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Hillier: LEPs’ leading industrial strategy role ‘incomprehensible’

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The chair of the Commons public accounts committee has branded the government’s decision to hand local enterprise partnerships a leading role in industrial strategies “incomprehensible”. 

Meg hillier mp

Meg hillier mp

Meg Hillier’s comments come as the National Audit Office today published a review of the LEP governance, focusing particularly on the Greater Cambridgeshire Greater Peterborough LEP, which highlighted serious concerns over the bodies’ management of conflicts of interest. On Monday the government announced LEPs would be responsible for leading local industrial strategies in areas that do not have metro-mayors.

Speaking to LGC Ms Hillier (Lab) said the problems at the Greater Cambridgeshire Greater Peterborough LEP were “certainly not uncommon”.

She added the committee feared LEPs were not incentivised to spend money wisely as there would be “no loss to those individuals” running them if a project went wrong.

“I find it incomprehensible that the default position is that the LEP is more able [to lead an industrial strategy] than a local council with a leader who has gone through some sort of election,” she said.

Ms Hillier added that in some areas, it may be the case that LEPs are better suited to leading strategies, but that LEPs and councils should be working together in any case.

“To have LEPs as the default [to lead industrial strategies] is a nice and easy stroke of a pen from Whitehall, but may not be the most intelligent decision at ground level,” she said.

The NAO’s report into Greater Cambridgeshire Greater Peterborough reveals that concern over conflict of interest at the LEP was behind the Department for Communities & Local Government’s decision to freeze the LEP’s £37.6m growth deal funding in March. The DCLG has this month released funding to cover the LEP’s “essential running costs”, but its growth deal funding has still not been paid as the department is “in continuing dialogue” with the LEP. The LEP told LGC it had been “fully compliant with the national assurance framework” since July, but does not know when DCLG will release its funding.

Section 151 officers must sign off LEP’s assurance frameworks before growth deal funding can be paid but the NAO report said Cambridgeshire CC’s section 151 officer Chris Malyon certified the LEP’s local assurance framework as compliant with national standards “without fully checking all supporting documentation”.

Ms Hillier said a single S151 officer within a group of counties covered by a LEP area could not provide adequate oversight.

“It’s a backstop, but it requires people on the LEP to report things; it’s not really a proactive role,” she said.

The review of the LEP was prompted by a complaint from North East Cambridgeshire MP Stephen Barclay (Con) who claimed LEP chair Mark Reeve may have benefited from the LEP’s investment. Mr Reeve is the chair of a construction company contracted to build a new facility in one of the LEP’s enterprise zones.

The NAO report said this triggered a DCLG review of the LEP, which found its local assurance framework did not comply with national standards. The DCLG review found no evidence of misuse of public funds, but the department had concerns about the management of conflicts of interest and the timeliness and availability of papers for LEP board members.

The NAO also considered the national assurance framework for LEPs as part of the report. It said the framework did not set out how councils or S151 officers should fulfil their roles in relation to LEPs. It also found the DCLG’s powers to respond to a LEP’s failures were “limited” because they are private bodies.

In April, the DCLG asked former Greenwich RBC chief executive Mary Ney to conduct a review of LEPs. This resulted in a set of recommendations to improve their governance, all of which the government has accepted and included in updated guidance sent to LEPs in late October.

Ms Hillier (pictured) said the government’s updated guidance was “a step in the right direction” but “a bit too late” and warned “more would come out” about failings at LEPs.

“It should never have got to this point,” she said. “Where taxpayers’ money becomes available, it’s a bit of a ‘Chancer’s Charter’ if you’re not careful. There isn’t significant understanding in some LEPs that this is taxpayers’ money that they have to be accountable for. Some were shockingly blasé about spending other people’s money.

“We will be looking at this again more widely at some point,” she said.

In a statement the Greater Cambridge Greater Peterborough LEP stressed no evidence had been found of misuse of public funds and said it had co-operated voluntarily with the NAO’s review.

“The Greater Cambridge Greater Peterborough LEP takes all matters relating to governance and transparency very seriously, and has acted in a swift and appropriate manner to effectively implement suggested improvements to their processes well in advance of the publication of the NAO report.”

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