The government has confirmed that the functions of Local Enterprise Partnerships (LEPs) will be transferred to local authorities in England from April 2024.
In a letter addressed to LEP chairs, the Mayor of London and local government leaders, levelling up minister Dehenna Davison outlined that from next year, the government’s sponsorship and funding of LEPs will cease.
Instead, the government will now support upper-tier councils or combined authorities to absorb the three main functions of LEPs, which include business representation, strategic economic planning and responsibility for the delivery of government programmes.
Davison’s letter also detailed that the government will provide some revenue funding to local and combined authorities in 2024/25 to support them in delivering the functions currently delivered by LEPs. However, it stated that funding beyond 2024/25 is subject to future spending review decisions.
This confirmation follows chancellor Jeremy Hunt’s announcement in his Spring Budget that the government was “minded to” transfer LEPs’ responsibilities for local economic growth and development to local authorities following a consultation.
Davison wrote in her letter: “Following the conclusion of this exercise [the consultation], we are now writing to you to confirm our ‘minded to’ decision.
“The government will now support local and combined authorities to take on the functions currently delivered by LEPs.”
Duplication of responsibilities
In her letter, Davison outlined that the consultation identified overlap between some of the functions being discharged by LEPs, local authorities and combined authorities. She stated that it also confirmed that there is already a high level of integration of LEP functions in mayoral combined authority areas.
“The exercise also highlighted the different perceived levels of benefit and engagement between LEPs and local authorities.
“The government’s view is that there is likely to be scope for greater join-up, efficiencies, and clarity for the private sector by these functions being discharged within mayoral combined authorities, devolution deal areas and upper tier local authorities, working together as appropriate,” Davison wrote.
Alongside the additional funding, the government has also published technical guidance for LEPs and local authorities to support them through the transition.
Transfer will raise ‘significant challenges’
Jack Shaw, a local government expert, told Room151 that the government’s decision to transfer LEPs’ functions to local authorities was on balance, “the right one”, but he highlighted that the execution will be challenging.
He said: “Local authorities are well-placed to design more bespoke, place-based interventions and better align them with wider skills and business support.
“However, the change will raise significant challenges which will need to be addressed. Integrating LEPs must be managed sensitively, to ensure service continuity and so that authorities can retain their expertise. Without adequate, long-term funding to support their new functions, authorities will also be unable to sustain them.
“A long-term strategy, accounting for changes in governance as more devolution settlements are agreed, must be a priority going forward.”
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‘Decisive government decision’
Tim Oliver, chairman for the County Councils Network (CCN) and leader of Surrey County Council, also welcomed the government’s decision.
“Today’s decision by the government is a decisive one and very welcome, drawing a line under recent uncertainty and allows us to get on with integrating LEP functions into upper-tier councils and combined authorities,” he said.
However, Oliver highlighted that the government must provide local authorities with the “necessary resources to enable councils to make the most of these new functions to support local economies”.
“While the government have clearly set out that LEP functions should be transferred to upper-tier councils, it still allows LEPs to continue to operate independently without government support. While recognising these are private enterprises which the government cannot abolish, this could create duplication and confusion locally, and therefore they should only continue to function following consultation with the relevant upper-tier council,” Oliver added.
This comes as the CCN called for the government to set out a “clear and decisive” framework for the transition of LEPs’ functions to local authorities in July.
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