Private sector firms are not matching public sector funding for local regeneration, senior civil servants have admitted.
Two senior civil servants at the Ministry of Housing, Communities and Local Government told MPs on Parliament’s Public Accounts Committee (PAC) that cash from the EU, public sector and higher education are still the main sources for funding regional development projects.
The department’s permanent secretary Melanie Dawes and director general Simon Ridley said match funding for the £9.1bn Local Growth Fund is largely dependent on match funding from councils and other public bodies.
Ridley also admitted there were still challenges over transparency and the boundaries of some Local Enterprise Partnerships (LEPs).
The LEPs were set up following the abolition of regional development agencies with the idea that they would be a partnership between business and local government – with an expectation that firms would help funding regional regeneration.
Ridley told the committee that the main private sector input into the LEPs is the time and expertise of board members who work for free.
Committee member Anne Marie Morris said: “Clearly, you are having the private sector involved, so how come you haven’t got a significant financial commitment from them?”
Ridley responded: “The capacity funding we give requires match from the LEP in different ways.
“A large number of business people on the boards do it without renumeration. A lot of the capacity support around the accountable body that the local authority provides is paid for by the LEP.
“Our core expectation was to set up partnerships between the private sector and local government to think about local area development.
“Some of those funding streams are matched by private sector funding schemes.”
Committee chair Meg Hillier asked if developers and construction firms were giving over and above Section 106 contributions to enable projects.
She said: “There is a danger that without having any skin in the game, businesses can walk away and local taxpayers end up picking up the bill.”
Ridley replied: “What the LEP is seeking to do is bring forward projects in the local area that wouldn’t otherwise be coming forward.
“They are often funded by more than one funding stream from the public sector.”
The committee also challenged the pair over a claim that LEPs tended to go to the top-five local employers and as a result, other firms were being left out of key decisions.
Oxford University has become a major decision-maker for its LEP, the committee heard.
Committee member Layla Moran asked: “How do we know that everyone who is a stakeholder in this money is actually involved in the decision?”
Hillier also questioned if the LEPs were accountable, citing Oxfordshire, where meetings were not being held in public.
Dawes said the use of scores in the LEPs annual performance review were conditional for funding being released and this had impacted on responses.
She said: “The real test is how it feels for local communities and I think that’s something that’s very difficult for us to judge in central government. We are on a bit of a journey here. It’s going to take a while.”
Ridley said local authorities had a crucial role in oversight, specifically through Section 151 officers who are ideally placed to deal with complaints.
He said: “All LEPs have got their complaints procedures. We have a clearer role realisation with the accountable body and the 151 officer, so they [the public] might write to them.
“The section 151 officer does have to get all the information that goes to the LEP board. I can’t personally here guarantee that absolutely all of that is in front of every scrutiny committee.”
Dawes confirmed the department has no metrics for assessing complaints being made about the LEPs.
MPs also raised concern about territorial battles between LEPs and combined authorities.
Decisions have still yet to be made about the boundaries in nine LEPs.
Dawes told the committee: “There are legitimate reasons why these geography questions are there. We are working actively with them.
“What ministers will have to work through is whether to impose a decision centrally.
“That would be a matter of last resort.”
