The findings from the new report on Local Enterprise Partnerships also highlight “confusion” about their role in local devolution deals, and difficulties assessing value for money.

The critical report from spending watchdog the National Audit Office, suggests that five years on from their creation, there is still some way to go to ensure LEPs are delivering the economic growth they promised.

But organisation’s operating in South West have welcomed the report – arguing they have made strong progress in the creation of new jobs, homes and investment opportunities in the region.

“The role of LEPs has expanded rapidly.”

The Coalition Government launched the Local Enterprise Partnership programme in 2010 to replace the UK’s nine Regional Development Agencies. Since then, 39 LEPs have been established, including fone or Cornwall and Isles of Scilly (CIOS) and for Devon and South West Somerset (the Heart of the South West, or HotSW).

The aim of these bodies is to boost economic development at a local level, using funding from Local Growth deals to support business and infrastructure improvements. But over time, the NAO notes, they have taken on a “significant” number of responsibilities, including positions on local transport boards and leading roles in devolution deals.

HotSW board member, Tim Jones suggests LEPs have faced a “whirlwind” of changes in recent years. He says this has contributed to a sense of “doing business on the hoof”, as the Government devolves more and more powers.

“The NAO report marks a good time to pause, reflect and make sure we are doing it right,” he said. “Now that the questions are being asked, it’s an opportunity to make sure LEPs are fit for purpose.”

“LEPs do not possess the resources necessary.”

The Government has pledged to make a total of £12 billion available to LEPs between 2014/15 and 2019/20. So far, Cornwall has received £60 million from this fund, with a further £150 million put forward by private investors, HoTSW has been awarded £195.5 million.

LEPs also have an influential say in the allocation of European funding, in the area. This amounts to roughly £470 million for the CIOS area and £92 million for HoTSW.

However, according to the NAO report, only 5% of LEPs surveyed felt they had sufficient resources to deliver the services and projects expected of them. And as they rely heavily on partnerships with local authorities to achieve their aims, the study warns many will struggle as cuts to council budgets take their toll.

Mr Jones said challenges around resources affect all LEPs. But he is not in favour of increasing staff numbers and returning to “the bad old days of big bureaucracy”.

“As an example, the demands around devolution have been huge, around half of the LEP team has been diverted to writing the devolution agenda,” he said. “But the expectations of government need to be managed against the resources that are available, rather than the other way round.”

CIOS chief executive Sandra Rothwell stressed her LEP is keen to make sure as much funding as possible goes to economic growth “not organisation”. “We are a partnership and we work with councils, chambers of commerce and businesses in developing and implementing strategies,” she explained. “Could we use more [resources]? Yes of course. But it should be proportionate to the scale of the programmes we deliver.”

“LEPs… are not as transparent to the public as we would expect.”

Management of LEPs currently consist of a mixture of private sector representatives and local councillors. The NAO report found that the proportion of private sector membership ranged from 45% to 80% across the 39 bodies.

It says the Department for Communities and Local Government has taken steps to improve LEP governance and transparency. But it suggests the department should do more “to ensure that the required standards of governance and transparency are being met”.

At the Cornwall LEP, four of the 16 board members are elected councillors, with remaining members coming from local businesses and other professions. Ms Rothwell believes that this is a fair representation of public, private and voluntary sectors.

She also stresses that the LEP reports back to local authorities on its decisions, and makes information about board members and their registered interests available online.

“Most of our resources are focussed on running an accountable process, because at the end of the day this is public money,” she added. “We were one of just seven LEPs in England interviewed in depth for this report and we received excellent feedback on our own systems and processes.”

At HotSW, six of the 20 board members are councillors – a ratio Mr Jones describes as a “healthy balance”. He also states that prospective board members face a “very rigorous” selection process.

“I think [the mix] has created an understanding about the needs of the business community, and improved their understanding of the needs of the local authority,” he said. HotSW also published information on board members and meetings on its website.

“It is not clear how LEPs fit into devolution.”

The NAO notes that ministers see LEPs as “central” to their plans for English devolution. But it claims LEPs are often “uncertain of their role within a more devolved landscape”, particularly in areas where their boundaries do not match those of the combined authority.

Ms Rothwell said CIOS, which leads on the employment and skills and business supports aspects of Cornwall’s devolution deal, is “very clear” on its involvement. “This one of the strengths that Cornwall and the Isles of Scilly has in terms of focus and geography,” she said. “So we are in a slightly different place than other LEPs].”

The Heart of the South West devolution submission is still in the bid stage. As the name suggests, it corresponds with the area covered by the LEP, but Mr Jones said their role is as “an observer and a consultee” in the process. “There is some degree of confusion around the fact that it is not a complete deal… but it is being led quite rightly by the local authorities,” he said.

“LEPs are at the heart of driving local growth”

Both the Cornwall and Isles of Scilly LEP and the HotSW LEP maintain that they are well on their way to hitting their targets for growth, but it is “too early” to accurately measure their success. They also stress that the NAO report is a “general” comment on the LEP model, and not an assessment of individual bodies.

The DCLG argues the study “misses the point”. A spokesman said: “LEPs are pivotal to driving local economic growth and have an important leadership role in devolution. That is why we have announced this week a further £1.8 billion through a new round of Growth Deals, maintaining our commitment to a £12 billion Local Growth Fund over the course of the Parliament.”

LEP targets for 2020/21

Cornwall and the Isles of Scilly LEP aims to:
Create 20,000 new jobs
See superfast broadband rolled out to 100% of homes and businesses
Build 13,000 homes
Support the creation of at least 336 new businesses
Upgrade the Night Riviera sleeper service

Heart of the South West LEP aims to:
Create 22,000 new jobs
Build 10,000 new homes a year
Reduce rail journeys between Plymouth and London to 2 hours 45 mins
See 95% superfast broadband roll out
Achieve partial dualling of A303/A30 corridor

Further analysis

Torbay MP and Public Accounts Committee member Kevin Foster: “The NAO report highlights the role our local LEPs play in economic development policy, but with this responsibility must come better accountability. It is right that LEPs can decide what reflects local priorities, rather than have them set by government or quangos across artificial regions that do not reflect our actual economic areas. Yet with the amount of money spent via them there needs to be clear measures to ensure the taxpayer gets value for money.”

Devon councillor and HotSW board member Andrew Leadbetter: “The Heart of the South West LEP has successfully enabled the private and public sectors to work together more efficiently to improve the lives of residents by creating jobs, attracting investment and in increasing the diversity of the regional economy. Together we will continue to improve productivity and growth in the region and I look forward to continuing to work with government and our regional partners Plymouth, Somerset and Torbay in the future.”