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MPs call for 'use it or lose it' growth pot rule

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The chancellor should introduce a “use it or lose it” rule for Whitehall budgets to encourage devolution of funding, MPs have said.

The recommendation, by the all-party parliamentary group for local growth, echoes a demand last week by the Conservative leader of Essex CC, David Finch.

The demands reflect frustration with the pace of devolution of powers and funding from central government. They come as the chancellor prepares for December’s autumn statement.

The APPG report, published on Wednesday, said the size and scope of the £2bn-a-year local growth pot announced in June was “a disappointment to many”.

It added: “Lord Heseltine’s vision of a ‘no strings attached’ pot … has not been realised”.

MPs have called for the pot to be increased at subsequent spending rounds and said the Treasury should “allocate money to the [pot] upfront, rather than negotiating with departments on particular funding streams, and challenge departments to ‘use it or lose it’.”

The proposal is similar to the “lock and key” mechanism the LGA discussed with Treasury officials ahead of the June spending round and which Cllr Finch last week asked chancellor George Osborne to implement.

Cllr Finch wrote to Mr Osborne following his county’s failure to persuade the government that skills funding should be devolved to it.

A Treasury spokeswoman said it would not comment on speculation about the next spending round.

MPs called for the creation of a single cross-Whitehall team to handle growth deals. Local growth deals are being negotiated largely with the Department for Business, Innovation & Skills while the forerunner city deals are being negotiated with a cross-department cities team based in the Cabinet Office.

The APPG report called for Whitehall to use the deal process to support local enterprise partnerships.

A BIS spokesman said: “The government continues to support LEPs’ core capacity, through core funding and through the support of BIS local and senior Whitehall sponsors. BIS is working with other government departments and local stakeholders, and is enhancing the arrangements for joint working through the development of local growth teams.”

The APPG report also recommended:

● LEPS which did not reflect economic realities should review their boundaries.

● LEP chairmen should appear before the public accounts select committee in order to prove local bodies can be held accountable.

● Councils should speed up the pooling of economic development resources with LEP partners.

The Treasury said: “The government has already indicated that the local growth fund will be worth at least £2bn in every year of the next parliament. When the first growth deals are concluded, ministers may allocate up to £5bn of the £10bn identified for the period 2016-17 to 2020-21 in support of multi-year capital programmes in LEP plans. “

● To read a LEP chairman’s verdict on the report visit LGCplus.com/5064796.article

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