Thursday, March 26, 2015

News: LEP's advisory role over EU funding "goes against spirit of devolution"

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The Sheffield City Region Local Enterprise Partnership (LEP), will only have an "advisory role" over how £180m of European funding is spent to create jobs and boost the economy in the city region. The final decisions will be made in Whitehall.


The Government's model of local economic growth centres around LEPs, a collaboration between businesses and the local authorities that are placed at the heart of growth in the regions. In response to the Heseltine Review, the Government has charged LEPs with putting together local growth plans that will be the basis on which the Government negotiates deals with each LEP for new levers, resources, funding and flexibility over them.

Structural funding from the EU is likely to be integral to meeting the targets in the LEP's Growth Plan, which has set an ambitious target of creating 70,000 new jobs in the Sheffield city region (SCR) by 2023.

The EU Structural Investment Fund Strategy set out how the funding will be used, based around six main priorities: supporting and creating new businesses; growing existing businesses; attracting incoming businesses; increasing exporting; developing the skills base and labour mobility; improving and enhancing infrastructure.

However, Communities Minister Lord Ahmad has formally advised LEPs that they have an advisory role only, while decisions will remain with central Government. This follows the Government considering the role of Intermediary Body as being too risky in the context of managing European funds and the European Commission not accepting that LEPs are an appropriate body to take decisions.

The Commission had expressed concern about potential conflicts of interest, given that businesses are represented on LEPs and would, in theory, be able to both bid for and influence the allocation of funding.

Eric Pickles, Secretary of State for Communities and Local Government, laid the blame with the Regional Development Agencies, such as Yorkshire Forward, that his Government abolished. Talking recently to the Communities and Local Government select committee, he said: "Being really blunt, the Regional Development Agencies made a complete dog's breakfast of this and we spent an enormous amount of time mopping up the tens of millions — it looked like, at one point, it was going to be hundreds of millions of pounds — of mistakes.

"You have to come to a view with regard to not only passing the power down, but also taking the risk.  What we have done is to ensure that the LEPs have a very strong voice in that process."

Following the closure of Yorkshire Forward, the government had to agree to provide at least 45% of the funding (up to £45m) in relation to the failed Digital Region project to cover a significant proportion of the repayment of the ERDF grant which has to be paid back to Brussels, because the original conditions were not fulfilled.

Pickles added that the long term aim would be to see more intermediate status in the UK through a roll-out process but warned that: "What I cannot have is the situation that we had with the Regional Development Agencies, which is that they managed it; they screwed it up; we had to pick up the tab."

In a report to the Sheffield City Region Combined Authority Ben Morley, on behalf of Sheffield City Region Executive, said that the decision was "disappointing and goes against the spirit of devolution [but] there is an indication of future review with the option to hand down decision making to local Committees at a later date."

Local authorities battling the government over the way it decided how millions of EU funding was distributed recently found out that the allocations were indeed lawful. Led by Rotherham Council, the authorities in South Yorkshire and Merseyside took the appeal all the way to the Supreme Court. The decision means that South Yorkshire is set to receive some £50m less in funding than expected but legal advice is not to pursue the case any further.

Sheffield City Region Local Enterprise Partnership website

Images: European Commission

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