LEPs and the Spending Review

In the 2013 Budget the Chancellor accepted the majority of Lord Heseltine’s recommendations in his review of economic growth “No Stone Unturned” and announced measures that will devolve significant funding to LEPs to enable them to encourage growth in the regions of England.

The Government’s Response to the Heseltine Review set out ambitious plans for LEPs over the next two years, including:

• from April 2015, the Government is creating a Single Local Growth Fund which will be available to LEPs to generate growth. This will include funding for housing, transport and skills. This will be billions of pounds; and
• the Government will streamline the management of the EU Structural and Investment Funds to align them with the plans of the LEPs. This includes the European Regional Development Fund, the European Social Fund, the European Maritime and Fisheries Fund and part of the European Agricultural Fund for Rural Development. Again this will be billions of pounds.

Lord Heseltine has suggested that the funds mentioned above need to be in the region of £50bn. Over time this number has gone down but on Wednesday 26 June the Chancellor, George Osborne announced and the detail around this has been clarified by the Treasury Minister, Danny Alexander:

• encouraging LEPs to work with local authorities on local road schemes to gain most benefit from strategic road and rail enhancements;
• £300m funding a year for a refocused Regional Growth Fund (RGF) in both 2015-16 and 2016-17 to support projects and programmes to create economic growth and sustain private sector employment;
• Government is committed to local leadership on economic development, giving greater power and influence to LEPs, by:
• • bringing the resources under the strategic influence of LEPs to at least £20bn in the years to 2021;
  • creating a Single Local Growth Fund (SLGF) with over £2bn of budgets from skills, housing and transport for 2015-16;
  • making a further commitment of £5bn of transport funding in the SLGF from 2016-17 to 2020-21 to enable long-term planning of priority infrastructure while also committing to maintain the SLGF at a total of at least £2bn each year in the next Parliament; and
  • giving LEPs responsibility for how €6.2bn (£5.3bn) of EU Structural and Investment Funds is spent.

The Government have again made it clear that any funds going to the LEPs comes with strings attached. The main conditions are governance structures, accountability and cooperation between the LEPs. 

LEPs need to have clear governance and accountability structures in place as they will be dealing with public funds. We have been advising LEPs on these structures and their funds.

Bevan Brittan are planning some seminars this Autumn on state aid, funding, governance and transport in relation to LEPs. If you think this would be of interest to you please email Jo.Denton@bevanbrittan.com.