Democratic accountability has become an issue for Local Enterprise Partnerships (LEPs) after the Government ran foul of European rules on managing cash streams.
A senior politician has accused the Government of creating ‘a mess’ after it had to concede defeat in the debate over funding devolution with the European Commission (EC), suggesting ministers should have known that LEPs, as unelected bodies, could not receive the cash.
In a letter sent out to stakeholders, communities minister Lord Ahmad revealed that European Structural and Investment Fund regulations prevent LEPs from managing cash for the European Regional Development Fund (ERDF) and the European Social Fund (ESF).
The combined funding for 2014-2020 amounts to some £5.3bn for England's local areas.
Lord Ahmad wrote: ‘Throughout the development of the ERDF and ESF programmes, we have wanted a significant level of local engagement in delivery arrangements. As part of this we have sought to give LEPs and partners a direct role in decision-making on projects. However, the European Commission has advised that this approach is non-compliant.’
Instead the Government has delegated the Greater London Authority intermediate body status, which means it can manage decisions on all aspects of the programme in London.
Limited intermediate body status has been granted to the Core Cities giving them control of 10% of their area’s ERDF allocation.
Chair of the Communities and Local Government select committee, Clive Betts, told Transport Network the Government was forced into changing its plans because LEPs do not meet the necessary level of democratic accountability.
‘It’s very good to have businesses in partnerships with LEPs but ultimately the accountable bodies have to be those that are elected. I think that is a real problem. The EC will not let LEPs be the accountable body because you can’t have a non-accountable body spending European money. It’s not going to work,' he said.
'The combined authorities seem to be the sort of vehicle for that funding. It has sort of half happened with the GLA and the Core Cities. We are not quite sure whether it’s the Core Cities alone or the Core Cities and combined authorities. It’s a bit of a mess.’
However the Local Government Association blamed ministers for the problem accusing them of a devolution U-turn.
In a statement, council chiefs said: ‘Ministers are refusing to make full use of EU mechanisms to grant Intermediate Body (IB) status to local areas outside of London
‘While the Greater London Authority will have full control, every other area in England – stretching from Manchester and Birmingham to Cornwall – will have to enter long-winded Whitehall negotiations before any money is handed out.’
Lord Ahmad's letter concluded the Government hopes to reach in-principle agreement with the EC on the programmes by the end of the month, enabling project applications to be launched by March. It added the EC is expected to formally adopt the programmes in June.
The 39 LEPs bring together council and business representatives and prioritise local transport funding from the Government's Local Growth Fund through their Strategic Economic Plans.