Statement about SEMLEP's future

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In his Spring Budget statement to the House, the Chancellor Jeremy Hunt MP announced that government will consult on transferring responsibilities for local economic development from Local Enterprise Partnerships to local authorities from April 2024.

The full statement within the Spring Budget regarding LEPs is copied below:

Page 70, Para 3.119: The government is committed to empowering democratically elected local leaders at every opportunity. To this end, the government intends for the functions of Local Enterprise Partnerships (LEPs) to be delivered by local government in the future. Therefore, the government is minded to withdraw central government support for LEPs from April 2024. DLUHC and the Department for Business and Trade will now consult on these proposals, before confirming a decision. The government will publish an updated policy position to confirm next steps by the summer.

Whilst Government’s intentions for closer integration between LEPs and local democratic institutions was set out in a letter on March 2022 the news about the withdraw of central government funding following the 2023/24 financial year is incredibly disappointing for us.

Today, 17th March we have received a letter from Minister Davison and Minister Hollinrake notifying us of a four week information gathering exercise. We will be working with government and our local authorities to respond and prepare for transition. Our priority is to support our colleagues as they continue their work this coming year to deliver the vital business support and investment services, careers and education work and, the gathering of economic intelligence and analysis to inform decisions.

I want to take this opportunity to give heartfelt thanks the SEMLEP team for their dedication to the work they do and give recognition to the contribution each and every staff member, Board director and the many partners engaged in the efforts to deliver our mission to enable sustainable economic growth by strengthening the conditions needed for businesses to succeed.

Hilary Chipping

SEMLEP Chief Executive

Additional statement from LEP Network: added 21 March 2023

Silencing the voice of local business will cost money not save it

The Chancellor’s announcement that he “is minded” to cease funding Local Enterprise Partnerships, and by implication, the Growth Hubs that have helped support millions of small businesses, might be a further step in the devolution agenda, but it raises serious questions about consequent costs and the role of business.

The government said it would cease core funding to LEPs beyond 2023-24 and will work with local areas to determine how the functions currently undertaken by LEPs will be delivered at a local level, “where appropriate”, and where they are not already delivered by a Combined Authority. A four week consultation process is now underway with LEPs, Local Authorities, and Mayoral Combined Authorities.

LEP Network Chair Mark Bretton, said:

“The Chancellor’s statement was a further step in LEPs’ evolving role in the devolution agenda, if not managed well, it could significantly diminish or even silence the voice of local business and damage the unique convening power that gets projects delivered, acknowledged as the hallmark of LEP success for over a decade.

“We have now received the letter from Ministers and met with Officials. The letter included clear statements from Ministers that the “minded to” decision is not about performance, but is driven by political policy. Our meetings have revealed the full scale of the challenge and complexity facing Officials - most LEPs are incorporated companies, a structure insisted upon by Government. Unravelling this with the trailing liabilities and accountability for significant sums of money will not be simple, yet we need to do all of this whilst continuing to deliver for our local communities.

“What the 2000 business leaders, 350 FE and HE Principals and Vice Chancellors and, indeed, the 200 democratically elected local politicians on our LEP boards want to be clear on is that:

• Whitehall recognises the transition will cost money, not save it, under the new burdens rule on Local Authorities, whereby any new functions must be funded by government, both LAs and government need to agree what these functions would cost to effectively deliver them. There is no money in the LEP system or core funding settlement to pay for this exercise which will only serve to divert scarce resources from where they should be focused, stimulating economic growth and supporting local enterprise;
• LEP directors cannot be expected to shoulder ongoing liabilities and going concern commitments. Government must provide full indemnities and take complete responsibility for the implications of their decisions;
• Business must not be silenced or made ineffective – it must retain a meaningful voice to ensure investment is relevant and that it enables the creation of jobs – after all it is business which creates jobs, not government;
• Lessons learned, especially in business case assessment, project execution governance and the delivery of committed outcomes are not lost. Government needs to avoid a “cookie cutter” approach and ensure solutions are locally tailored;
• Most importantly, that the 1000 people employed in our Executive teams are respected and their talent is not wasted.

“LEPs are apolitical and part of the original devolution arsenal; the word “Local” in our title makes this clear. We are therefore no strangers to devolution nor are we challenging policy. This is why we are now helping Officials with their information gathering exercise. We are promised a decision “by the summer” and expect this to be well considered, but it must not be subject to the usual delays.

“For more than five years LEPs have been scrutinised and on every occasion passed muster. The importance of the role of business in driving a future Enterprise Economy has never been more important. To say we remain puzzled as to why Government wants to put at risk a growth engine that has worked so well for them is an understatement, but if that is what they want let’s get this done professionally, in a timely fashion and with respect.”