LGA research looks at the key issues for councils
In August 2023, the Government confirmed its intention to integrate local enterprise partnership (LEP) functions into local democratic institutions.
This decision followed the March 2023 Budget, in which the Chancellor announced he was ‘minded’ to end funding for LEPs from April 2024.
As set out in a March 2022 ministerial letter, the integration process can take three pathways: integrating an LEP into a combined authority or county devolution deal; maintaining the LEP until a devolution deal is agreed; or finding a local solution where existing or future devolution arrangements leave an area of the LEP’s geography outstanding.
At the time of the Chancellor’s announcement, the LGA was working with consultants Shared Intelligence to produce a guide, ‘Supporting the integration of local enterprise partnerships’.
As this report notes, the Government’s decision rapidly accelerated the rate at which local plans were being drawn up.
It was against this background that, late last autumn, the LGA’s People and Places Board commissioned consultants Henham Strategy to consider the key issues for councils now having to work at pace.
To this end, four workshops were held in early 2024, at which local authority chief executives, senior council officers and local enterprise partnership representatives were invited to talk through the key challenges in: governance, business representation and joint working; growth hubs and careers hubs; freeports and enterprise zones; and funding and asset integration.
These conversations helped tease out some of the things that LEPs did well. They helped support growth in clearly defined functional economic areas; they had strong buy-in from the public, private and academic sectors, with a clear mandate from national government; and they are estimated to have leveraged £1.76 of private investment for every £1 of public money spent.
The researchers found that, while most areas are making good progress with LEP integration – closing their LEP and transferring functions into a local authority – there are a significant minority that will continue to deliver functions through a LEP.
Furthermore, some councils are experiencing highly localised challenges, particularly in areas where local authority boundaries are not in line with the LEP’s geography.
The researchers also heard some district councils express concern at having gone from a seat at the table to being ‘squeezed out’ of a strategic conversation about what comes next.
More significantly, the research raised some key issues that the LGA intends to put to all the national political parties ahead of the next general election.
First, economic development is a strategic, long-term agenda, and local areas need a clear mandate and funding if they are to attract and retain business leadership.
Second, national guidance on integration has been vague and sometimes contradictory. More needs to be done to help councils focus on strategic issues rather than getting bogged down in operational matters.
Third, the ‘prize’ for this process of reorganisation is unclear, particularly given the very limited funds available to councils and the few practical incentives for cross-boundary collaboration.
Councils and combined authorities play a crucial role in driving productivity and building sustainable communities. With inclusive growth now at the forefront of the national political agenda, we will be making the case over the next six months that, with the right freedoms, funding and flexibility, a locally led approach will unlock the potential of the national economy.