UK Government Decision on Local Enterprise Partnerships: What It Means for Businesses

The UK government has recently confirmed its decision to cease funding for Local Enterprise Partnerships (LEPs) and transfer their core functions to local councils and combined authorities from April 2024. This move has sparked discussions on the potential impact on businesses and the support they receive.

So what is the background to the government's decision, and what are the implications for businesses in the UK?

“The government’s view is that there is likely to be scope for greater join-up, efficiencies, and clarity for the private sector by these functions being discharged within mayoral combined authorities, devolution deal areas and upper tier local authorities, working together as appropriate,”
Dehenna Davison, Minister for Levelling Up, Department for Levelling Up, Housing & Communities

Background on Local Enterprise Partnerships

LEPs are partnerships between local authorities and businesses that aim to drive economic growth and job creation in their respective regions. They provide various support services, including Growth Hubs, Career Hubs, Digital Skills Partnerships, and funding through schemes such as the Growing Places Fund, Getting Building Fund, and Local Growth Fund.

The Government's Decision

The decision to end funding for LEPs and transfer their functions to local councils and combined authorities was based on an information-gathering exercise conducted between 17 March and 19 May 2023. The exercise aimed to identify overlaps between the functions of LEPs, local authorities, and combined authorities and to assess the level of integration of LEP functions in mayoral combined authority areas.

The government has confirmed that funding for LEPs will end from April 2024, with some revenue funding provided to local and combined authorities. The successor bodies are encouraged to involve specific named business representative organisations, such as the local Chamber of Commerce or the Federation of Small Businesses, and to develop a Local Skills Improvement Plan (LSIP) through a designated Employer Representative Body (ERB).

“The government will now support local and combined authorities to take on the functions currently delivered by LEPs.”
Dehenna Davison, Minister for Levelling Up, Department for Levelling Up, Housing & Communities

Implications for Businesses

The transfer of LEP functions to local councils and combined authorities has been met with mixed reactions. Tim Oliver, chairman of the County Council's Network (CCN), welcomed the move, stating that it would lead to "greater clarity and efficiency in the private sector." However, others have raised concerns about the potential costs and the role of business in the decision-making process.

Many small businesses rely on LEPs for support, so the changes in funding and structure may impact them. The level of support available to businesses may vary depending on the region and the specific initiatives provided by the local councils and combined authorities.

The government has also introduced Local Skills Improvement Plans (LSIPs) and a strategic development fund (SDF) to help people develop the skills they need to get good jobs and increase their prospects.

Designated ERBs will work closely with employers, providers, and key stakeholders to develop evidence-based, credible, and actionable LSIPs. Each plan will set out the key changes needed in a local area to make technical skills training more responsive to employers' needs.

The Implications for Growth Hubs

The government expects that Growth Hubs in areas with an existing devolution deal will continue to integrate as agreed. In areas without a devolution deal, local authorities are expected to work together to ensure seamless Growth Hub provision across the area.

From April 2024, the Department for Business and Trade expects that the gateway criteria to receive core funding to deliver Growth Hub services will be:

• A strong and effective accountable body
• A delivery area that is broadly related to the business and economic area footprint, with a minimum business (22,000) and actual population (500,000) size
• A broadly-based business voice embedded in strategic advice and delivery arrangements
• Commitment to put in place approaches for match funding, collective resourcing and/or direct funding from third parties (including sources such as UKSPF), to enable the Growth Hub service to be further enhanced and supported
• There is also a requirement to demonstrate delivery of key Growth Hub priorities and abide by an agreed evaluation framework. The level of funding for Growth Hubs beyond 2023/24 is subject to future government spending decisions.

The Role of Business Representative Organisations

As LEP functions are transferred to local councils and combined authorities, the involvement of business representative organisations will become increasingly important. These organisations, such as the local Chamber of Commerce or the Federation of Small Businesses, can provide valuable insights into the needs and challenges faced by businesses in their region.

By engaging with these organisations, local councils and combined authorities can ensure that their support initiatives are tailored to the specific needs of businesses in their area.

Collaboration Between Local Authorities and Combined Authorities

The transfer of LEP functions to local councils and combined authorities also presents an opportunity for increased collaboration between these bodies. By working together, local councils and combined authorities can pool resources, share best practices, and develop joint initiatives to support businesses in their region.

This collaborative approach can help to ensure that businesses receive consistent and effective support, regardless of their location.

"Today’s decision by the Government is a decisive one and very welcome, drawing a line under recent uncertainty and allows us to get on with integrating Local Enterprise Partnership (LEP) functions into upper-tier councils and combined authorities."
Cllr Tim Oliver, County Council Network (CCN) chairman and leader of Surrey County Council

Moving Forward

As LEP functions are transferred to local councils and combined authorities, businesses should stay informed about the changes and the support available in their region. They can engage with their local councils, combined authorities, and designated ERBs to ensure their needs are considered in the development of LSIPs and other support initiatives.

The UK government's decision to end funding for LEPs and transfer their functions to local councils and combined authorities marks a significant change in the way business support is provided. While the move has been welcomed by some, concerns remain about the potential impact on businesses and the support they receive.

It is crucial for businesses to stay informed and engaged with their local councils and combined authorities to ensure they continue to receive the support they need to grow and succeed.