Local Enterprise Partnerships: Funding

Baroness Penn Excerpts

Monday 11th December 2023 Lords Chamber

[Lord Leong]

To ask His Majesty’s Government what assessment they have made of the ending of local enterprise partnerships’ funding and the impact on local economic development.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

The Government are committed to empowering locally elected leaders to drive local economic development. From April 2024, government will support local and combined authorities to deliver the core functions currently delivered by LEPs; namely, the functions of strategic economic planning, business representation and ongoing delivery of specific government programmes. Revenue funding will be provided to local and combined authorities in 2024-25 to support this activity.

[Lord Leong (Lab)]

My Lords, Labour’s very successful regional development agencies were replaced with local enterprise partnerships in 2011. These will be abolished next year. From micro-businesses to multinationals, businesses cry out for certainty, consistency and competency, but, far from levelling up, all they get from this Government is chaos, confusion and closure. The best way to restore business confidence would be for this Government to shut up shop and call an election. Are these businesses wrong in their assessment?

[Baroness Penn (Con)]

Yes. I also disagree with the noble Lord’s assessment of RDAs. I would be interested to know, if they were such a successful way of delivering local growth, whether they would be re-established under future Labour plans. The Government are focused on empowering local leaders over geographies that make sense in local areas to deliver local economic growth. We are working to integrate the roles of local enterprise partnerships into local areas so that we have the best of both worlds, with local democratic accountability and strong business voices to drive economic growth.

[Lord Razzall (LD)]

My Lords, I well understand the arguments that the Minister made regarding the shifting of LEP funding. To return to the Question, which the questioner rather strayed away from and which is whether the Government are satisfied about the impact on local economic development, is the Minister satisfied that the existing schemes, which are often successful, will not be damaged? I am thinking particularly of the very successful work done by a number of combined LEPs on digital poverty and exclusion.

[Baroness Penn (Con)]

I assure the noble Lord that the Government are confident that, in integrating the work done by LEPs into local authority or combined authority areas, we will not lose the benefits of the great work done by LEPs since their establishment. The aim is to integrate that with local democratic accountability. It is part of our broader agenda on devolution and we will continue to see some of that great work delivered over similar areas to now.

[Lord Young of Cookham (Con)]

My Lords, is it not the case that, since the LEPs were set up in 2011, more and more of their functions have been transferred to mayoral authorities and combined mayoral authorities, and have been included in devolution deals, many more of which are still on the way? Is that not a more democratic solution than the unelected LEPs?

[Baroness Penn (Con)]

My noble friend is absolutely right. In taking this decision, we conducted an information-gathering exercise with local authorities and LEPs to understand the impact of our plans. That identified great overlap between some of the functions discharged by LEPs, local authorities and combined authorities, as well as confirming a high level of integration of LEP functions in mayoral combined authorities. That is why we are taking the direction of travel that we are. The Government’s view is that there is likely to be scope for both greater join-up and efficiencies, and clarity for the private sector, by these functions being discharged in a joined-up way, and greater local accountability.

[Baroness Wolf of Dulwich (CB)]

My Lords, LEPs and RDAs had in common that, while they referred to “local” and “regional”, they were, in fact, Whitehall appointed and Whitehall controlled. If their functions are gradually transferred to mayoral authorities, that will clearly take things closer to local enterprise, but it is not necessarily a great improvement if you move from a Whitehall bureaucracy to a mayoral bureaucracy. What is being done to ensure that these functions respond actively to local enterprises and to local and regional organisations, which are membership organisations and directly represent enterprises, businesses, communities and, indeed, consumers?

[Baroness Penn (Con)]

My Lords, the Government have published guidance for the transfer of LEP functions to local authorities. Further guidance will be issued in January. As part of our devolution settlements in different areas, there are also clear conditions around how business engagement should take place to ensure that the voices of local businesses and their representative organisations are well heard in those areas.

[Lord Haselhurst (Con)]

My Lords, is it not unusual that within local enterprise partnerships, some of those participating were rivals with one another? Is it not best to ensure that, after all this time, we take another look at Redcliffe-Maud and have stronger bodies and authorities, with more competent clerks, to make it a really good and efficient system?

[Baroness Penn (Con)]

One important aspect of moving LEP functions into local authorities and mayoral combined authorities is making sure they cover appropriate economic geographies so they can deliver for those areas. In having proper democratic accountability, it will be clear to local businesses and local people who is responsible for economic development in their area.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, is it not clear that in the Teesside mayoral area, on some of the economic development programmes, we have seen less democratic accountability and less transparency about what is going on? The Government instituted a review that was supposed to report in July on this and we have heard nothing yet. We want more electoral and democratic accountability and more transparency. When is the report going to come out?

[Baroness Penn (Con)]

My Lords, there has been a great deal of success in devolution to Teesside and the mayoral combined authority there. The noble Baroness is right that we have instituted a report into some of the processes that have been undertaken. I do not have a date for her, but we are looking at it very carefully and we will publish the report when we are in a position to do so.

[Lord Scriven (LD)]

My Lords, is the issue here not just talking about structural change to functions but the power of the functions themselves? The clear issue with saying that we are going to have proper regional economic development firing on all cylinders is that, in every country, every indicator shows that fiscal devolution is required, not just the movement of existing functions. Will the Government seriously look at fiscal devolution to ensure that proper economic development can happen in all regions across the country?

[Baroness Penn (Con)]

That is exactly what the Government are doing; they are seeking to combine the devolution of greater power with greater funding and greater responsibility for the funding. There are the trailblazer deals that look to integrate the different streams of funding for local areas into something much closer to a single settlement. That will allow those areas to make decisions at a local level about what should happen in their area.

[Lord Kirkhope of Harrogate (Con)]

My Lords, surely all this bureaucracy and red tape is not the answer for some parts of our country that are in need of development. As one of those involved in the establishment of development corporations in the late 1980s, I think we should be proud of such a model. Frankly, is it not about time we allowed local businesses and local people to have a stronger say in what they want to renovate and rejuvenate zones of that kind?

[Baroness Penn (Con)]

My Lords, by integrating LEPs into local authorities and mayoral combined authorities, we are looking to streamline the processes by which business can engage in their local areas. As a part of our devolution deals, we are also giving combined authorities the power to set up development corporations so they can use the voice of business to drive development and economic progress in their local areas.