Posted on:
21st March, 2023

Silencing the voice of local business will cost money not save it

The Chancellor’s announcement that he “is minded” to cease funding Local Enterprise Partnerships, and by implication, the Growth Hubs that have helped support millions of small businesses, might be a further step in the devolution agenda, but it raises serious questions about consequent costs and the role of business.

Silencing the voice of local business will cost money not save it

The government said it would cease core funding to LEPs beyond 2023-24 and will work with local areas to determine how the functions currently undertaken by LEPs will be delivered at a local level, “where appropriate”, and where they are not already delivered by a Combined Authority. A four week consultation process is now underway with LEPs, Local Authorities, and Mayoral Combined Authorities.

LEP Network Chair Mark Bretton, said:

“The Chancellor’s statement was a further step in LEPs’ evolving role in the devolution agenda, if not managed well, it could significantly diminish or even silence the voice of local business and damage the unique convening power that gets projects delivered, acknowledged as the hallmark of LEP success for over a decade.

“We have now received the letter from Ministers and met with Officials.  The letter included clear statements from Ministers that the “minded to” decision is not about performance, but is driven by political policy.  Our meetings have revealed the full scale of the challenge and complexity facing Officials - most LEPs are incorporated companies, a structure insisted upon by Government. Unravelling this with the trailing liabilities and accountability for significant sums of money will not be simple, yet we need to do all of this whilst continuing to deliver for our local communities.

“What the 2000 business leaders, 350 FE and HE Principals and Vice Chancellors and, indeed, the 200 democratically elected local politicians on our LEP boards want to be clear on is that:

  • Whitehall recognises the transition will cost money, not save it, under the new burdens rule on Local Authorities, whereby any new functions must be funded by government, both LAs and government need to agree what these functions would cost to effectively deliver them. There is no money in the LEP system or core funding settlement to pay for this exercise which will only serve to divert scarce resources from where they should be focused, stimulating economic growth and supporting local enterprise;
  • LEP directors cannot be expected to shoulder ongoing liabilities and going concern commitments. Government must provide full indemnities and take complete responsibility for the implications of their decisions;
  • Business must not be silenced or made ineffective – it must retain a meaningful voice to ensure investment is relevant and that it enables the creation of jobs – after all it is business which creates jobs, not government;
  • Lessons learned, especially in business case assessment, project execution governance and the delivery of committed outcomes are not lost. Government needs to avoid a “cookie cutter” approach and ensure solutions are locally tailored.
  • Most importantly, that the 1000 people employed in our Executive teams are respected and their talent is not wasted.

“LEPs are apolitical and part of the original devolution arsenal; the word “Local” in our title makes this clear.  We are therefore no strangers to devolution nor are we challenging policy.  This is why we are now helping Officials with their information gathering exercise.  We are promised a decision “by the summer” and expect this to be well considered, but it must not be subject to the usual delays. 

“For more than five years LEPs have been scrutinised and on every occasion passed muster.  The importance of the role of business in driving a future Enterprise Economy has never been more important.  To say we remain puzzled as to why Government wants to put at risk a growth engine that has worked so well for them is an understatement, but if that is what they want let’s get this done professionally, in a timely fashion and with respect.”