Local enterprise partnerships could be merged or have their boundaries changed as part of a wider review designed to shake-up the current system.
Among other key changes are plans that will see more women sit on LEP boards.
Moving LEPs towards legal entities brings the prospect of the business-led organisations taking on more responsibilities in the future, although there is also a greater potential the government will intervene in underperforming areas.
The changes are contained in the Ministry for Housing, Communities & Local Government’s Strengthened Local Enterprise Partnerships document, published today. It will implement in full the recommendations of the Ney Review which primarily sought to tighten LEP rules to tackle conflicts of interest.
There are currently 38 LEPs operating in England. However, the government said it will ask LEP chairs “and other local stakeholders to come forward with considered proposals by the end of September on geographies which best reflect real functional economic areas, remove overlaps and, where appropriate, propose wider changes such as mergers.”
The government will then respond to these proposals, submitted by 28 September, in the autumn, it said.
There has already been one merger since 2011 – that of Northamptonshire LEP and South East Midlands LEP - while areas involved in the South East LEP, which covers East Sussex, Essex, Kent, Medway, Thurrock and Southend, have historically sought to seek its dissolution due to concerns about it being too big.
The publication said the government “would expect any consideration of geographical changes to consider the most effective size and scale to operate over”. But it added: “There is no universally accepted approach to measuring or defining functional economic areas and boundaries vary depending on the method used.”
However, the government said it is “important that accountability for decisions and responsibility for investment is clear” and added: “On balance, government considers that retaining overlaps dilutes accountability and responsibility for setting strategies for places and so will seek to ensure that all businesses and communities are represented by one local enterprise partnership.
“Close collaboration between local enterprise partnerships will replace overlapping responsibilities.”
The government is also keen to establish more representative LEP boards which have a maximum of 20 persons sitting on them, with the option to co-opt up to five additional board members. It wants “two-thirds of board members” to be from the private sector.
In a bid to improve the gender balance on LEPs the government said organisations will need to ensure “women make up at least one third” of board members by 2020 “with an expectation for equal representation by 2023”.
LEPs will also now be required to consult “widely and transparently with the business community before appointing a new chair” – both they and their deputies will also have limits on the length of term they can serve in those roles.
County Councils Network vice chair Philip Atkins (Con) welcomed potential changes to LEP boundaries but expressed concern setting quotas on the number of private sector members on LEP boards “could downgrade the role of democratically accountable local government” and added it “underestimates the role county authorities can play in supporting LEPs and promoting growth in their areas.”
With the government requiring all LEPs should become their own legal entities by April 2019, this will ensure they can “enter into legal commitments to take on further responsibilities in the future”.
Doing this will also mean that LEPs will have to hold annual meetings in public and “actively participate” in council scrutiny panel enquiries relating to their investment decisions.
The government will, from now on, “assess and publish annual performance against quantitative and qualitative measures” for each LEP, with the potential for “an escalating approach to intervention in any instances where local enterprise partnerships demonstrate that they are found to be underperforming”. A sector-led approach to assessing and improving performance through regular peer reviews will also be introduced.
In areas where LEPs and mayoral combined authorities co-exist they will be encouraged to “move towards coterminous geographies where appropriate” while each will be required to “clearly set out” their individual roles and responsibilities.
The government is provide up to £20m funding between 2018-19 and 2019-20 to support the implementation of all of these changes.