NAO report questions enterprise zones success

Mechanisms to support local economic growth, such as local enterprise partnerships and enterprise zones, have not yet demonstrated that they are delivering value for money, a report by the public spending watchdog has found.

The National Audit Office (NAO) report found that the 24 enterprise zones established by the coalition have been slow to create jobs, and face "a significant challenge" to produce the number of jobs initially expected.

It highlighted that the Treasury’s 2011 forecast that enterprise zones would create 54,000 jobs by 2015 has since been revised, and they are now expected to only create between 6,000 and 18,000 jobs.

The NAO also raised concerns about Local Enterprise Partnerships (LEPs), outlining that some continue to face "significant capacity issues".

The report said progress by LEPs has been affected by their limited resources and capacity coupled with the fact that they have taken on additional responsibilities, firstly through the Growing Places Fund and the enterprise zones, and more recently through the introduction the Growth Deals, where partnerships take responsibility for growth funding from 2015/16.

The NAO report looked at the full range of mechanisms aimed at stimulating local economic growth, including the Growing Places Fund, the Regional Growth Fund, and City Deals.

It warned that because there is no plan to measure outcomes or evaluate performance comparably across the range of local growth programmes, departments are not able to demonstrate value for money across the programmes, or be sure about where to direct their resources to achieve the most impact.

Amyas Morse, head of the NAO, said: "Three years on from the 2010 White Paper, the new local Enterprise Partnerships are taking shape and jobs are being created. But the transition from the old to the new schemes has not been orderly and there has been a significant dip in growth spending.

"To secure value for money from both the existing schemes and the new £2 billion Growth Deals, central government needs to make sure that there is enough capacity centrally and locally to oversee initiatives, that timescales are realistic and that there is clear accountability."

But local growth minister Kris Hopkins said: "This government is taking the difficult decisions needed to tackle the deficit inherited from the previous government, and thanks to our long-term economic plan, we're now seeing the UK economy heading in the right direction.

"We are investing billions through our growth programmes, supporting thousands of local businesses, securing billions in private sector investment, boosting skills and creating tens of thousands of much needed local jobs.

"And we are now reaping the rewards, with the latest GDP figures showing the economy is back on track, with the deficit falling and unemployment at its lowest for more than three years."

Funding and structures for local economic growth can be read here.

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