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Where £37m of taxpayers’ cash was spent in Norfolk and Suffolk - but who made the decisions?

PUBLISHED: 08:22 28 November 2016 | UPDATED: 15:09 20 January 2017

The LEP put an extra £10m into the NDR when it emerged there was a £30m funding gap in the budget. 
Picture: Nigel Pickover

The LEP put an extra £10m into the NDR when it emerged there was a £30m funding gap in the budget. Picture: Nigel Pickover

Archant Norfolk 2016

It had a £33m increase in public funding last year and is run by an unelected body, influencing decisions which affect people everywhere in our region.

New Anglia LEP's managing director Chris Starkie. Picture: James Bass New Anglia LEP's managing director Chris Starkie. Picture: James Bass

But the public does not have a say over where the New Anglia Local Enterprise Partnership (LEP) spends its money and cannot go to its meetings.

That is why today we are looking at where the LEP has spent its 800pc increase in taxpayers’ cash in Norfolk and Suffolk and how effective it has been.

Set up to create jobs and businesses, the LEP was given £37.4m from the government last year – up from £4m the year before.

That sudden leap in funding from the squeezed public purse means New Anglia LEP now has a bigger budget than small councils in the region such as Forest Heath.

The LEP, which is headed by business people and council leaders, will get £220m of taxpayers’ cash by 2020, including £38.5m this year.

In return, the government expects it to help create 10,000 businesses, 95,000 jobs and 117,000 new homes by 2026 in Norfolk and Suffolk.

Managing director Chris Starkie said the LEP’s board decided which projects to back based on whether they met those goals.

The LEP wants its schemes to add an extra 32,000 jobs in Norfolk and Suffolk by 2026, and create an additional 500 businesses a year.

Mark Pendlington, chairman of the LEP, speaking at the official opening of the new University Centre at the College of West Anglia. Picture: Ian Burt Mark Pendlington, chairman of the LEP, speaking at the official opening of the new University Centre at the College of West Anglia. Picture: Ian Burt

It says its projects have already created 4,464 new jobs and 350 new businesses since 2012.

It also wants to increase the number of new homes built in Norfolk and Suffolk by a third to 117,000. So far its programmes have helped build 229 new homes.

The LEP said this low number was because the region’s housing market had seen a “subdued” recovery since the financial crisis.

Caroline Williams, chief executive of the Norfolk Chamber of Commerce, said the LEP worked closely with the region’s businesses and listened to where they wanted the money to be spent.

The EDP says...

When any business, body or government department is spending upwards of £37m of public money in a year, they wield significant influence – an influence that should be matched by similar levels of scrutiny.

Our investigation into the workings of New Anglia Local Enterprise Partnership (LEP), suggests the scale is somewhat unbalanced.

The body, run by unelected board members who meet behind closed doors, is clearly intended as a force for positive economic development. This can only be welcomed.

But the way in which they are able to make decisions which will impact on millions of people in our area, with little public involvement, raises some alarm bells.

There is no suggestion that the LEP has any reason to hide what it is doing.

Its aims of increasing housing and boosting jobs and growth – as well as facilitating infrastructure projects to support those aims – are wholly commendable.

For too long Norfolk and Suffolk have been on the back foot when it comes to business growth, and forward-thinking solutions are needed. But that does not mean progress should not be subject to checks and balances – especially when public money is involved.

And while scrutiny is provided by councils and central government, it is clear the public is not engaged with the LEP and its workings.

Fortunately, there is always room for change.

The LEP has the chance to increase its public engagement in line with its budget.

It may even find the added input provides a helpful steer as it drives forward the region’s growth.

We hope it takes the opportunity.

“No one gets it right all the time, but they are very open and receptive to our people’s views,” she said.

The LEP says its schemes have unlocked more than £200m of private investment, five years ahead of target.

But in March this year, the National Audit Office found it would be difficult to measure LEPs’ contributions to economic growth.

It also found LEPs “do not yet have an established track record of delivery”.

As LEPs across the country get billions of pounds more in public funding, they have also been criticised for a lack of transparency.

The New Anglia group holds all its meetings – apart from its annual meeting – in private, while making decisions that affect thousands of people. That included the decision to give an extra £10m to plug the funding hole in the controversial Northern Distributor Road (NDR) on the edge of Norwich.

The LEP also loaned £2.4m to Hopkins Homes in 2013 to help it build 176 homes on the former HL Foods site in North Walsham.

The scheme was backed by North Norfolk District Council but opposed by some residents and North Walsham Town Council.

Nick Clancy, clerk at the town council, said it had still not seen infrastructure benefits for North Walsham from the new homes.

“There’s been no investment in the town from it,” he added.

Hopkins said the LEP money was vital at the time to getting the scheme off the ground.

In May 2014, the Public Accounts Committee said it was concerned about “the lack of transparency” of LEPs and the government’s reliance on “self-reported information” as a way of measuring their success.

They are not subject to local government transparency rules.

Shadow business secretary and Norwich South MP Clive Lewis said the region needed business leaders and councils to bat in partnership for the local economy but they needed to be open.

“We need to recognise that without them (LEPs) local economic development would be in a worse place,” he said. “But that doesn’t mean we can’t do things better or be critical friends when something’s not right.

“This government has a blind spot when it comes to the accountability of organisations that spend billions of pounds of our money.

“Whether they are doing a good job or not, it simply can’t be right that it’s so difficult for us as the people who fund them and who they serve to hold them to account.”

The LEP’s board is unelected, but it does publish a list of interests of its 16 board members. It also publishes minutes from meetings.

Mr Starkie said the board’s decision were scrutinised by the government and councils.

“We are accountable to central government,” he said. “We publish details of how we spend the money. We regularly appear before council scrutiny panels.”

Board members also have to leave the room if a decision will affect any of their business interests.

“We really try to be careful,” Mr Starkie said. “Board members are not there to benefit.”

Who is on the LEP?

The government announced in October 2010 that 24 Local Enterprise Partnerships (LEPs) would replace Labour’s Regional Development Agencies.

As of March 2016, £7.3bn worth of public cash had been earmarked to LEPs to push regional growth.

The LEPs decide who is a member of their board but they must be chaired by a business person and at least half of their members must be from the private sector.

The New Anglia LEP board is made up of eight people from the private sector and eight from the public sector.

They are: Mark Pendlington, group director, Anglian Water; Doug Field, joint chief executive, East of England Co-op; Mark Goodall, area manager, Aker Solutions; Jeanette Wheeler, partner, Birketts LLP; Steve Oliver, chairman, MLM Group; Lindsey Rix, managing director, Personal Lines, Aviva; Davina Tanner, chief executive, Britannia Enterprises; Dr Tim Whitley, managing director research and innovation, BT; David Ellesmere, leader, Ipswich Borough Council; Andrew Proctor, leader, Broadland District Council; John Griffiths, leader, St Edmundsbury Borough Council; Cliff Jordan, leader, Norfolk County Council; Colin Noble, leader, Suffolk County Council; Alan Waters, leader, Norwich City Council; Dr Nikos Savvas, principal, West Suffolk College; and Professor David Richardson, vice-chancellor, University of East Anglia.

Which projects have the LEP backed?

The LEP supports projects from road and rail to food and flood defences.

It has several funds of public money which it uses to support private businesses to invest in East Anglia.

Firms benefiting from the cash range from huge multinationals such as McDonalds to small start-ups.

Some of the money is given as loans with the interest rate decided depending on risk of the project, while other cash is given as a grant.

The LEP has supported infrastructure projects with its “Growing Places Fund” with funding of £17m.

It has also given more than £15m of taxpayers’ money out as grants through its Growing Business Fund.

That cash has gone to 300 businesses and the LEP says the funding will create 2,200 jobs and unlock private investment of £100m.

Mr Starkie said the LEP would not loan the public money to private firms at “unacceptable risk” but intervened when projects or companies could not get private funding which would benefit the region.

“If something is not working in the system, we look to step in,” he said.

Funding has included:

• £6.6m towards the £53m flood defences in Ipswich

• £2.5m for the new Innovation Centre at King’s Lynn

• £500,000 to support commercial developments on the Barton Mills roundabout on the A11 including McDonalds and a petrol station

• £2m for Haverhill Research Park

• £2.8m to Pasta Foods to help build a new production line in Great Yarmouth

The LEP also agreed last year to put an extra £10m of public money into the NDR when Norfolk County Council found a £30m black hole in the £178.5m project.

Mr Starkie defended the decision, saying the LEP had already invested money in the project.

He also said that Greenpeace had come to the LEP’s board meeting to speak against funding the new road so the board got an alternative view.

Where the money went

Of the £37m the LEP was given in a grant from the government last financial year, the LEP passed £20m of that on in grants to projects in Norfolk and Suffolk.

The biggest sum of £3.9m was given to West Suffolk College for its engineering and technology centre.

Another £4m was paid out in loans to kick-start businesses and projects.

Staff costs for the LEP’s 23 employees came to around £1m.

That left almost a third of its budget, £12m, which was earmarked for projects such as the College of West Anglia and the Aviation Academy at Norwich Airport which fell behind schedule.

It meant the money could not be passed on and the LEP under spent by £12m.

That money rolled over to be spent this year instead, with the College of West Anglia opening in September and work starting on the Aviation Academy in April.

“We have to spend the money we are allocated in a year,” Mr Starkie said.

“If a sector slips that is a problem so we are trying to be as flexible as we can with our projects.”

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