Friday, May 1, 2015

News: Councils asked to balance LEP's budget

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In order to balance its budget, the Combined Authority has requested that authorities within the Sheffield City Region (SCR) provide additional resources of £563,000 to pay for its economic development activity, Rotherham Council's share of which is £94,000.

Local Enterprise Partnerships (LEPs) are the Government's model to promote economic development. With input from the private sector, they provide the strategic leadership required to set out local economic priorities, and better reflect the natural economic geography of the areas they serve.

In 2013, the nine local authorities that comprise the SCR agreed to create a new legal body, the Combined Authority, that would have responsibility for transport, economic development and regeneration. The LEP and the SCR Combined Authority have assumed a joint role in developing and delivering the economic strategy for the SCR and a joint SCR Executive Team has been created.

The authority has put forward plans for a balanced revenue budget of £9.3m to be set for economic development activity in 2015/16. Most of the budget, some £2.4m, is used for salary costs for officers and for consultancy work and income comes from the Government through grant awards, local authority subscriptions, Enterprise Zone business rates growth and traded income.

Papers to the Combined Authority state that: "Budget development work shows that despite an increase in EZ growth, income generation has not kept pace with expenditure pressures. Unresolved, this would lead to an unbalanced budget for 2015/16."

Activity includes a focus on attracting inward investment to the city region, developing the Growth Hub for business support, a Skills Bank programme and administering the Apprenticeship Grant for Employers (AGE).

Councils approved loans to the LEP to "pump-prime" activity in 2012/13 of £1.126m, of which Rotherham advanced £188,000, and subscriptions were frozen in 2015/16 at the 2014/15 level of £204,000.

Now Commissioner Manzie at Rotherham Council is minded to approve the option of Rotherham Council foregoing £94,000 of its £188,000 loan to help the LEP and Combined Authority balance its budget.

Papers to Rotherham Borough Council also point out that: "It is worth emphasising that the request for additional resources in 2015/16 does not tackle the underlying issues around the sustainability of the Combined Authority's economic development revenue budget from 2016/17 onwards.

"The expected loss of LEP government grant funding of £0.5m at the end of 2015/16 will leave a budget shortfall in the region of £0.4m to £0.5m in 2016/17 unless there is further growth in business rates income from economic development within the SCR's Enterprise Zones."

The Combined Authority is planning to undertake a fundamental review of its economic development budget's sustainability, a major part of which will be to quantify risk around Enterprise Zone business rates growth in greater detail in order to produce more accurate growth forecasts.

All business rates growth within the SCR's Enterprise Zone for a period of at least 25 years will be shared and retained by the city region, to support the LEP's economic priorities and ensure that Enterprise Zone growth is reinvested locally. However, the complexity of the business rates system has made it difficult to implement a mechanism for this to happen.

Rotherham Council forgoing the loan is conditional on the Combined Authority producing a medium term financial strategy which balances putting the economic development budget on a sustainable footing with looking to refund local authorities with the additional resources at the earliest opportunity. In addition, the council is asking for further details on the consultancy costs, which have increased £169,000 to £692,000, why they are considered necessary, and, how they will be monitored to determine whether or not they represent good value.

Sheffield City Region LEP website

Images: Sheffield City Region LEP

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