Councils urge government to be decisive on abolishing Local Enterprise Partnerships as new report analyses the benefits of transferring functions to upper-tier authorities

Councils are calling on the government to abolish Local Enterprise Partnerships (LEPs) from next April and equip local leaders with the powers to help them close the economic growth gap between rural and urban areas, which is revealed in a new report today.

In February, the government announced that it was ‘minded’ to enable the functions of LEPs to be delivered by local government in the future. Today, a new report by EY for CCN analyses the implications of the policy.

The report explores the key themes and considerations for a successful transition of LEP functions to local authorities, drawing on findings from new economic analysis and insights from LEP leaders, policymakers and councils.

The report identifies the principles for a successful transition of LEP functions to local authorities, providing government and local authorities with a ‘transition roadmap’ ahead of the government’s formal announcement on LEPs’ futures later this month.

Download the report here.

In CCN’s response to a recent consultation, the network strongly welcomed the government’s intention to transfer LEP functions to local authorities. It has long argued that while its councils have worked closely with LEPs, there is too much duplication between both delivering skills programmes and major infrastructure, whilst questions over their democratic legitimacy and effectiveness remain.

Today’s report shows that that despite receiving over billions public sector funding since their creation, LEPs have underperformed in generating a return on investment compared to government predications.

EY’s analysis concludes that county authorities are well positioned to take over LEP functions. The study finds upper-tier authorities have the necessary strategic scale to effectively grow economies across wide geographies, they have convening powers and local influence to bring the voice of local business on board, and they have strong democratic accountability and governance.

However, they conclude that the government must set out a clear and decisive position this month with a policy framework for LEPs transitioning functions to upper-tier local authorities.

In responding to the report, county leaders say they fear an incomplete decision – either allowing LEPs to continue in some form or transferring functions in a piecemeal way – will leave them with less tools to address regional inequalities.

New analysis in the study finds that economies in England’s county and rural areas are forecast to grow at a much slower rate by the middle of the decade than city and urban areas, most of which already have LEP functions and funding integrated through devolution deals.

EY’s projections show the 11 LEP areas covering urban and city areas – encompassing the likes of London, Manchester, and Leeds – recovered their economic output lost from the pandemic in 2022. Their Gross Added Value (GVA) is forecast to grow by 6.7% (£60bn) by 2025, compared to 2019.

In contrast the analysis forecasts the 27 LEP areas covering county and rural areas will grow at a much more sluggish rate of 3% (£29bn) between 2019 and 2025 – and will only recover lost economic output from the pandemic in 2024. Before the outbreak of Covid-19, the 27 LEP areas covering county and rural areas, which include 56% of England’s population, had a larger economy but were overtaken in 2022 by 11 LEP areas comprised of cities and urban areas.

Whilst employment bounced back to pre-Covid levels for both groups by 2022, by 2025 the 11 LEP areas are forecast to grow by 3% (643k jobs) on 2019 levels, compared to 1% (322k jobs) for the 27 CCN represented areas.

Cllr Tim Oliver, County Councils Network Chairman, said:

“The government’s ‘minded to’ indication that it was to abolish LEPs and transfer them to local authorities was long overdue. The process had already slowly begun in parts of England with LEPs being subsumed into city areas with mayors and devolution deals, leading to a piecemeal approach where some councils have greater powers than others.

“For too long, councils in county areas have been hamstrung in their ability to drive economic growth lacking the powers enjoyed by urban and city authorities with mayors. As today’s economic analysis shows, growth in those areas far outstrips county locations, with our rural areas only bouncing back to pre-pandemic output five years after the event. We need all the tools in our armoury to try and close the gap, and LEP functions would be another string to our economic growth bow.

“EY’s analysis shows that county authorities are well placed to absorb the functions of LEPs from April 2024. However, we need government to be decisive and quick, otherwise county areas will continue to be left at an economic disadvantage.”