The Ministry for Housing, Communities and Local Government has been told to make more use of performance data for the billions of pounds' worth of funding being channelled into Local Enterprise Partnerships to better understand what growth-boosting spending works best.
The Public Accounts Committee report has said MHCLG's decision not to formally evaluate the impact of Local Growth Fund cash given to England’s 38 LEPs means the department's claim that every pound of investment could generate £4.81 of benefits is an “unsubstantiated estimate”.
In a report published today, the committee said that despite receiving quarterly performance updates from LEPs – partnerships between local authorities and businesses – the department had not used the information to assess the impact of the £9.1bn they received from growth deals and £3bn from other sources.
LEPs were introduced by the coalition government as a looser, more locally-driven replacement for the nine regional development agencies that were abolished in 2010. But the PAC said it remained concerned that LEP boards were “not yet representative” of their local areas and business communities, and that their accountability arrangements were “not strong enough” for the significant sums of money they managed.
MPs also raised concerns about the implications of a £1.1bn underspend that the bodies had racked up between 2015-16 and 2017-18, which they suggested was evidence that capital projects were not coming forward quickly enough.
PAC said MHCLG had been unable to provide examples of the type of private-sector match funding and investment generated through LEPs’ activities or their management of local growth funds.
Committee chair Meg Hillier said MHCLG needed to use the data it already received to get a better picture of what was working most effectively to boost growth. She added that the information should also inform the design of the UK Shared Prosperity Fund, which is planned to replace EU structural funds after Brexit.
“Local Enterprise Partnerships have been given £12bn of taxpayers’ money to support local economic growth,” she said. “But LEPs have underspent their funding allocation by over £1bn in the past three years, raising questions about their capacity to deliver complex projects.
“The committee has previously raised concerns about the transparency and governance of LEPs and more action is needed to ensure they are held properly accountable for spending.
“LEPs are supposed to be an engine room of local economic growth but they have been dogged by a lack of local accountability and there is little evidence that they have levered in the promised private sector funds.”
In addition to calling for MHCLG to up its game on performance data, the PAC said the department should set out how it will boost local scrutiny of LEPs; help LEPs meet the April 2020 deadline for removing geographic overlaps; and aid the development of more robust local growth strategies.
An MHCLG spokesperson said LEPs played a vital role in supporting the government’s ambition to rebalance the economy so that it “works for everyone”.
“The Public Accounts Committee’s report recognises that improvements have been made by the department to ensure robust governance and financial transparency arrangements are in place,” they said.
“We continue to work with LEPs across England to further improve these standards and ensure value for money in local growth spending.”