The Government has ‘no real understanding’ of the impact which the Local Growth Fund has had on local economic growth despite investing £12bn of taxpayers’ money, MPs say.
The Ministry of Housing, Communities and Local Government (MHCLG) claims that every £1 of local growth funding paid to Local Enterprise Partnerships (LEPs) could generate £4.81 in benefits.
However, a new report from the Public Accounts Committee has criticised the MHCLG for a lack of transparency and accountability, and argued that the £4.81 claim is an ‘unsubstantiated estimate’.
The 38 Local Enterprise Partnerships (LEPs) in England were set up to stimulate local economies and have been allocated £9.1bn through Growth Deals and £3bn via other means.
The PAC report found that there has been improvements to LEP governance and transparency, but says there is ‘still a long way to go’.
The MHCLG receives quarterly performance data from LEPs, but the committee discovered that it did not use this to measure the impact of local growth funding nationally.
It has also not measured what value for money LEPs have delivered so far, nor could it provide the committee with examples of private sector investment generated through LEPs’ activities.
‘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,’ said the committee chair Meg Hillier.
The PAC report also found that Local Enterprise Partnerships have underspent their Local Growth Fund allocations by a total of over £1.1bn in the three years to the end of 2017-18.
LEPs are also not ‘sufficiently representative’ in terms of gender diversity or where local businesses are concerned.
Responding to the report, an MHCLG spokesperson said: ‘Local Enterprise Partnerships play a vital role in supporting the Government’s ambition to rebalance the economy so 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.
‘We continue to work with LEPs across England to further improve these standards and ensure value for money in local growth spending.’
A spokesperson for the Leeds City Region Enterprise Partnership, which with £694.9m is the LEP with the largest Growth Deal nationally, said they supported the ‘overall message’ of the PAC report.
Addressing the question of accountability, the spokesperson said: ‘All meetings of the LEP and its related panels and sub-committees are held in public.
‘Investment decisions are made according to a rigorous assurance framework, which is fully compliant with Government’s assurance guidelines and requires projects to pass a series of gateway checks and due diligence before funding is released.
‘All of our investment decisions are ratified by elected politicians at public meetings of the West Yorkshire Combined Authority and are subject to scrutiny by the Combined Authority’s Overview and Scrutiny Committee as well as reporting regularly to our partner councils’ scrutiny meetings.
‘These governance measures have been consistently rated as good by the Government.’