Boosted s151 officer role ‘significantly improves’ LEP transparency
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The National Audit Office has reported a significant improvement in the financial transparency of England’s Local Enterprise Partnerships (LEPs) after section 151 officers were given extra responsibility for ensuring that key data is publicly available.
But the public-spending watchdog has warned that the Ministry of Housing, Communities and Local Government’s unwillingness to evaluate the impact of the £9bn in Growth Deal funding channelled through LEPs since 2015 means it is unable to learn lessons on what has worked well. A total of £12 bn is committed to the fund by 2021.
Set up to drive economic growth as part of coalition government reforms introduced from 2011, there are now 38 LEPs in England, tasked with bringing together business and political leaders in a patchwork of sub-regional areas.
In its first report on their progress for three years, the NAO found a leap in the level of openness displayed by the partnerships, following concerns about financial transparency levels explored by the Ney Review, in 2017.
The NAO said that in 2016 only 13% of LEPs published financial data such as salaries on their websites, while only a third published their annual reports online.
As of February this year, 84% of LEPs were publishing their annual reports online and all gave financial information on the projects they funded.
The NAO said the improvements had followed an MHCLG and CIPFA drive to “set out stronger expectations” of the role of section 151 officers in assuring good financial governance of LEPs.
Section 151s now sign off monitoring information reported to the department.
Sign-off is also required for local assurance frameworks that confirm a LEP’s governance arrangements.
The drive came after the Ney Review’s 17 recommendations and is one of a series of initiatives addressing its findings.
Despite the improvements in transparency, the NAO report said MHCLG’s ability to make the most of opportunities presented by the UK Shared Prosperity Fund – created to replace EU economic development funding post-Brexit – would be hampered by its lack of understanding of LEPs success with the Growth Deals.
“We have previously reported that the department opted not to set quantifiable objectives for Growth Deals, including, for example, the number of jobs created,” it said.
“The absence of robust evaluation means the department and LEPs are less able to learn from what has worked well and ensure that this is reflected in the design or objectives of the new UK Shared Prosperity Fund.”
The report observed that that there was an “inherent tension” in the government’s need to develop a system of governance for a finance model that devolved funding and new responsibilities to ad-hoc business-led partnerships.
“While the assurance framework is stronger, backed up by checks on compliance, it is not proven yet whether these measures will be effective in detecting and responding to governance failures over significant sums of public money,” it said.
“The department’s accounting officer is accountable for the Local Growth Fund delivered through LEPs.
“However, the department has made no effort to evaluate the value for money of nearly £12bn in public funding, nor does it have robust plans to do so.
“The department needs a grip on how effectively these funds are used. It needs to act if it wants to have any hope of learning the lessons of what works locally for future interventions in local growth.”
Public Accounts Committee chair Meg Hillier said MHCLG had to ensure that huge sums of public funding were not wasted as it presses ahead with its devolved approach to delivering economic growth.
“It is too early to tell if the ministry’s remedial actions will get its governance up to scratch,” she said.
“Worryingly, the ministry also does not know if the funding is being used effectively to benefit local communities and businesses as intended.”
Last year the PAC called on MHCLG to implement the Ney Review recommendations and strengthen transparency and governance arrangements at LEPs following failings at the Greater Cambridgeshire Greater Peterborough LEP.
Concerns included the LEP’s relationship with local developers, and how it managed conflicts of interest. GCGP LEP went into voluntary liquidation in December 2017 after the department withheld funding from it.
This week’s NAO report notes that MHCLG “acknowledges that it cannot mitigate entirely the risk of a failure similar to the GCGP LEP”.
