Where next for LEPs?

Paul Hunter, Head of Research, The Smith Institute

This week saw the launch of a Smith Institute collection of essays, Where Next for LEPs. The report which includes a commentary on a new survey of LEPs, shows there is little appetite for a return of the Regional Development Agencies, despite recognition of their achievements. There now seems to be cross party support for LEPs and city regions. According to Labour’s shadow chief secretary, Rachel Reeves :

“We won’t waste time on a costly reorganisation, we will get on with delivering real improvements and change. The next Labour government will inherit a “patchwork quilt” of regional, sub-regional and local structures of economic governance – uneven and inconsistent, threadbare in some places and multi-layered in others. We are not interested in tearing it up, but in finding ways of strengthening and extending partnerships between businesses, communities, and elected leaders within and across areas.”

Consistency must surely be a good thing, with shifts in structures blamed for the loss  of institutional memory and organisational improvements which can only happen over time. But despite this consensus, if the UK is serious about spreading economic growth more evenly, how far can LEPs go to achieving this? The recent Ernst and Young assessment of investment into the UK highlighted the fall in foreign direct investment in the North and Midlands, in part due to the demise of the RDAs. In terms of jobs and growth all the regions continue to lag behind London and the South East.

The Institute’s report questions the capability of the LEPs to make much difference to the economic divide within and between the regions. LEPs are for the most part invisible to both the public and key stakeholders. The main concerns are:

  • Resources: do LEPs have adequate resources? At the moment LEPs receive relatively little funding and certainly not enough to help rebalance the UK economy.
  • Accountability: If greater resources are to be made available, do LEPs have the right accountability structures? Many are subject to no scrutiny or independent evaluation.
  • Capacity: Are LEPs the right size to fill the void between national and local decision making? And will they end up competing rather than collaborating?

For the time being Labour is content to sign up to a consensus (with a greater focus on city deals and regional banks). With no new money on the table, it remains questionable whether tackling the regional divide will be a priority for Labour, even though it has the most seats in under-performing places. Tensions also remain between consistency and finding a more appropriate geographic scope and scale of agencies (if we deem LEPs too small and too many). If they are to remain, a key question must be whether any government can really make the LEPs work where the Coalition has failed, and, if so, how?

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