Local Enterprise Partnerships (LEPs) face an uncertain future after local government secretary Michael Gove suggested he was in favour of replacing them with something more democratic.
Speaking to the County Councils' Network, Mr Gove said: 'My preference is that powers, including economic development powers, are best exercised alongside other powers that rest in the hands of democratically elected, accountable leaders. That's just a preference but we are reviewing the situation at the moment.'
However, chair of the LEP Network, Mark Bretton, rejected the suggestion that LEPs' future was under threat.
He told our sister publication The MJ: 'We have been massively accountable to local government for a very long time. LEPs are in good shape. To my mind these comments are a wrinkle along the way?
'Getting rid of LEPs would be a very surprising anti-business gesture.'
LEPs are partnerships between businesses and local public sector bodies that were established in 2011 to drive economic growth in local areas.
The Government committed £12bn under the Local Growth Fund to LEPs in England between 2015-16 and 2020-21. The fund was an attempt to pool Whitehall cash from different departments, including transport and local government, to break down siloes to unleash local business potential in the wake of the 2008 crash.
LEPs have been dogged by criticism for some time, with many raising concerns about how local business leaders were appointed to LEP boards, and how cash was allocated from LEPs to local schemes.
Transport Network was one of the first to raise the alarm about the opaque governance and appointment systems LEPs employed. Transport Network was told by ministers that the Government would not step in to tighten such governance structures despite fears of a ‘democratic deficit’ within the key bodies, responsible for billions of pounds.
Soon afterwards, an investigation by the Daily Mail revealed questionable spending practices with scores of millions directed to projects with a conflict of interest.
More recently reports have questioned the oversight of these bodies and the value for money they have achieved.
In 2017, then communities secretary Sajid Javid tried to increase the level of democratic oversight in LEPs and called on them to ensure ‘every penny you spend is transparent and justified’.
Nonetheless in 2019, the Public Accounts Committee said the local government department's decision to not formally evaluate the impact of Local Growth Fund cash meant it could only make 'unsubstantiated estimates' of its impact.
Originally 39 in number, there are currently 38 LEPs in England, each operating across more than one local authority.
With the Local Growth Fund now concluded and the government redirecting similar cash, such as the Levelling Up fund, directly to councils, LEPs are in search of a new purpose.