MHCLG consultation on ending funding for LEP functions: LGA response

If funding is ceased for the core functions formerly delivered by LEPs, which of the following will you be likely to do? The functions are business representation and local economic planning. 

Please provide supporting information i.e. if you plan to cease delivering some functions, which functions you plan to cease delivering.

Since 2022, the Government has supported the integration of Local Enterprise Partnership functions into local authorities – including combined authorities in areas with an existing devolution settlement. Whilst we recognise that the transition has the potential to cause instability, the LGA supports the integration of functions into local authorities. We know that councils have a critical and unique role in delivering local growth across all sectors and communities – especially working with business and developing place-based economic strategies. Councils are also the heart of local democracy.

In Supporting the Integration of Local Enterprise Partnerships, we found that integration was seen by the areas we engaged with as a chance to reconfigure strategic and operational arrangements for services that exist to serve the interests of the area.

Crucially, Local Enterprise Partnership funding is local authority funding. It has been provided to deliver very specific functions. Local authorities cannot, and should not, be expected to continue to undertake these functions moving forward without adequate resources. The LGA has been clear from the outset that the Integration of LEP functions had to be accompanied by sufficient funding.

This is particularly worrisome in the context of local authority funding constraints. We know that funding pressures are particularly challenging for non-statutory services like economic development, especially in the retention of specialist staff. Some economic development teams consist of just one officer within a larger team. 

We believe that the funding for LEP functions should be integrated into a simplified, consolidated and long-term approach to growth funding. The LGA welcomes the Government’s intention to reform the growth funding landscape to rationalise the number of funds, move away from competitive bidding, and better supporting local leaders to drive growth. We hope the government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review.

To understand the impact of this consultation, we spoke to a limited number of local authorities across a range of different backgrounds, including those already in a devolved area. Local authorities told us that valuable LEP functions would be put at risk by the cessation of funding. Some of the key concerns included:

• the ongoing need to monitor previously established growth funds, such as the Local Growth Fund or Getting Britain Building fund as outlined in guidance issued in August 2023.
• having the resource to identify future investment opportunities.
• the ability to maintain the secretariat function for the business board.
• attracting high quality candidates to the business board.

More broadly, given the financial pressures on local authorities, some may have no choice but to cease LEP related activity.

Are there any other impacts in the event of this funding being ceased that we should be aware of?

Some areas have not yet completed the full transition of Local Enterprise Functions entirely into the local authority. One area has yet to completely resolve formerly distinct ICT systems. The cessation of funding could threaten to derail this process. 

Local authorities recognise the value of the business voice. This is true for economic development, in which successful place-based plans respond to the needs of business. However, more broadly, the business board has also served as a wider forum to convene and provide a voice to key local stakeholders. In some areas, this has attracted significant political buy-in to the board with Members of Parliament attending. To put this at risk would be unwise. This is especially true for areas grappling with the English Devolution White Paper, where local business is a significant stakeholder in local decision making.

Whilst we recognise the government has indicated that devolution has the potential to unlock significant growth funding for areas, areas without devolution agreements must be not left behind. In addition, while future funding for growth-related investment is important, we should not lose sight of the immediate and vital need to adequately resource all local authorities so that they are able to continue critical economic development work. A failure to do so will hinder the ability of devolved areas to begin on the best footing. There is still over a year until full establishment for those areas selected for the Devolution Priority Programme and in many places this process will take much longer. The Government has attached significant importance to the pursuit of growth, we are concerned that any reduction in funding for local growth-related activities is likely to hamper this.

In addition, the threat to local economic planning could undermine the ability for local areas to engage with wider UK Government policy objectives, such as the upcoming Industrial Strategy. One of our members indicated that their sector specific work could be put at risk due to the cessation of funding. 

The possible move to cease LEP function funding should also be placed within the wider policy context of the last fifteen years. This period has witnessed the abolishment of Regional Development Agencies, the establishment of Local Enterprise Partnerships and their transition into local authorities. Economic development is a long-term process, in which interventions may take years to come to fruition. Such policy churn is at odds with the long-term nature of the profession and creates inherent risk, such as the loss of qualified professionals and institutional memory. 

Recognising their critical and unique role in delivering growth, as well as their key role as local democratic institutions, it is right that LEP functions sit with local authorities. We would welcome further engagement with Government about how we support local government to best fulfil these new functions. 

If funding is ceased for the Business Board Network, how will this impact the activities that you currently undertake?

In both our Supporting the Integration of Local Enterprise Partnerships and Learning from LEP Integration, we outlined that the Business Board Network plays a role in lobbying for the economy and how we could work more closely as the Local Government Association to further strengthen local integration. 

As a national forum, it is recognised as a credible platform for businesses to volunteer their time towards. In addition, our members told us that the Business Board Network is a valuable two-way forum for government to access business insight and vice versa. It is also a place to share best practice and encourage collaboration between regions.

The following questions have been drafted to review how this potential policy decision meets the Government’s legal duty under the Equalities Act 2010 to:

• Eliminate unlawful discrimination, harassment, victimisation, and any other conduct prohibited by the Act.
• Advance equality of opportunity between people who share a particular protected characteristic and people who do not share it.
• Foster good relations between people who share a particular protected characteristic and people who do not share it.

The duty covers the protected characteristics of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

If funding were to be ceased, what impact might this have on the three elements of the public sector equality duty (bullet points above)?

In our report, Supporting the Integration of Local Enterprise Partnerships, we noted that the transition of functions to local authorities offered a valuable opportunity for business boards to be more representative of the diversity of the areas they represent across people and business demographics. Integration is an opportunity to consider board make up and the opportunity for political leaders to champion improvements where they are needed, in line with wider equality programmes. If funding were to be ceased, we run the risk of losing this valuable work. 

If funding were to be ceased, how could the impacts on the three elements of the public sector equality duty (bullet points above) be mitigated for those with protected characteristics?

Not applicable.

If funding were to be ceased, would you expect any impact to arise on the environment, for example through: 

• changes in the use or management of land or landscape 

• changes in the atmosphere, including air quality 

• changes in the supply of natural raw materials?

Our research found that some local areas had planned for business boards to articulate the demand side for major cross cutting themes such as such as net zero. This may be at risk given the proposed cessation of funding.