Watchdog warns on transparency, governance at Local Enterprise Partnerships

The National Audit Office has expressed concern at the level of transparency provided by Local Enterprise Partnerships (LEPs) and the failure to test their governance assurance frameworks.

In a report on LEPs, the spending watchdog also warned that the approach taken by the Department for Communities and Local Government to overseeing Growth Deals risked future value for money.

Amyas Morse, head of the National Audit Office, said: “LEPs’ role has expanded rapidly and significantly but they are not as transparent to the public as we would expect, especially given they are now responsible for significant amounts of taxpayers’ money.

“While the Department has adopted a ‘light touch’ approach to overseeing Growth Deals, it is important that this doesn’t become ‘no touch’. The Department needs to do more to assure itself that the mechanisms it is relying on ensure value for money are, in fact, effective.”

The NAO report acknowledged that the DCLG had acted to promote standards of governance and transparency in LEPs, and all 39 LEPs had frameworks in place to ensure regularity, propriety and value for money by March 2015.

But it noted that the Department had yet to test the implementation of such assurance frameworks at the time that Growth Deals were finalised.

The watchdog said it had found “considerable gaps” in LEPs’ compliance with the DCLG’s requirements in this regard, and that the availability and transparency of financial information varied across LEPs.

The NAO highlighted how, with the advent of the Local Growth Fund, the amount of central government funding received by LEPs was projected to rise to £12bn between 2015-16 and 2020-21 via locally negotiated Growth Deals.

“The Department, however, has not set specific quantifiable objectives for what it hopes to achieve through Growth Deals, meaning that it will be difficult to assess how they have contributed to economic growth,” it suggested.

The report also revealed serious reservations among LEPs themselves about their capacity to deliver and the increasing complexity of the local landscape.

The NAO said: “To oversee and deliver Growth Deal projects effectively, LEPs need access to staff with expertise in complex areas such as forecasting, economic modelling and monitoring and evaluation. Only 5% of LEPs considered that the resources available to them were sufficient to meet the expectations placed on them by government. In addition, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that their staff were sufficiently skilled.”

The report revealed that LEPs relied on their local authority partners for staff and expertise, and that private sector contributions had not yet materialised to the extent expected.

In addition, there was a risk that projects being pursued would not necessarily optimise value for money, the watchdog said.

“Pressure on LEPs to spend their Local Growth Fund allocation in year creates a risk that LEPs will not fund those projects that are most suited to long term economic development. Some LEPs reported that they have pursued some projects over others that, in their consideration, would represent better value for money. LEPs have also found it challenging to develop a long-term pipeline of projects that can easily take the place of those that are postponed.”