other conclusions and recommendations are:
- Skills should be a core priority. LEPs be required to demonstrate their levels of engagement with local education, in particular with skills and apprenticeship providers, FE colleges and schools.
- The requirement to match public funding has, in some cases, led to over-reliance on local authorities as LEPs struggle to find other willing investors. In future funding rounds, the Government considers individual LEP's funding arrangements to assess whether cash-matching requirements are appropriate.
- Government should gather information to assess how well LEPs match current functional economic market areas and the impact of having overlapping LEPs. The Government should also publicise its policy of not obstructing LEPs that want to amend their geographical boundaries.