In a blog yesterday, we summarised the 2015/16 Spending Round announcement along with three outstanding issues which still needs to be addressed. One of these was 'how will be £2bn for LEPs be deployed and for what?' This blog adds some detail to what is an evolving debate.
The Government has set out the level of funding that will be devolved to Local Enterprise Partnerships through the Single Local Growth Fund. The amount for 2015/16 will be £2bn, made up of:
- Local Authority Transport Majors budget
- Local Sustainable Transport Fund
- Integrated Transport Block
- Further Education capital (along with European Social Funds skills match funding) and
- New Homes Bonus funding.
In total £1.4bn of the £2bn will be a capital budget for LEPs to direct strategically.
Staged approach is good newsThe £2bn announced is similar to the amount Regional Development Agencies had as funding. However under the Single Local Growth Fund 70% is directed toward capital funds, not administration (LEPs already have £250k each as an operational budget).
This £2bn should be able to leverage additional funding from the private sector. As an example, the Regional Growth Fund has so far been allocated £2.4bn of Government funds; this has leveraged £13bn of private sector investment a gearing of about £5 of private sector investment from every £1 of Government investment. A similar amount, if not more, could be expected as a result of the Single Local Growth Fund. However the £2bn will be split across the 39 LEPs, with some getting more than others based on the strength of multi-year Local Growth Plans.
Not all about fundingBut it isn't all about funding. The process for bidding will rest on the strength of Local Growth Plans, following negotiations with Government; these will then result in Local "Growth Deals" tailored to each LEP. These deals, along the same lines as City Deals, will give LEPs additional powers, influence, freedoms and flexibilities. This could include things such as powers to "earn back" tax from HM Treasury, the ability to vary local tax rates or the use of tax increment financing to fund infrastructure investments.
Time to proveWith the funding settlement now outlined and the guidance on the allocation process expected shortly, greater scrutiny will now be placed on LEPs to demonstrate that they can deliver workable local growth plans which will really deliver for manufacturers across the UK.
The EEF's response to the 2015/16 infrastructure and LEP announcement can be found here.