Legal report - Partnerships await clear steer on role and capacity

So, where do we now stand after submissions to Whitehall have been made with proposals for 58 local enterprise partnerships (LEPs)? In short, still faced with many unanswered questions.

Business secretary Vince Cable has said that only 15 to 20 of these bids pass muster, so it follows that many more require further details or reconsideration before they are found acceptable.

Bearing in mind that Cable has also said he believes the upper limit for the total number of LEPs should be 30, then many are likely to fall by the wayside in their current form.

The indications are that the best of the proposals will have early approval now that the comprehensive spending review has been published, to be followed shortly by the white paper on sub-national economic growth.

As LEPs are to be the successors of the regional development agencies, no doubt we will have to wait for legislation for the latter's abolition and transfer of powers.

Moreover, we need to know the detail of LEPs' proposed roles and responsibilities, which have not yet been worked out. All this and more is to be addressed in the decentralisation and localism bill. In the meantime, one of the big questions is how LEPs will be structured. There is a strong argument for them being legal entities in their own right.

Fears of creating talking shops

Many will argue that without this, LEPs will lack credibility and the capacity to deliver and will run the danger of becoming talking shops, which is just what the government says they should not be. It is hard to see how this squares with communities secretary Eric Pickles's aspirations for LEPs to be "loose associations" of local authorities with local businesses.

The formal legal structure of the LEPs may only be resolved once it becomes clear what powers and responsibilities they will have. Many of the submitted proposals set out ambitions for a strategic role in planning, housing, transport, infrastructure and skills - a potent mix for generating economic growth.

As far as public accountability is concerned, decision-making on such vital matters will have to remain with the local authority partners.

As loose associations, LEPs would be in a position to provide strategic direction and ideas and act as facilitators, but they might lack any real teeth. On the other hand, with real powers and real responsibilities vested in an independent organisation, they could become commissioning or delivery bodies.

Funding is the elephant in the room. The questions around powers, responsibilities and legal structures are inextricably linked with resources. The availability of funding will define the purpose, credibility and capacity of LEPs. Without adequate resources, they will not be capable of being delivery bodies and will have to assume the role of strategic facilitators.

Can local authorities facing extensive cuts, or local firms, shoulder the cost of staffing and administration? Whether either or both will be prepared to take on this role seems dependent on what the LEPs' role and responsibilities will be. Suffice it to say that it is hard to imagine local businesses being prepared to contribute anything substantial by way of resources to LEPs unless they can see some real value being delivered by their activities.

Regional fund may foot the bill

Clearly, Whitehall is not offering any funding for running costs. The regional growth fund (RGF) may offer some hope. The spending review confirms that the LEPs will be able to bid to the RGF. A letter from Pickles to leaders of local authorities on the day of the spending review announcement suggests that the RGF could be used to fund capital projects that support housing growth.

Maybe we will see this fund used for projects like those paid for over the past few years from growth funding and the accompanying community infrastructure fund for transport schemes to support new homes. Both of these sources are now coming to an end.

There are hints from elsewhere in government that LEPs might be chosen by Whitehall to deliver specific projects applying departmental funds.

So, where do we go from here? Well, we look to the ministers to whom the proposals have been submitted to provide feedback to the proposers. Beyond that, much will depend on publication of the white paper and the localism bill, which is expected to be brought before parliament next month.

Christine de Ferrars Green is a partner at national law firm Mills & Reeve

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