Episode 2: Reality check – the level of new funding
Place… the final growth frontier. This is the domain of thirty-nine local enterprise partnerships. Their five year mission: to explore strange functional economic geographies, to seek out new ways to bolster growth and new collaborations, to boldly add value where no one has done so before…
We've written previously about LEPs, in particular their funding, how they could be held accountable and the kind of metrics they could use. The issue most missing from the debate however is how and where LEPs can actually add value; this is the subject we turn to in a three part series of blog posts.
Following on from our last blog post looking at five basic tests LEPs should apply when developing interventions, today we provide a reality check about the level of funding being devolved. Perhaps the biggest temper to LEPs developing grandiose plans is a reminder of the level of funding which is being devolved and the constraints on its use.
£2bn will be devolved per year as part of the Single Local Growth Fund (SLGF), with this amount divided between 39 LEPs. £1bn of this allocation is effectively ring fenced for transport capital projects.
Around £880m of EU funds (European Regional Development Fund (ERDF) and European Social Fund (ESF)) will be devolved per year with LEPs providing strategic oversight. This amount is split amongst 39 LEPs; the allocation for each LEP has already been published.
In the last round of EU funds (2009-2014) the split between ESF and ERDF was £2bn and £2.8bn, assuming a similar 40/60 split we can make some assumptions on the levels that require ring fenced spending across the EU thematic areas. Of this amount in each year, divided between LEPs:
- 60% (£317m) of ERDF has to be spent in the thematic areas of Innovation, SME competitiveness or ICT
- 20% (£105m) of ERDF must be spent on the Low Carbon Economy theme
- 80% (£281m) of ESF spent in Employment, Skills or Social Inclusion themes
LEPs will also continue to have existing funds such as the Growing Places Fund and of course EU funding has to receive match funding leveraged from either the public or private sector.
This funding overview should serve as a reminder to LEPs of the need to focus on strategic interventions in pursuit of growth. LEPs should have the confidence to put forward a well evidenced and focussed strategy, avoiding a scatter gun approach as much as possible.
What does this look like on the ground? Taking our five tests and drilling down in the areas where LEPs have already started doing their thinking will be the focus of our third and final blog post in this series.