Review calls for improved governance at local enterprise partnerships

Local Enterprise Partnerships should tighten their governance including over actual or perceived conflicts of interest, a government review has said.

The Department of Communities & Local Government has indicated it will swiftly implement all recommendations made by its board member Mary Ney, who led the review following criticism of LEPs’ accountability by the National Audit Office.

There are 38 LEPs responsible for around £12bn of public funding and they channel the Local Growth Fund to localities.

They were set up by the Coalition government after abolition of regional development agencies and were intended to be business-led bodies formed around functional economic areas.

Each is allowed to determine the details of its governance and accountability arrangements but the NAO report last year said DCLG “should enforce the existing standards of transparency, governance and scrutiny before allocating funding”.

Ms Ney, former chief executive of the Royal Borough of Greenwich, said her review, which can be viewed here, had uncovered that “some private sector board members were concerned that their association with weak practice in governance and transparency would have potential reputational implications for their companies”.

Some LEPs had robust governance arrangements but others “lag behind the practice on the ground in these places”.

She said the role of public sector LEP board members needed to be reconsidered “in the context of the changing role of local authorities and their increased involvement in commercial enterprises and alternative delivery mechanisms”.

Among the review’s recommendations were that all LEP decisions must be subject to the normal business case, evaluation and scrutiny arrangements, and a conflicts of interest policy must apply to all decisions.

All board members must take personal responsibility for declaring their interests and avoiding perceptions of bias, evidenced by signing a register of interests published on their LEP’s website.

LEPs should also explain how scenarios of potential conflicts of interest of local councillors, private sector and other board members would be managed.

Ms Ney said policy on publishing agendas, meeting reports and minutes varied widely from LEPs which modelled practice on local authorities to those that held no meetings in public, published no meeting reports and recorded no information on confidential matters.

Additional guidance was needed from the government on this, Ms Ney said.

She said there should be a risk-based approach to identify LEPs “where a deep dive on governance and transparency would be of assistance”.

A DCLG spokesman said: “Local Enterprise Partnerships are pivotal in driving local economic growth and it’s vital they are trusted and transparent. We continually review the assurance and transparency requirements for LEPs, and these recommendations will now be implemented in full to ensure the most robust measures are in place.”

Mark Smulian