Policy paper

Local Enterprise Partnerships: information gathering exercise

Published 4 August 2023

Applies to England

Introduction and background

On 15 March 2023, the Chancellor announced that government was ‘minded to’ withdraw central government support (core funding) for Local Enterprise Partnerships (LEPs) from April 2024, with the functions currently undertaken by LEPs – namely, business representation, local economic planning, and delivery of government programmes – to be delivered by local government in future, where appropriate and where they are not already delivered by a Combined Authority.

On announcing the ‘minded to’ decision, ministers at the Department for Levelling Up, Housing and Communities (DLUHC), and the Department for Business and Trade (DBT) wrote jointly to all LEP Chairs and Chief Executives, Mayors and Mayoral Combined Authority Chief Executives, and Local Authority Leaders and Chief Executives to launch an information gathering exercise to better understand the impacts that this proposal might have if taken forward, and before a decision was confirmed.

An information gathering exercise was launched on 17 March 2023 and ran for 9 weeks until 19 May 2023. It included an online questionnaire where participants were invited to submit their views. 253 responses were received from institutions, individuals, and companies:

• 163 responses (64%) came from local authorities
• 13 responses (5%) came from mayoral combined authorities (MCAs) or areas that had recently agreed a devolution deal
• 29 responses (12%) came from LEPs
• 48 responses (19%) came from other organisations or individuals who had sought out the online document to give their views

DLUHC and DBT officials also held 6 themed roundtables with a working group of LEP Chief Executives, and one roundtable with representatives of business bodies, Local Authority Networks, and other umbrella organisations. DBT and DLUHC officials also held individual conversations with relevant organisations to gain further understanding of the potential impacts.

Aim

The information gathering exercise sought to fully understand the implications of the ‘minded to’ decision if this were to be taken.

Core funding has been typically used to pay for staff salaries, buildings, marketing, communications, and consultancy.

Government had a particular interest in how activities currently carried out by LEPs might change, cease, or be transferred – depending on local plans – in the event of core funding being withdrawn, as well as the potential impact on:

• economic growth in local areas
• decision-making in local authorities, particularly the input of business organisations.
• LEP staff and customers, including those with protected characteristics
• legacy projects (i.e., projects that have been funded in previous years through government or private sector programmes)
• ongoing separately funded functions, such as Growth Hubs and Careers Hubs

Government also had an interest in whether the impact would differ between areas with devolution deals and those without, and how LEPs may respond without this core funding being provided.

Information gathering process

The process consisted of the following elements:

• A detailed online questionnaire sent to all LEPs to understand the implications for their finances, workforce, and missions. The same questionnaire was also sent to all Local Authorities, and to MCAs and the Greater London Authority (GLA) that have already integrated or are currently integrating LEP functions. Other organisations listed in Annex A were also invited to submit a response.
• General comments invited to a dedicated mailbox from a list of stakeholders (see Annex A).
• DLUHC and DBT officials convened with the support of the LEP Network a series of 6 themed roundtables with a working group of LEP Chief Executives, and one roundtable with representatives of business organisations and other umbrella groups.
• DLUHC and DBT officials held several individual conversations with LEPs and other organisations to further their understanding of the issues involved.

Structure of the questionnaire survey

The questionnaire was divided into 6 sections. The sections marked with an asterisk were mandatory. Respondents were asked to complete only the relevant sections:

• Section 1: Core Information*
• Section 2: Nature of your relationship with LEPs*
• Section 3: Questions for LEPs
• Section 4: Questions for MCAs, the GLA, and areas with new devolution deals
• Section 5: Questions for Local Authorities (LAs)
• Section 6: Public Sector Equality Duty Assessment (PSED)*

Summary of responses

Section 1: Core information

The questions in Section 1 asked for core information from respondents. Questions 1-4 are listed below for information but are not analysed in this document.

Question 1 What is your name?
Question 2 Please provide your email address.
Question 3 What is the name of your organisation?
Question 4 What type of organisation is it?
Question 5 Which area(s) of England does your organisation operate in?

Figure 1. Responses by area and organisation type

Region	LEPs	MCAs, the GLA, and areas with new devolution deals	Local Authorities	Other	Total
North East	1	2	2	2	7
North West	5	2	11	12	30
Yorkshire and Humber	2	4	7	8	21
East Midlands	3	1	10	6	20
Ox-Cam Arc and East Anglia	3	2	36	8	49
West Midlands	3	1	15	7	26
Greater London	0	0	5	5	10
South East	7	0	47	16	70
South West	5	1	30	4	40
Total	29	13	163	68	273

Totals provided in this table will differ from those provided elsewhere as some institutions operate in multiple regions.

Section 2: Nature of interaction with LEPs

Note: this section was not completed by LEPs.

Question 6
How do you currently work with your LEP? What are the key activities for your organisation that the LEP currently delivers? Please give details.

Most responding local authorities held a formal relationship with their LEP. For example, they are the accountable body or councillors sit on the LEP board. The key activities that were cited were: delivery of Growth Hubs and Career Hubs; Digital Skills Partnerships; delivery of funds (commonly cited were Growing Places Fund, Getting Building Fund, Local Growth Fund); inward investment advice; business support; and advice for sectors. A few local authorities did not specify whether their relationship with the LEP was formal or informal.

Other activities cited by some local authorities included support for business recovery following the COVID-19 pandemic and other major events and encouraging cooperation between authorities. For example:

• One council cited membership of a joint local authority and LEP-wide Resilience and Opportunities Group sharing intelligence on EU Exit, the COVID-19 pandemic, and labour market shortages.
• Another said its LEP had led economic recovery efforts following significant events such as Storm Desmond and the COVID-19 pandemic, leading multi-agency responses to coordinate appropriate interventions to assist businesses locally.
• In other cases, the LEP had facilitated collaborative working between people from different local authorities in a more formal setting, which helped to progress work already carried out between teams in a more informal manner.

Some local authorities said their LEP supported the net zero agenda in their area. By working with the relevant local Net Zero Hub, the LEP could help ensure local businesses were maximising the opportunities from available government funding. Another LEP had supported a countywide strategic climate leadership body to enable all areas to address the climate and ecological emergency.

Some local authorities said they had limited engagement with the LEP. This seems particularly the case for some district councils, who said that they had very limited direct interaction with the LEP and that their engagement was primarily via the county council or sub-regional partnerships.

Other local authorities said their engagement with the LEP had reduced following the shift to government funding going directly to Local Authorities rather than through LEPs (e.g., Levelling Up Fund, UK Shared Prosperity Fund), and technical skills coordination now being delivered through Local Skills Improvement Plans (LSIPs) rather than LEP Skills Advisory Panels.

Some respondents were critical of activities carried out by the LEP and said other organisations, including the local authorities, could offer a better service. Examples cited include provision of business support, delivery of Growth Hubs and Careers Hubs, programmes, and local economic insights.

In MCA areas, LEP functions are already fully integrated or integrating with the MCA. Four MCAs that responded to this question explained how they undertake LEP functions as part of current post-LEP arrangements, which cover additional functions to those previously performed by those LEPs.

A theme from the responding Chambers of Commerce was their close work with the LEP on those programmes the LEPs deliver. Examples cited include Growth Hubs, Skills Bootcamps, and support and information sharing/gathering for the business sector.

A general observation from respondents was around the value of Growth Hubs and concerns about losing them in the event LEPs cease to operate. Growth Hubs were seen to provide a coordinated approach for business support, ensuring a consistent offer across a wider region. That said, a few businesses stated that it had been difficult to reach the LEP which, in some cases, could impede delivery of upskilling and job creation activity.

Question 7
Without core funding it is possible that LEPs will reduce or cease their operations. What impact would that have on the following? A) Your own operations B) Your stakeholders C) Your customers D) Your future plans E) Any programmes or activities carried out in partnership or via the LEP.

Around a third of responding local authorities said that LEPs reducing or ceasing operations would have limited impact generally.

Just over half of local authority respondents said it would have some general impact on them. Of these, many raised significant concerns, but they either a) caveated with statements such as ‘without adequate funding’ or b) assumed that funding and functions would be transferred to other bodies.

Around 25% of respondents in this category raised as a concern the possible impact on the delivery of Growth Hubs. Of those, some said they could put in place measures to mitigate this impact; others indicated they would like to mitigate the impact but would need support in doing so. For example, a local authority said the Growth Hub played a vital role as the first referral point for business support in the county and the city.

More broadly, respondents in this category cited possible impacts such as the loss of business support and expertise, inward investment services, and of a voice on regional issues. For example, a local authority said that LEPs provided a combined regional voice of businesses and stakeholders, and together the LEPs provided a combined national voice.

Approximately 17% of respondents in this category mentioned Careers Hubs, but many respondents referred to skills advice and initiatives more broadly. One local authority said that its Careers Hub offered those leading on careers in education establishments across the region opportunities to network with one another, share solutions to challenges, and meet local employers.

A number of local authorities also raised concerns about their potential ability to deliver major projects in their areas, stating that a reduction or cessation of LEP support would result in decreased confidence and stability, which these projects required for successful delivery.

Five local authorities thought that the LEP ceasing or reducing operations would have a positive impact. One commented that if responsibility and funding for LEP functions was transferred to them, it could represent a significant opportunity to improve the strategic effectiveness, join-up and governance of their economic development and skills ambitions.

Local authorities in new devolution deal areas said they had assumed they would take on the functions of LEPs in their areas and would be funded to deliver those instead of LEPs. They said that if no core funding was made available for historic LEP functions in 2024-25 it was likely to lead to reduced service and future investment, and impact on their own operations, and those of their stakeholders and customers. Some local councils said that their devolution deal negotiations had been predicated on the basis that LEP funding would be transferred to the new combined authority/institution with a devolution deal, and plans had been made on that basis. One commented that to withdraw this funding would penalise them financially.

Six MCAs that responded to this question said the loss of LEP core funding would have an impact on their operations by reducing their capacity to deliver their current breadth of business and enterprise functions unless alternative funding could be sourced. No specific programmes or activities were mentioned except in one case where there was a particular risk to the MCA’s Growth Hub service with a potential negative impact on the level and coordination of support it could offer to local businesses.

Around a third of ‘miscellaneous’ responses to this question came from members of Chambers of Commerce, with a number of responses from other business organisations, current or former LEP board members, Careers Hubs members, and Growth Hub members. The Chambers said the loss of LEP core funding would have no impact on their work. Many thought it would allow for services to be more locally tailored and led, by developing local business growth hubs in towns with partners working together. That said, some Chambers were concerned that long-standing relationships with LEPs would be lost, and a lack of funding could mean some existing and future projects might not continue.

The 4 universities that responded to this question indicated that they had a positive relationship with LEPs and had benefitted from both access to funding and business support. They believed that the removal of LEP core funding could impact negatively on their future programmes and activities, and they would need to explore other options to support business initiatives in which they were involved.

Question 8
What (if any) impact would you envisage transferring responsibility of LEP functions to local authorities having, where they are not already being delivered by a combined authority?

Around 25% of local authority respondents highlighted the possible benefits of transferring LEP functions to local authorities.

Many local authorities suggested they have stronger local knowledge and a stronger connection with the local agenda and are better placed to tailor programmes delivered by LEPs in their areas. One local authority said that local authorities are best placed to know their area’s needs and opportunities and are equipped with skills and connections to work with the resident businesses, stakeholders, institutions, and residents.

Many local authorities said transferring LEP functions to local authorities removes a layer of bureaucracy and prevents duplication. One council also said local authorities have the processes and systems in place for transparent and democratic decision making.

In many cases, it was unclear whether respondents were answering the question with reference to local authorities in general, or a specific tier of local authority. Notably, a small minority of district councils felt that they would be better placed to take on LEP functions than county councils. One district council thought the transfer of LEP responsibilities to district councils would have a positive impact and provide a more coherent landscape to businesses. Another district council was worried that the aims and objectives of the county council did not always align with their local issues and suggested that transferring LEP functions to the county council would not deliver benefits.

Other respondents reflected that different tiers would be suited to delivering different functions, including some functions at a regional or sub-regional level. One council said inward investment support was best coordinated across a wider geographic area, possibly even sub-regional, whereas Growth Hub support and business intelligence and liaison may be best coordinated at district level.

Another council commented that all the economic priorities in its area were currently delivered by the LEP (e.g., infrastructure, regeneration, SME support, inward investment, skills development, rural economy). It argued that this should be changed with regional arrangements for strategic matters (e.g., infrastructure) remaining at upper tier (county) level but districts/boroughs being responsible for more local arrangements on issues like regeneration/SME support etc., given their local relationships and depth of local knowledge.

A substantial number of local authorities raised concerns alongside potential benefits, or highlighted actions that could be taken to mitigate these concerns, such as central government providing adequate funding.

A small minority of responses were mainly negative about the proposal.

The most frequently cited risks were the loss of an independent business voice; that business would be less inclined to engage with local authorities and concerns that local authorities would not cover a Functional Economic Area (FEA). One respondent questioned whether LEP functions would be seen as a priority compared with other local authority responsibilities, such as adult social care. Another thought it would be very difficult to replicate the truly independent business voice within a local government context which would be driven by short-term political decision making. Some argued that transferring LEP responsibilities to local authorities would be problematic as administrative boundaries would be at odds with any sensible interpretation of economic geography at a wider FEA or sub-regional level. They argued that these administrative boundaries would make little sense to the business community.

Local authorities with new devolution deals, or early candidates for the next wave of deals, expressed concern that they would not be able to assume responsibility for all the functions and activities of their LEP without receiving revenue funding support currently provided to the LEP. They also argued that it would be hard to encourage partner organisations to continue to contribute in the way they do now without that funding.

The MCAs where LEP functions are already integrated, or where integration is underway, did not comment on this question. All the MCAs are geographically coterminous with their LEP which makes the process of integration more straightforward.

Section 3: Questions for LEPs

Note: this section was completed by LEPs.

Question 9
If you do not continue to receive core funding, would you be likely to (a) continue operating or (b) transfer functions where appropriate and cease operations?

29 LEPs submitted responses to this question. Those LEPs that did not respond were coterminous and already integrated with their Combined Authority or had provided information through their devolution deal negotiations. Of the 29 that did respond, there was an even split between those that intended to continue operating as private sector companies (14) and those that planned to transfer functions and cease operations (14) with one undecided. Several LEPs added that their intentions were subject to conversations with relevant local authorities and/or the outcomes of current devolution deal negotiations, meaning there could be some change over the coming months, particularly given the proximity of the exercise to the local elections.

Question 10
If you would be likely to continue operations, what functions would you cease to deliver in the absence of core funding?

Of the 14 LEPs that planned to continue operating, only a minority explicitly stated that there would be little to no difference to the functions delivered, especially in the short term (in part due to reserves or a desire to pivot their businesses to look for other sources of income).

The majority did comment that some functions would cease or be greatly reduced without core funding. There was some consensus, though not a universal view, that functions categorised as economic strategic planning, long-term thinking and some of the convening roles would be harder to continue as they would not have a direct funding stream or one that was as flexible as core funding is.

Some LEPs commented that whether they would continue to operate would also depend on whether other government funded programmes or funding streams, such as Skills Bootcamps, Growth Hubs, and Careers Hubs, would continue to be delivered through LEPs. The removal of core funding per se did not affect the future delivery of these contracts, but the removal of the mandate for government departments to contract with them would.

Some LEPs based in areas subject to devolution deal negotiations emphasised that much was unknown and would depend on the outcomes of negotiations and/or conversations with local authorities or LEP boards that have not yet taken place. These would determine whether the LEP would continue to operate in areas. Some LEPs had potentially sufficient funding to continue to trade through 2024/25.

The LEPs also offered a view that, in light of a withdrawal of core funding and government support, the level of engagement by businesses with the LEP may fall and could serve to diminish the LEP’s effectiveness over time. This could, however, be true even if the LEP chose to integrate fully into a local authority. Many of the LEPs did not present a view on this. Some did reference seeking funding from additional sources, which could include businesses.

Question 11
If you would be likely to cease operations, please specify any significant liabilities such as ongoing MoUs (Memorandum of Understanding) and contracts with government, local authorities, or private businesses, including any subsidiaries owned by the LEP. Please also specify any plans for joint ventures and special purpose vehicles with local and national partners, and any plans for handling public money (e.g., retained business rates)

Many of the LEPs who stated they intended to continue operating did not provide a response to this question. For the remainder the answers to this question set out a number of liabilities that were specific to each LEP, with a lot of variation. These are not recorded here explicitly but covered the general themes of:

• reporting commitments on funds that had been delivered on behalf of national government. These funds are covered elsewhere in this summary.
• commitments to the operation of Enterprise Zones and management of business rates income, as covered elsewhere in this summary.
• commitments to joint fund ventures and a small number of subsidiaries.
• Director liabilities and respective insurance.

Several specific local responses are not included here due to commercial sensitivities.

Question 12
How many people (FTE) do you have working for you and what functions do they deliver? a) Directly Employed b) Under Contract to Provide Services c) Temporary Staff d) Secondees

Of the 29 LEPs that responded, 27 provided numerical values for this question. The total number employed across those organisations was 706, but the figures provided are subject to certain caveats that should be noted when considering them:

• some staff could be classified as being in multiple categories.
• some respondents listed services they had contracted out, rather than the number of staff they represented.
• there was a mixed interpretation of ‘secondee’, with some LEPs interpreting secondees as inward, and some outward.
• all numbers presented are FTE (full time equivalent).

The total for all LEPs is presented in the table below, further broken down by whether the LEP intends to continue operating, or transfer functions and cease operating. At present LEPs could not confirm which roles would cease or continue given uncertainties around the destination of different functions. 64% of the staff employed by LEPs are in those that intend to transfer functions and cease operations, meaning an estimate of 450 people will be subject to some form of disruption. This could be increased if certain functions are transferred away from LEPs that choose to continue operating.

Figure 2 – Breakdown of LEP employment

Status	Directly Employed	Under contract to provide services (contractors)	Temporary Staff	Secondees (2)	Total
Continue operations	204 (80%)	7 (3%)	28 (11%)	16 (6%)	255
Transfer operations and cease	319 (71%)	37 (8%)	48 (11%)	47 (10%)	451
Total	523 (1) (74%)	441 (6%)	76 (11%)	632 (9%)	7061

(1) One LEP did not provide a future status, so its values are not included in the totals. It has 20 directly employed staff and 4 contractors. (2)There were an additional 4 secondees from a LEP that did not provide a status, these are not included in these values.

Four LEPs employed more than 50 people and the largest 7 LEPs represented over 50% of all LEP FTE employment.

Question 13
How many staff (FTE) are funded solely or partially by core funding?

Of the 28 LEPs that provided employment values, 27 provided a full response to this question. Across all the LEPs, 256 FTE roles were fully or partially core funded, representing a third of all the FTE equivalent the LEPs stated previously.

However, there was a range in the significance of core funding. Four LEPs reported that 75% of their FTE roles were covered in some way by core funding, whilst 9 LEPs responded that fewer than 25% of their FTE roles were covered by core funding.

This equated to an average of 9 staff per LEP being fully or partially core funded, though values ranged from four to thirty. As with total employment, a large share of the employment supported by core funding is concentrated in a small number of LEPs. Eight LEPs represented over 50% of all core funded jobs.

Question 14
If core funding were to end in April 2024, would you expect to have to make any staff redundant? How many (FTE)? What are your estimated redundancy costs?

There was a mixed response to this question, with several LEPs stating they did not expect redundancies, so they did not provide a value, and 5 others that did not, or could not, provide an estimate cost. Some provided estimates of costs even if they did not expect to make redundancies. Included within this were some LEPs that did not expect to see their work change at all, but still provided cost estimates – the analysis has been broken down to reflect this. It should be noted that the values presented represent a worst-case scenario, with some uncertainties around the exact number of redundancies to be determined through individual integration processes.

An additional consideration is that some potential redundancies are dependent on the cessation of other funding streams, rather than just core funding, though in this case it could mean roles being transferred to another institution. Some LEPs commented that posts supported by LEP core funding would be most at risk, but it was difficult to provide an accurate forecast until they had greater certainty around the future of other funding streams.

A further 7 LEPs said they did not expect redundancies but provided an estimated cost.

Total estimated redundancy costs given were £4.3 million, of which £3.4 million were in LEPs that plan to continue operating and £0.9 million in areas that plan to transfer and cease operations. This gives an average redundancy cost of just under £0.2 million, albeit with significant variations. 18 of the 24 LEPs that provided a redundancy cost expected it to be £0.15 million or less.

Question 15
If required, how would you propose to handle resourcing questions such as return of secondees to parent bodies, TUPE of staff, etc.?

As shown in Question 12, there are currently 63 secondees employed by a total of 15 LEPs. Just over a third of LEPs with inward secondees stated they would either return to the parent organisation before any issue arose, or the person would continue in the new organisation. Half did not give a clear view on their secondees, and the remainder stated that they needed to have conversations with individuals or parent organisations before confirming a position.

There was a consensus that TUPE would apply in most cases, though uncertainty remained as this would depend on what functions were to be moved and to where. Some LEPs had greater certainty around how they would apply TUPE rules though many had yet to confirm exact processes. The question of where people move is dependent on conversations with potential destinations of staff, primarily the LEP’s accountable body. In some cases, the accountable body is already the formal employer – in which case transition would be smoother. Some LEPs mentioned that TUPE would only work if the functions were funded to continue elsewhere.

Question 16
What proportion of your overall income in 2022-23 is core funding?

Across the 25 LEPs with comparable returns, core funding represented an average of 19% of the total funding received by LEPs in 2023-24, although for the majority of LEPs the core funding figure represented 10-20% of overall income. For 5 LEPs core funding represented more than 30% of total funding.

Question 17
What private sector income in 2022-23 do you receive, e.g., funding for Careers Hubs, match funding from local partners?

Due to the varied nature of how this question was answered, and the different interpretations by LEPs of what constituted private sector income, it is not possible to present a summary of this question.

Question 18
Which local authority acts as your accountable body?

Answers to this question involved details of the Local Authorities that act as the accountable body for individual LEPs and are not recorded here.

Question 19
Do you have financial reserves? How much? What would be the actual and planned use of these?

27 LEPs returned numerical results for this question, and there was a broadly universal approach to detailing the purpose of the reserves, with reference to closure/redundancy. Many LEPs stated that reserves were earmarked for specific purposes and were already allocated for spend in this financial year (2023-24). The majority of LEPs are companies limited by guarantee and are legally required to hold sufficient reserves to remain a going concern or to wind up operations if required.

The breakdown of reserves purpose, as stated by the respondents, is included below.

Figure 3 - Breakdown of LEP reserves

Category	Total	% Total	Comment
Total	£123 (1) m	100% (1)	27 LEPs returned a numeric response.
Allocated to closure/ redundancy	£6m	5%	18 LEPs stated they planned to draw on reserves for closure/redundancy, of which 10 provided numerical values for the allocations. Across those 10 LEPs, the reserves allocated to closure was c.17% of their total. The other 8 LEPs did not place a specific value on funds allocated to closure/redundancy.
Tied up in assets	£28m	23%	Two LEPs classified assets in their reserve return.
Stated as having a specific purpose	£64m	52%	13 LEPs outlined a specific purpose for their reserves, e.g., a planned project, and provided a value this represented.
No purpose stated	£26m	21%	The remaining £26 million of reserves was not allocated to a specific purpose with a defined value.

(1) Due to rounding, figures sum to more than ‘total’ values given.

Of the LEPs that allocated reserves to redundancy, there were no instances where the reserves were less than the estimated redundancy cost provided in question 14.

Of the 11 LEPs that stated no reserves were allocated to redundancy, numerically or otherwise, the total value of estimated redundancy costs was £0.7 million as set out in response to question 14. Of these, 5 were planning to continue operating and 6 were planning to transfer functions and cease operations.

Figure 4 – Value of stated LEP reserves

Value of stated reserves (£m)	Number of LEPs
No value given	1
0 to 1	7
1.1 to 5	14
5.1 to 10	3
10.1 +	3

Question 20
What contractual agreements (commercial, employment, etc.) do you have beyond April 2024 and what costs are associated with these? What is the duration of these contractual agreements?

Of 29 respondents, 22 stated contractual agreements beyond 2023/24. The longest running of these were Enterprise Zone commitments, but there were other longer-term commitments such as the Local Growth Fund, Getting Building Fund and Careers Hubs.

Three LEPs provided a list of contracts by which they were bound but did not state an end date for these.

Of the remaining 4 LEPs that had no commitments beyond 2023/24, two had already integrated/were integrating their functions into local authorities, one did not hold contracts as these sat with the accountable body, and one stated that all commercial contracts were due to cease before April 2024.

Many contractual agreements were in programme delivery that could, in theory, be transferred over to another institution. LEPs also mentioned other contracts that were not explicitly delivery focussed and covered day-to-day operations, e.g., office costs and subscriptions. These were typically of much lower value than the programme contracts.

Question 21
Do you have any Local Growth Fund (LGF), Getting Building Fund (GBF), or Growing Places Fund (GPF) money remaining to spend? If so, how much do you expect to have unspent by fund (£m) by April 2024? If you plan to cease operations should core funding end in 24/25, how do you propose to deal with any unspent funding?

Of the 29 respondents, 11 said they had no funds that would be unspent by April 2024. 18 did have money outstanding, either in the form of the given grant, or loan amounts due to be repaid. Nearly all the money due to be spent, or currently loaned out, relates to the Growing Places Fund. Only one LEP explicitly stated they had outstanding spend for the Local Growth Fund or Getting Building Fund.

10 LEPs stated they had provided money as a loan through the Growing Places (GPF) and were awaiting repayment. GPF was originally paid to all LEPs in 2012 as a one-off un-ringfenced Section 31 (Local Government Act 2003) capital grant, designed to help areas unlock stalled infrastructure projects and drive economic growth and job priorities. The outstanding loans will be available for recycling for future loans once repaid. Across all the LEPs the extent of this is set out below in approximate value.

Figure 5 – Funding not due to be spent by April 2024

	Local Growth Fund (LGF)	Growing Places Fund (GPF) (Unspent + Outstanding Loans)	GPF confirmed as outstanding Loans
LEPs	1	18	10
Value (£m)	2.88	116	70.7

Given the different ways LEPs interpreted this question, it is possible that the money classified as outstanding GPF spend may also be in the form of outstanding loans due.

Many LEPs offered the view that any remaining funds, either as spend or loans to be repaid in future, would by default go to the new institution taking on responsibility for LEP functions, or be used to fund transition.

Question 22
Has the LEP been a Grant Recipient for European Regional Development Fund (ERDF)? If so, what arrangements will be made to retain the project audit trail in an accessible format until December 2033 in line with the contractual agreement? 

Of the 29 LEPs that responded, 16 said they had been a recipient of the European Regional Development Fund (ERDF) or European Structural and Investment Fund (ESIF). Of the 16 recipients, 10 stated that they either expected or had confirmed that responsibility for the management of these funds would transfer to the LEP’s accountable body, or the institution that took on their functions. Financial figures were not given in most cases.

The remaining 6 LEPs in receipt of this funding stated that systems and procedures were in place to retain and update all key documents in relation to these funds, but there was some uncertainty over the destination for these systems.

Question 23
What implications would there be if hosting arrangements for Careers Hubs sat outside of LEPs? E.g., local authorities. 

  In general, the responses to this question ranged from ‘no concern’ to ‘some concern’, but there was no outright objection to the idea of hosting Careers Hubs outside of LEPs. Where concerns existed, they can be summarised as following:

• match funding, and funding in general, would still be required to ensure delivery. Without the LEP contribution to Careers Hub funding, one source of match funding would be lost and would need to be covered from elsewhere (e.g., by Local Authorities).
• the geography of the successor body needed to be appropriate. Existing/confirmed or potential devolution deal areas were seen as appropriate, as were upper tier Local Authorities, but delivering functions at a lower tier level was seen as undesirable on both administrative and strategic grounds.
• business engagement was viewed as a strength of the LEP, but there were concerns that this could diminish if the Careers Hub moved into a local authority.
• TUPE would be required for a number of staff; this was raised to note the practical implications of a transfer.

Question 24
Do you currently oversee the operations of an Enterprise Zone?

(Note: respondents were instructed to only complete questions 24-28 if they currently oversee the operations of an Enterprise Zone.)

18 LEPs said they did oversee the operation of an Enterprise Zone while 7 either said no or did not respond positively. A further 3 gave responses that indicated a form of voluntary/high level involvement.

Question 25
If yes, what local arrangements (i.e., MoUs/contracts) are in place to determine how the growth in retained business rates generated by an Enterprise Zone site are distributed?  

All the LEP areas with Enterprise Zone responsibility had a valid Memorandum of Understanding (MoU)/agreement in place, except for one which stated an MoU was being finalised.

LEPs did not provide sufficient detail around the duration of such agreements for us to provide a summary. However, two LEPs stated that the original MoUs signed in 2016 had lapsed and had been renewed. Only one of the two LEPs provided a date to which the MoU had been extended (2026).

Where information was provided, the agreements involved the LEP and the local authorities that covered the geography of the Enterprise Zone (sometimes referred to as the collecting authority) as a minimum. There were occasional references to the LEP’s accountable body and/or the Enterprise Zone’s accountable body being involved.

The arrangements governing the use of Enterprise Zone income varied, though when specific detail was given, the first (and sometimes only) priority was to maintain the Enterprise Zone and reinvest into it. Following that there was often an agreement between the involved parties as to what share of income they received, which sometimes came with stipulations/restrictions over what it could be spent on.

Question 26
Are there any other MoUs or contracts pertaining to the management of the Enterprise Zone that we should be aware of (including where borrowing has taken place against the future receipt of retained rates)?  

In many cases there are loan agreements in place between a range of parties, almost always relating to future business rates income. In some cases, it was not clear who was borrowing/lending the money, but where it was there were:

• 4 instances of a LEP borrowing against future business rates
• 3 instances of borrowing agreements involving local authorities
• 5 instances of other borrowing agreements where the details were unclear

Question 27
What are your receipts/income from property/land, including ‘evergreen’ investments? 

Of the 29 LEPs that responded to this question, only two stated that they received income from property or land. These covered loan repayments for a commercial premises and interest payments generated by a property fund.

An additional 3 LEPs provided figures for the value of income they received from Growing Places Fund loans.

Question 28
Do you have any liabilities that are being funded using Enterprise Zone income to borrow money, for example, to fund infrastructure development over several years? If so, can you please provide details? 

Of the 19 LEPs that oversaw operations of an Enterprise Zone, 9 confirmed they had liabilities funded by Enterprise Zone income, or investments in the zone.

In a small number of cases the Enterprise Zone had liabilities to the LEP and/or the LEP had investments in the zone without the presence of liabilities the other way.

Question 29
What major assets do you own or have a financial or contractual interest in (e.g., land, buildings, data and knowledge assets, etc.)? 

Eight LEPs said they held no physical or financial assets or investments, and 2 LEPs did not answer the question. A further 8 LEPs responded that their only assets were data and knowledge-based, including Customer Relationship Management (CRM), websites and IP addresses, and business contacts.

Reported assets included rights to future Business Rates in Enterprise Zones; stakes in and full ownership of capital assets; committed and unallocated loans; investments in evergreen funds; security of assets to pay off loans; and rights to overage recovery. The overall reported asset value was £75.25 million, but this does not include any assets to which LEPs referred but did not provide a value. It was also unclear which of these assets were held directly by the LEP or which were assets managed by them but held by the Accountable Body. Finally, some LEPs held outstanding loan agreements and grants to be repaid from the future growth in Business Rates income.

Question 30
What local agreements are in place to determine how assets are managed and appropriately transferred or disposed of? 

Answers to this question were inconsistent and largely incomplete. No respondents confirmed a timescale for the transfer of any assets, with some saying that the process was currently being developed, and others stating that they had not considered it in detail.

Nine LEPs responded that there was no agreement in place regarding asset transfer and 4 did not provide a response. Eight LEPs responded that they had no assets to transfer.

The key actors in agreements are the LEP Board, Articles of Association, and conversations with the Accountable Body. Local agreements include MoUs and legal agreements on the use of assets. One LEP said they would look at how best to apportion assets should the LEP be wound up, including the novation of agreements where appropriate. It was not always clear from responses whether assets are owned by the LEP or the Accountable Body. Some LEPs are established as Community Interest Companies (CICs) and a key part of their Articles of Association is Asset Lock, meaning assets must continue to be used for a specific community benefit when transferred.

Question 31
Are there any other impacts in the event of LEPs no longer receiving core funding, or the transfer of LEP functions, that you would like to make us aware of? 

Many of the general themes recorded in responses to earlier questions were repeated here, alongside LEPs highlighting some local issues. The main concerns raised on which there was general agreement were:

• the threat to business engagement and loss of a strong business voice particularly as LEPs are currently independent in nature. Linked to that is relationship management and a potential loss of the networks and connections LEPs have built.
• LEPs suggested that they offer a very efficient way of delivering what they do, which may not be retained if functions are moved and/or split up over new geographies.
• areas with existing or prospective devolution agreements presented few other concerns. Some LEPs not in devolution deal areas stated that that without such an agreement it might be harder to transfer LEP functions to local authorities.
• finally, it was also highlighted that LEPs deliver and manage a very wide range of programmes and funding streams, tailored to the needs of the local area. The management of these programmes and funding streams will need to be rehoused.

LEPs responding also took the opportunity to highlight information around their long-term work, including strategic plans.

Section 4: Questions for MCAs, GLA, and areas with devolution deals

Question 32
Was the cessation of LEP core funding from 2024/25 to apply to MCAs, the GLA and Devolution Deal areas how would this affect your plans for integration?

Of the 8 MCAs that responded to this question, 3 felt the withdrawal of core funding would have no effect as they were already fully integrated with their LEP. One said it would be reflected in its new MCA financial plan and budget but made no further comment about impacts on plans for integration.

The other 4 MCAs felt the withdrawal of LEP core funding would have a direct negative impact on their capacity to deliver, even where the LEP was already fully integrated into the MCA. They said LEP core funding provides a complementary policy support to ensure LEP functions, including Growth Hubs, are properly targeted. Core funding was seen as important for business engagement work and delivery. They said withdrawal of this funding would make it harder for the MCA to maintain a strong business voice, which could reduce the effective targeting, impact, and value for money of business engagement (unless alternative funding could be sourced).

The 4 new devolution deal areas that responded were all working on the assumption that LEP core funding would be available to them. If not, they stated that it was likely to lead to reduced outcomes for LEP functions. One area commented that LEPs are non-statutory bodies, and their functions are non-statutory, so it would have to consider how far it could prioritise the delivery of LEP functions in the absence of core funding.

Question 33
How would the cessation of LEP core funding affect your subsequent delivery of remaining functions (e.g. Careers Hubs, Growth Hubs)?

One MCA said they would continue to deliver remaining functions, giving no indication that a removal of core funding would affect their delivery plans.

The remaining 7 MCAs said the withdrawal of core funding would negatively impact their delivery of the remaining functions. They added that it would lead to a reduction in staffing and overall business support services and impact the quality, targeting and delivery of the remaining functions, unless alternative funding could be found from another source.

One MCA said they may be unable to deliver their Growth Hub because this was currently supported by LEP core funding, in addition to specific programme funding for the service.

The 4 new devolution deal areas (all of whom are yet to integrate their LEP) said that they would continue to support those functions in future where funding was provided by government. If LEP core funding was not forthcoming, they stated that it could be difficult for new devolution deal areas to undertake delivery of these functions.

Question 34
How would it affect your provision of a business voice to influence key economic decisions?

Five out of eight MCAs said the loss of LEP core funding would have no effect on the provision of a business voice to influence key business decisions as there was already a strong partnership between the public and private sector in those areas.

Three out of eight said the loss of core funding would diminish their ability to fund and engage business effectively in policy development and delivery.

Three of the four new devolution deal areas (all of whom are yet to integrate their LEP) did not consider the loss of LEP core funding would affect the provision of a business voice in economic decision making as there was already a strong partnership between the public and private sector in their areas.

One of the four said they would have to consider the size of the business board and its allowances, which could impact the inclusivity of its arrangements.

Question 35
Do you currently oversee the operations of an Enterprise Zone?

(Note: respondents were instructed to only complete questions 35-37 if they currently oversee the operations of an Enterprise Zone.)

Five MCAs oversaw the operation of an Enterprise Zone, either wholly or jointly with their LEP. Three MCAs did not oversee the Enterprise Zones in their area but had Enterprise Zones within their boundaries.

Of the 4 new devolution deal areas, two responded that the local authority currently oversees the operation of the Enterprise Zones in their area. In the other 2 this role is undertaken by the LEP. In the last 2 cases the intention is to transfer responsibility to the devolution deal area once it is established.

Question 36
If yes, what local arrangements (i.e., Memorandums of Understanding/ contracts) are in place to determine how the growth in retained business rates, generated by an Enterprise Zone site, are distributed?

Of the 5 MCAs that answered this question all had MoUs or local financial agreements in place governing the distribution of the growth in retained business rates, but few provided details.

In one case the MoU with relevant LAs enabled the payment of business rates to the MCA which were used to support delivery of the MCA’s Investment Plan. In 2 MCAs, the MCA reinvests Enterprise Zone income into economic development activity in line with its annual budget setting process. In another MCA the distribution of retained business rates is based on a gain/loss sharing agreement in place between its constituent authorities and the LEP.

For the 4 new devolution deal areas, formal contractual arrangements are in place between the LEP and the relevant county and/or district councils involved over the allocation of retained business rates.

Question 37
Are there any other MoUs or contracts pertaining to the management of the Enterprise Zone that we should be aware of? (Including where borrowing has taken place against the future receipt of retained rates).

Seven of the eight MCAs either did not answer this question or said it was not applicable.

The one MCA responding said that its local authorities had undertaken borrowing for specific investments in the Enterprise Zone through retained business rates but gave no further detail.

Only 3 of the 4 new devolution deal areas responded to this question. In two cases there are legal agreements and MoUs covering borrowing arrangements against the future receipt of retained business rates by both counties and districts. In the third case borrowing arrangements are agreed but not yet actioned pending finalisation of the devolution deal.

Question 38
What local agreements are in place to determine how any LEP-owned assets are managed and appropriately disposed of?

Six of the eight MCAs said the question was not applicable as the LEP did not own any assets (apart from ICT equipment in some cases), and the LEP was already integrated with the MCA and assets held by the MCA.

One MCA was still working through local arrangements, as the only assets were ICT equipment and office furniture. The remaining MCA said this was covered in their LEP integration plan (commissioned by government following the publication of the Levelling Up White Paper). Arrangements for LEP owned assets being transferred to the MCA were agreed in meetings between the LEP and MCA.

In the 4 new devolution deal areas (all of whom are yet to integrate their LEP) these are matters that are currently under review and in two cases at least will be dealt with through the LEP integration plan.

Question 39
What have been your key lessons learned from the integration process to date, which would be helpful for others to consider if transferring functions?

Six of the eight MCAs responded to this question. The key lessons highlighted in their responses included:

• Managing engagement and consultation on the integration process with LEP Board representatives and staff was critical. Strong project management capacity was needed to oversee activity on multiple workstreams.
• Starting the integration process before the MCA and LEP were required to do so had enabled strong and integrated public/private sector leadership to drive growth. It had provided an opportunity to build on well-established and integrated LEP structures to create a stronger and more influential business-led partnership that was independent, inclusive, and diverse. Simplifying governance arrangements between the MCA and LEP had helped to ensure the strong partnership between the public and private sector was further strengthened so the changes did not destabilise the relationship.
• The degree of capacity that a full transfer requires in the case of multiple LEPs being integrated into a single system. An ability to engage and enthuse business leaders in informing regional economic priorities was important, as was having a positive narrative, led by relevant political leaders. The complexities of data management ahead of data transfer (GDPR, etc.) had been difficult, given the need to integrate different modes of holding information, permissions to use the data, etc. Considerations of ownership of data (and agreements to use it) needed to start early.

The new devolution deal areas are still at the design principles stage and have not yet integrated the LEP, so had few lessons learned to draw upon. One commented that it would be helpful to understand lessons from elsewhere to inform their process of integration, which this exercise provides.

Section 5: Questions for local authorities

Question 40
Are you an accountable body for a LEP? If so, which?

Answers to this question involved details of individual local authorities that act as the accountable body for their LEP and are not recorded here.

Question 41
How would you plan to incorporate the voice of private sector leaders in support and growth of local economies and highlighting economic opportunities? Would you be minded to continue a relationship with the LEP (if they continued) or put in place a new arrangement? 

A small number of local authority respondents would not be minded to continue a relationship with the LEP. Reasons cited included concerns about the legitimacy of LEPs if they were no longer funded and mandated by government, and concerns about duplication. About a third of respondents would be minded to continue a relationship with the LEP. A majority of respondents did not specify their positions.

A majority of respondents would put in place a new arrangement, either in isolation or alongside existing arrangements, to incorporate the voice of private sector leaders. While some authorities gave little detail on this, others presented more detailed proposals. For example, one area planned to establish a county-wide Prosperity Board, and another area planned to establish a Business Board to bring together business, academic and local authority stakeholders from across the sub-region.

About a third of respondents would plan to incorporate the voice of private sector leaders through existing arrangements only, such as business boards, taskforces, and links with organisations such as the Chamber of Commerce.

Question 42
Would your authority be able to take on the remaining LEP functions (Careers Hub, separately funded Growth Hub, ongoing monitoring of the Local Growth Fund, Getting Building Fund, ERDF etc)? If your whole county geography or functional economic area covers more than one upper tier local authority, would you be able to do it on behalf of other local authorities? What governance would you need e.g. a joint committee? 

The majority of district councils said they would not be able to take on the remaining LEP functions, either due to lack of funding and capacity, or because they view it as undesirable on strategic grounds. Those that responded positively to this question often framed their involvement in partial terms – taking on some functions where appropriate or working in partnership with other councils in the area. Most districts did not specify which functions they saw themselves taking on, but the most frequently mentioned was Growth Hub services and business support. Many districts also said that they assumed functions would be taken on by the relevant upper tier authority but wanted districts to be involved in some way.

A large majority of county and unitary authorities said they could take on the remaining functions, with the necessary funding, although most did not comment on whether they would be able to do this on behalf of other local authorities. Six authorities specified that they would be able to take on functions on behalf of other local authorities.

Many county and unitary authorities did not comment on the specific function they could take on, but where they did refer to specific functions, the most frequently mentioned were Growth Hubs, Careers Hubs, and the ongoing monitoring of funds such as the Local Growth Fund, Getting Building Fund, and Growing Places Fund. Some upper tier/unitary authorities commented that as they were not the accountable body for their LEP, the role of monitoring local growth funds would not naturally fall to them, while others who were the accountable body argued that it might be more appropriate for the monitoring role to transfer to the relevant upper tier authorities (rather than to accountable bodies).

Some authorities maintained that a form of sub-regional body remained desirable in their area. One respondent said this would provide important continuity and maintain existing capability and expertise critical to the delivery of planned services and programmes.

On governance arrangements, the range of options presented included using existing structures within councils or existing joint committees/boards (for example Growth Boards), establishing a new joint committee, or working with neighbouring authorities to agree an appropriate structure.

Question 43
Were your LEP seeking to continue as a separate organisation, what would be the implications of this for your area?  

Local authorities were unclear on how LEPs continuing as a separate organisation would add value. Just under half of respondents were neutral on LEPs continuing as a separate organisation. This was either because they did not have enough information on the form and role of LEPs as a separate organisation to outline the implications, or because they knew the LEP was planning to cease operations in their area. Some respondents in this category were positive about LEPs continuing in principle but outlined practical problems such as raising sufficient funding to keep the organisation going if additional grant funding to the local authorities to do so was not forthcoming.

A small minority of respondents were supportive of LEPs continuing, but many suggested that the nature of their relationship with the LEP would change. For example, they would continue to work with them but on a reduced basis on larger regional issues, or they would seek proposals from the LEP for commissioned pieces of work.

Around one third of respondents were opposed to the LEP continuing as a legacy organisation for reasons including:

• duplication and confusion for stakeholders, and concerns that the business voice and support landscape is saturated
• undermining the government’s devolution approach and the ambitions set out in the Levelling Up White Paper
• concern that functions would be lost without a clean break and formal transfer
• concern that the LEP would compete with local authorities and win business
• local authorities would need clarity that residual income from historically publicly funded growth loans and business rates retention will be passed to upper tier local authorities to use in the local area, as opposed to being used nationally
• subsidy control issues
• issues with liabilities for the council as the accountable body should the LEP become insolvent as a limited company
• decisions around TUPE of staff from the LEP

Question 44
Were your local LEP to cease operations, what successor arrangements would you need to consider putting in place in supporting HMG activity in driving co-investment in site development, business growth, and innovation, as well as providing a local focus in responding to economic shocks? 

Around one third of respondents showed a high degree of readiness to support these functions with additional funding. In one example an existing Leaders Board of Local Authorities in the LEP area, that has already been successful in supporting the local economy through various recent global economic events, could deliver on these functions and wider matters in the future.

Most local authorities had some existing arrangements they felt they could build on – such as a board that can provide a basis for discussions – or had started considering a new delivery model.

As in previous questions, a key theme in many responses was an emphasis on partnership working with neighbouring authorities and across functional economic areas. Many also had previous experience of delivering these functions that they felt they could build on. local authorities appeared particularly confident in their ability to respond to economic shocks, often citing the role they played in supporting businesses through the COVID-19 pandemic. A handful also detailed how the other functions they carry out – such as being responsible for planning – are complementary to the functions listed above.

A couple of respondents suggested that there could be political resistance to delivering certain functions and objectives at the local level, and therefore functions should be statutory, and funding should be ringfenced.

Question 45
How would you ensure that co-operation is maintained in adjoining and economically linked local authority areas? 

Respondents showed a strong desire to work with neighbours and in most cases mentioned existing networks and partnerships that could be drawn on. Some areas said there are talks underway to establish new ways of working. For example, one area is working to establish a Pan Regional Economic Growth Board with a remit to cover the economic geographies of neighbouring councils. In some cases, existing partnerships and delivery arrangements might need to be adapted to place more of an emphasis on economic development, regeneration, and growth.

In most cases, there was alignment between responses where local authorities had specifically named each other in existing pan-regional partnerships as a means of maintaining cooperation.

In a small minority of cases, local authorities said they could maintain co-operation with their close neighbours but raised concerns that it would be difficult to sustain relationships with a wider network of authorities across the existing LEP area. One respondent suggested this level of joint working could only be fully guaranteed by imposing a duty to cooperate. Another flagged that more guidance on how areas can work with neighbouring authorities, including combined authorities and other partners would be helpful.

As a general theme, however, local authorities are positive about the opportunity and flexibility to engage further with neighbours who are currently within a different LEP to meet business needs.

Question 46
Do you agree that, where a devolution deal is not agreed or in negotiation, the Growth and Careers Hub geographies should be based on a sensible geography as defined by the Levelling Up White Paper i.e., over a sensible functional economic area and/or a whole county geography, even if this involves more than one upper tier local authority working together? 

Most respondents supported the proposal that the geographies of Growth Hubs and Careers Hubs be based over sensible functional economic areas.

Some respondents said that these services would be better delivered at a smaller, more localised level commensurate with local needs and clusters of activity, where each authority delivers its own programme, recognising its different demands.

Some respondents who broadly agreed with the principle of services being delivered over a sensible functional economic area described their own suggestions as to what this looked like in practice, and the area it should cover, which reflected their own view of the geography of their area.

A minority of respondents thought that Growth and Careers Hubs might be suited to different geographies. For example, one respondent suggested Growth Hubs being based on a Functional Economic Area but Careers Hubs being based on a whole county geography.

Question 47
Do you currently oversee the operations of an Enterprise Zone?

(Note: respondents were instructed to only complete questions 47-49 if they currently oversee the operations of an Enterprise Zone.)

Out of 138 local authority returns, 24 said they oversaw the operations of an Enterprise Zone.

A further 13 local authorities were involved as partners in Enterprise Zone management or delivery in some way but not as the body overseeing Enterprise Zone operations. This could include being a member of an Enterprise Zone Steering Group, Advisory Board, or sub-group, though responses did not always specify the exact nature of the involvement.

Question 48
If yes, what local arrangements (i.e., MoUs/ contracts) are in place to determine how the growth in retained business rates, generated by an Enterprise Zone site, are distributed? 

In almost every case where a local authority oversaw the operations of an Enterprise Zone or was a partner in the management and operations of an Enterprise Zone, there was an MoU or legal agreement to determine how growth in retained business rates would be distributed. Such documents could also cover arrangements for the management and delivery of the Enterprise Zone. In two cases, reference was made to an Advisory Board being in place representing the LEP, local authorities and local site owners but there was no specific reference to an MoU or legal agreement.

Few responses gave details of the value of the financial arrangements or went into detail of how long the current Enterprise Zone arrangements were likely to run for. Of those that did, some had MoUs that allowed for the retention of business rates for a 25-year period from 2016 to 2041. This was supported by an Enterprise Zone implementation plan including priorities for investment from the retained business rates growth. In another case, a new MoU was being finalised to update the retained business rates forecast to 2037. In another instance, an MoU for an Enterprise Zone signed in 2017 allowed for business rates retention for a period of 25 years to 2042.

Question 49
Are there any other MoUs or contracts pertaining to the management of the Enterprise Zone that we should be aware of (including where borrowing has taken place against the future receipt of retained rates)? How would you propose to handle retained rates in the event of the LEP ceasing operations? 

Most of the responses said there were no further MoUs or contracts relating to the management of the Enterprise Zone other than the original MoU or agreements reached between parties when the Enterprise Zone was first established. In one instance, no further MoUs were planned as the Enterprise Zone received no income for the first 7 years and seemed unlikely to generate any significant income in the foreseeable future. Another council was reviewing how their existing MoU would operate in the event of the LEP closing. This would cover the mechanisms to manage retained business rates with appropriate principles for their distribution and allocation.

Several of the existing MoUs did specifically mention where borrowing had or was due to take place and gave details of these. In one case, the council was committed to borrowing £20 million against future retained business rates revenues to invest in a range of projects to support growth. In another case, a council had entered into borrowing arrangements to be repaid from current and future retained business rates with actual and future borrowing costs expected to total £77.6 million over a 20-year period.

Not all local authorities overseeing or serving as partners to an Enterprise Zone agreement responded to the question of what they would do in the event of the LEP ceasing to operate. Of those that did, most took the view that the existing arrangements would continue but recognised that a new MoU might need to be agreed if responsibility for an Enterprise Zone transferred to a new successor body or bodies.

Question 50
In the event of a LEP ceasing its operations, what are your plans for any local authority staff who are currently based in the LEP or any of its subsidiaries? 

Many local authorities did not respond to this question. Of those that did, 21 local authorities had staff currently based in the LEP. In just over half of these cases, respondents said staff would be retained by the local authority in the event of a LEP ceasing its operations.

Others were unclear. This was either because the respondent did not provide any further information or stated that they were waiting for more information on funding arrangements. One council said that, subject to post-LEP funding arrangements being confirmed, if there is no alternative role for local authority staff based in the LEP and no alternative funding then they would have to consider redundancy. Another council said, as a minimum, the LEP team will be made aware of potential job opportunities across all member authorities so their skills, talent and knowledge can be retained.

Question 51
In the event of a LEP ceasing its operations, will this have any impact on plans for any joint ventures with the LEP? 

Out of the 105 responses received for this question, 12 local authorities said they had plans for joint ventures with the LEP. Examples of joint ventures include regeneration projects, strategy development, delivery of UK Shared Prosperity Fund (UKSPF), and specific projects and programmes. No authorities provided any details on what the impact would be of a LEP ceasing its operations.

Others mentioned more informal arrangements. For example, one council said they were not currently in any formal joint ventures but there were some partnership activities relating to sector research and feasibility.

Question 52
Should your local LEP choose to continue as a separate organisation, would you have any plans to fund it? 

Of the 122 responses to this question, 75 local authorities said they would not continue to fund their LEP. Most did not explain why, but of those that did, the most frequently cited reasons were limited resources and concerns over LEPs continuing as a separate organisation.

Only one respondent said they would continue funding the LEP, but only in relation to Growth Hubs.

39 respondents gave a more nuanced answer on how they might fund the LEP. These included:

• commissioning services from the LEP as resources allowed
• looking at contributing to the LEP should any devolved funds become available
• investigating ways of leveraging funding and investment to fund the LEP, but this could not be delivered through core local government funding

Question 53
Are there any other impacts in the event of LEPs no longer receiving core funding that you would like to make us aware of?

  Most respondents did not have anything to add here. Of those that did, most used it to reiterate points made in the previous answers. Some examples were:

• emphasising the role the LEP has played in supporting skills in an area where educational attainment is below the national average, but the council was not resourced to fill the gap
• highlighting the risk that economic data and forecasting currently undertaken by the LEP would be lost
• emphasising concerns about the impact of the possible closure of the LEP on ongoing devolution discussions

A small number of respondents flagged new concerns over possible LEP closure including:

• one council said that if the LEP were to close they would need to fully understand the retention and/or transfer of assets and liabilities, where appropriate, to the council and added that they would need to ensure that the local economic leadership/strategic advocacy role currently resourced via core funding does not morph into unequal access to government, i.e., channels for all places, not just MCA areas
• a different council said that the LEP had sponsored several subsidiary companies to promote sector strengths or clusters. These bodies/companies might need to be reviewed to determine ongoing partners’ support or the potential for private sector sponsorship
• another council said the LEP pays the council for its Accountable Body services from its core funds. If any of these duties transfer to the local authority (e.g., grant certification/reporting, assurance, treasury management, legal advice, board/committee structures/servicing) then they felt ‘new burdens’ funding would be requested from central government to continue support.

Section 6: Public Sector Equality Duty (PSED)

The following questions have been drafted to review how this potential policy decision meets the government’s legal duty under the Equality Act 2010 to:

1. Eliminate unlawful discrimination, harassment, victimisation, and any other conduct prohibited by the Act.
2. Advance equality of opportunity between people who share a particular protected characteristic and people who do not share it.
3. Foster good relations between people who share a particular protected characteristic and people who do not share it.

The Duty covers the protected characteristics of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

Question 54
If LEP core funding were to end in 2024/25, what impact might this have on the 3 elements of the public sector equality duty (numbered points above)?

A total of 220 people responded to this question. Out of those, 92 said there would be no impact, 37 reported negative impacts, 45 did not feel as though they could answer, 9 stated that they did not understand the question, 35 said this question was not applicable, and two reported there would be a positive impact.

Out of those that reported negative impacts, it was suggested that negative impacts will indirectly affect people with protected characteristics who use LEP services and directly impact people with protected characteristics who are employed by the LEP.

Of the two that reported positive impacts, it was suggested that replacing the LEP presents an opportunity for places to increase representation of individuals with protected characteristics by bringing a wider range of business voices into the fold.

For users of LEP services, it was suggested that the groups with protected characteristics who would be most impacted are young people and people with disabilities as they are the main beneficiaries of targeted provisions serviced by LEP core funding (namely careers support).

For staff employed by LEPs, it was reported that some individuals with protected characteristics will be at risk of redundancy following the ending of core funding, including some individuals from ethnic minority backgrounds and some that are either pregnant or on maternity leave.

It was reported that the loss of LEPs’ diverse boards (many of which include some form of Equity Champion) will be felt. Notably, one respondent referred to LEP Boards as “exemplars of gender equality” noting that “the end of LEPs will therefore end a valued opportunity for many women to contribute to the good governance of a public/private partnership.”

Most respondents reported there would be no impact on the 3 elements of the PSED if LEP core funding ended. It should however be noted that there was a common assumption that there would either be a successor arrangement or that the LEP’s operations would continue through a local authority, both of which would be required to meet the same equality duties. This assumption had not been confirmed by government at the time of the information gathering exercise.

There were a significant number of respondents who felt unable to comment on the impact of the ceasing of core funding on the 3 elements of the public sector equality duty without a full equality impact assessment (EIA) being carried out. Respondents felt they did not have enough information to make an informed decision at this stage. There were many requests for this to be undertaken at the point at which an agreed plan for the transfer of services, staff and assets is finalised.

Question 55
If LEP core funding were to end in 2024/25, how could the impacts on the 3 elements of the Public Sector Equality Duty (numbered points above) be mitigated for those with protected characteristics?

A total of 220 people responded to this question. Out of those, 70 suggested mitigations, 51 said there were no mitigations necessary, 26 did not know or were not sure, 12 did not understand the question, and 61 said this question was not applicable.

The responses received showed that there are ways to mitigate negative impacts on the PSED. It was widely noted that one mitigation would be ensuring all institutions complete a full EIA to monitor the impact and mitigations on both LEP staff and users of LEP services with protected characteristics.

A common theme was the assumption that if LEP responsibilities were transferred to either the local authority or combined authority, any negative impacts on staff and service users with protected characteristics would be mitigated because the local authority also must adhere to the Public Sector Equality Duty. It was noted however that if a transfer of functions were to take place, then appropriate resourcing and funding to the local authority should be considered.

The following suggestions were made for LEP staff and users of LEP services with protected characteristics:

• for LEP service users with protected characteristics, it was suggested that direct signposting to an alternative service should be available. A full review should be completed to explore what service provision remains, what should be protected, and how this should be facilitated.
• for LEP staff with protected characteristics, it was suggested that a clear plan should be developed and robust change procedures put in place, if transferring functions or staff to a new institution.
• to mitigate against the negative impacts that reducing core funding will have on the LEP Board, it was suggested that there should be a review of business representation locally. Further to this, any subsequent board created, if functions are transferred, should follow the same principles as set out in the 2018 Mary Ney review, Strengthened Local Enterprise Partnerships, particularly to “improve the gender balance and representation of those with protected characteristics on boards”.

Question 56
Are there any programmes or initiatives that you think are noteworthy in terms of servicing users (both beneficiaries of programmes and activities and LEP employees) with protected characteristics (in bold above)? How would these be impacted by the end of core funding?

A total of 220 people responded to this question. 86 of them did not report any notable programmes, 49 said there were some notable programmes, 32 did not know or were not sure, two did not answer the question, and 51 said it was not applicable to them.

Most respondents did not report any programmes or initiatives that they considered noteworthy in terms of servicing users and LEP employees, as none of that activity is specifically tied to the core funding.

Of those respondents that reported noteworthy programmes that support people with protected characteristics, programmes mostly focused on activity surrounding Growth Hubs and Careers Hubs which promote activity for young people and people with disabilities. There were also multiple mentions of networks which support people from ethnic minority backgrounds.

It should be noted that core funding is not provided for the delivery of these services and funding for these programmes has been sourced from other avenues. However, core funding has been key to the funding model of many LEPs and therefore its removal may risk the financial viability of LEPs and the long-term deliverability of these programmes.

Some specific noteworthy programmes mentioned by LEPs were:

• A central source of information around skills and employment which also offered tailored packages of support to users who fall within protected age categories.
• A project to deliver alternative provision to young people with special educational needs and disabilities (SEND) in selected schools to strengthen their engagement with employment and further education.
• A digital skills and innovation hub for Careers Hub and Growth Hub activities which offer services to people with protected characteristics.
• A race equality working group.
• A social contract programme targeting disadvantaged communities which includes individuals with protected characteristics.
• A programme which encourages the involvement of people with protected characteristics and has engagement with 350 businesses.
• An ethnic minority peer network and a Careers Enterprise Company which is focused on people with disabilities.
• A foundation which supports people with learning difficulties, and/or Autistic Spectrum conditions, and programmes with a dedicated SEND workstream.
• A Career Hubs programme across 112 schools and colleges which supports young people.

Next steps

The government welcomes the responses received to this information gathering exercise.

Following the exercise, the government has confirmed its ‘minded to’ decision. From April 2024, government’s sponsorship and core funding of LEPs will cease. Government will now support local authorities to take on the functions currently delivered by LEPs as set out in the guidance for Local Enterprise Partnerships (LEPs) and local and combined authorities: integration of LEP functions into local democratic institutions which the government has published in parallel to this summary of responses.

To ensure the integration process already underway continues to progress as smoothly as possible, government will set up regular engagement with the LEP Network. Individual LEPs are encouraged to raise any initial questions about this process with the LEP Network. LEPs and local authorities may also direct questions to their Area Lead in the Cities and Local Growth Unit. For further information please contact lepinformation2023@levellingup.gov.uk.

Annex A: List of organisations invited to respond to the information gathering exercise

(This exercise was limited to organisations in England as LEPs only operate in England)

• All LEP chairs and chief executives
• The LEP network
• All local authority leaders and chief executives
• Local Government Association, County Councils Network and District Councils Network
• Mayors and chief executives of all mayoral combined authorities and the Greater London Authority
• M10 Mayoral Group

Other organisations:

• Association of Colleges
• Business Representative Organisations (including regional representatives) e.g., Confederation of British Industry (CBI), British Chambers of Commerce (BCC)
• The Careers and Enterprise Company
• Career Hubs providers
• The Chartered Association of Business Schools
• Growth Hubs
• National Council for Voluntary Organisations (NCVO)
• National Centre for Universities and Business (NCUB)
• National Farmers Union (NFU)
• Rural Services Network
• Scale Up Institute
• Special Interest Group of Municipal Authorities (SIGMA)

Annex B: Glossary of terms

Accountable Body – the local authority responsible for carrying out the financial functions of the LEP. It oversees the LEP’s finance, governance, transparency, and accountability arrangements.

Articles of Association – rules that set out how a company or organisation is run, governed, and owned.

Asset Lock – a legal clause that prevents the assets of a company from being used for private gain rather than the stated purposes of the organisation.

Community Interest Company (CIC) – a special type of limited company that exists to benefit the community rather than private shareholders.

Career Hubs – organisations that bring together schools, colleges, employers, and apprenticeship providers in local areas to help prepare young people for their next steps in their careers.

Combined authorities (CAs) – local government entities set up by two or more neighbouring councils that have agreed a bespoke devolution deal with central government.

Devolution deal areas – areas in England with new devolution deals agreed between the government and local areas in 2022.

CRM – Customer Relationship Management.

DSIPs - Digital Skills Improvement Partnerships. A Department for Culture, Media and Sport-led programme that worked through LEPs and combined authorities (CAs) to tackle local digital skills challenges.

EIA – Equalities Impact Assessment.

Enterprise Zones – designated areas across the country that provide tax breaks and government support to businesses and enable economic growth. All business rates generated by an Enterprise Zone are retained by the relevant LEP and local authorities in the area usually for 25 years to reinvest in local economic growth.

Evergreen investments – an investment vehicle that allows investors to make long-term investments in private companies, unlike traditional funds which have a fixed lifespan.

Equity Champion – trained individuals in an organisation who provide guidance, facilitation, and feedback on equality, diversity, and inclusion issues.

ERDF – European Regional Development Fund.

ESF – European Social Fund

ESIF – European Structural and Investment Fund. The ESIF covers a range of European growth programmes including the European Regional Development Fund.

FEA – Functional Economic Area.

FTE – full time equivalent.

GBF – Getting Building Fund.

GDPR - General Data Protection Regulation.

GLA – Greater London Authority.

GPF – Growing Places Fund.

Growth Hubs – a Department for Business and Trade-led programme that helps businesses and entrepreneurs to unlock their potential by providing access to tailored business advice, online services, and routes to funding.

GVA - Gross Value Added.

ICT – Information and Communications Technology.

IZs – Investment Zones. Designated areas that are set up to provide a package of tax cuts, accelerated development incentives, and government investment to drive economic growth.

LEPs – Local Enterprise Partnerships. LEPs are private sector-led companies limited by guarantee (not arm’s-length public bodies).

LEP Integration Plan – a plan setting out how the body taking on LEP functions and roles – an MCA, local authority or devolution deal areas – will integrate an existing LEPs business voice and functions into its operations in line with LEP Integration Guidance issued in March 2022.

LEP Network – champions the impact and value of LEPs in building local economic growth and prosperity across the country. It acts as the lead negotiator for LEPs at a national level with government, advisers, businesses, academia, and other target audiences.

LGF – Local Growth Fund.

LSIPs – Local Skills Improvement Plans. A Department for Education employer-led initiative that aims to reshape skills and training provision to better meet the needs of local employers.

LUF – Levelling Up Fund.

Mayoral combined authority (MCA) – combined authority with a directly elected Mayor.

MoU – Memorandum of Understanding.

Net Zero Hubs – 5 regional bodies funded by the Department for Energy Security and Net Zero to provide practical support and expertise to develop local energy projects.

PSED – Public Sector Equality Duty.

SEND – Special Educational Needs and Disabilities.

Skills Advisory Panels (SAPs) – a Department for Education-led programme previously delivered through LEPs to bring together employers, skills providers, and key local stakeholders to address skills and labour market needs. Now replaced by LSIPs – see above.

Skills Bootcamps – a Department for Education-led programme to help employers by training potential new and existing employees with the necessary skills to fill job vacancies.

TUPE – Transfer of Undertakings (Protection of Employment) Regulations.

UKSPF – UK Shared Prosperity Fund.