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Government to tighten LEP rules to tackle conflicts of interest

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The government is to implement a number of changes aimed at improving the governance and transparency of local enterprise partnerships (LEPs) after a review identified inconsistent practice.

The results of the review by Rotherham MBC commissioner and former Greenwich LBC chief executive Mary Ney, published today, found LEPs have “a strong understanding of [their] responsibilities for stewardship of public funding” but recommended changes to the national assurance framework due to concerns over how requirements are being implemented.

The report said LEPs had developed their own decision-making arrangements, which reflected the organisations’ particular legal structures, the “complexity” of each local area and compliance with requirements to ensure value for money, local engagement and democratic accountability.

But it added that while LEPs comply with a requirement to publish a conflicts of interest policy and a register of interests for each board member, the content of policies and approach to publication varies “considerably” and is dependent on the “overall cultural approach within the organisation”.

The report cited the example that some statements only focus on registering directorships, excluding land, property and household member interests.

It said the the national assurance framework should be more explicit in setting out requirements to ensure consistency of standards on potential conflicts of interest.

This includes clarity that the consideration of conflicts does not just apply to formal decision-making but to all activity or involvement of a board member in the LEP’s work.

The report said it was insufficient for some LEPs to refer to a councillor board members’ declaration of interests on the council’s website as the individual’s interest as a LEP board member may be different.

It also said that as councils increasingly commercialise there is increased scope for conflict. The report added that councillors on a LEP board must also consider their interests as leaders or cabinet members for council land and resources.

The report said there are a variety of arrangements in place across LEPs for section 151 officer involvement in decision-making. It recommends that the assurance framework provides further clarity on the role of the section 151 officer in consultation with the Chartered Institute for Public Finance & Accountancy to establish more consistency.

It adds that while section 151 officers have a “crucial” role to play in assurance processes, LEPs should not rely on this alone. It recommends that the assurance framework should require a “brief formal assurance statement” annually from the LEP’s leadership on the status of governance and transparency within their organisation.

The review found some LEPs framed their statement of values and standards of conduct in terms of the requirements of company board directors and did not reflect the “dual dimension” of public sector accountability.

It adds that all LEP staff board members and staff should sign up to a code of conduct that has the Nolan principles of public life as its basis.

The report also found that very few LEPs refer to a whistleblowing policy in their complaints procedure and recommends this is include in the assurance framework.

In response to the report, a Department for Communities & Local Government spokesperson said: “Local enterprise partnerships are pivotal in driving local economic growth, so it’s vital they are trusted and transparent.

“We continually review the assurance and transparency requirements for LEPs, and these recommendations will now be implemented in full to ensure the most robust measures are in place.”

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