Groups of English councils and businesses will take control of central government cash from 2015 under Treasury plans announced today.
Local enterprise partnerships will compete for money from a Single Local Growth Fund from 2015-16 in order to boost local economic growth.
The fund will bring together Whitehall funding for areas like skills, transport and housing with European Union structural and investment funds in England.
The announcement was part of the government’s response to Lord Hesletine’s report on improving local economic growth entitled “No Stone Unturned”. Full details of the fund will be announced at the spending review in June.
The Treasury accepted 81 of the report’s 89 recommendations.
However it rejected Lord Hesletine’s view that the government should “clarify urgently” its preferred solution to a shortage of airport capacity in the south east.
Lord Heseltine also said the government should set out a “definitive and unambiguous energy policy, including the supporting financial regime, to give the sector the certainty to invest”.
But in reponse the Treasury said its Energy Bill and Gas Strategy provide the necessary reassurance to investors.
The government also accepted that it should hold discussions via the Bank of England and regulators to enable UK public and private pension funds to invest in infrastructure.
Various recommendations about getting unemployed people into work will be addressed in June’s spending review.
But some construction experts said there was too little detail on the measures that should be included in the LEPs’ plans.
Consultancy WSP’s technical director Sean Nicholson said: “It’s concerning that there is no more detail on the content of LEP strategic plans or an indication of if and when this will be provided. The strategic plans will provide a framework for managing growth and delivering the necessary infrastructure for the local area so there is a lot riding on getting them right.
“It’s imperative that some guidance is provided that ensures they are robust, effective and collaborative from the outset. There may also be benefits associated with getting consistency of approach across LEPs and the guidance will have a role in achieving that.”
Alasdair Reisner, director of external affairs at Civil Engineering Contractors Association, said: “We are pleased that the government has understood that any recovery in the UK economy can only be achieved by providing the tools for local growth. We welcome the commitment to for LEPs to develop five year strategic spending plans, which will give industry clarity over future investment. But we have real concern about the fact that funding will be unringfenced in the single pot.
“While we believe the case for infrastructure investment is strong, we can foresee how short-term political issues could see vital funding for transport be used for other purposes. As such it is essential that LEPs are provided with the capability to make sensible investment decisions, looking to communities’ long-term interests. We will be working with other representatives of industry to ensure that LEPs have the support they need to expand into their new role.”
Business secretary Vince Cable said: “We have grasped the challenge that Lord Heseltine’s report posed to government and accepted the vast majority of his recommendations.
“The plans will boost the UK’s competitiveness nationally and drive local growth through the local growth deals that we will be negotiating with every Local Enterprise Partnership.”
The proposal to hand over some government funding to LEPs builds on the concept of City Deals, already underway in 28 places, where some central government funding is devolved to groups of councils or LEPs in exchange for better economic performance.