Local Enterprise Partnerships must be strengthened, streamlined and given access to additional powers and funds to drive future economic growth, a report written by former Labour local government minister John Healey has urged.

In a paper entitled 'Making Local Economies Matter', Mr Healey shows evidence indicating the defunct Regional Development Agencies succeeded in boosting growth in less prosperous areas of the country between 2000 and 2010, while the gap in growth has increased fivefold since their LEP successors took charge.

But the report argues against a wholesale abolition of the ‘deeply flawed' LEP structure, recommending instead learning from recent experience to make them fit for the future.

‘It is clear that regions and cities need a better framework to support businesses and local economic growth but going back to square one with each change of Government is no recipe for success,' Mr Healey said.

‘The next generation of business-led LEPs must be stronger and cover areas which actually make economic sense, he added.

‘And ministers must make sure that LEPs have the extra powers and funds they need to deliver a better balanced recovery and stronger growth across the country,' Mr Healey continued.

The study released by leading progressive think-tank The Smith Institute think is backed by shadow chancellor Ed Balls and Labour growth guru Lord Adonis, who wrote a joint foreword approving the findings.

They stated:  ‘We will only be able to develop the middle-income jobs we need to tackle the cost-of-living crisis if our cities and towns are more effective engines of growth.

‘To achieve this we need stronger local government supported by more effective central government, both working in stronger partnership with the business and education communities,' they continued.

Key recommendations included in the report include:
 

• Giving LEPS certainty and independent single pot resources to deliver long-term growth;
• Making purpose and functions of LEPs clear in a simple high-level statement, but let individual LEPs take responsibility for setting priorities;
• Establishing clear governance and accountability structures which balance local and national interests and appoint a single sponsor Whitehall department to co-ordiante across government;
• Review and streamline LEP geographic boundaries to create a smaller number of larger and more effective LEPs.

In response, cities minister Greg Clark told The MJ: ‘I would welcome genuine cross-party agreement for our decentralisation agenda but nationally Labour's heart hasn't been in it.

‘During the 13 years of the previous Labour administration, powers were centralised in Whitehall,' Mr Clark said.

Solace director, Graeme McDonald, said the report chimed with several key recommendations the chief executives' body set out in its recent ‘Local Roots to Growth' report last month. 

Similarities included the call to realign LEP boundaries and for the bestowal of more significant long-term funding streams as outlined in Lord Heseltine's ‘No stone unturned' growth review, and the use of alternative funding sources such as municipal bonds and local investment banks.

‘We would argue, however, that we need to go further in providing greater freedoms to councils over their own finances, including borrowing for infrastructure and housing investment,' Mr McDonald said.
 

Read next week's issue of The MJ for more commentary and analysis.