Local Growth White Paper: LEPs revealed

The Department for Business Innovation & Skills has published its White Paper on Local Growth, (the “White Paper”) which adds detail to the Government’s plans to shift decision-making and delivery powers to a local level to promote economic growth in local economies. From the perspective of the infrastructure sector, the White Paper sets out the following key points:


Round 1 of bidding for funding under the Regional Growth Fund (“RGF”) is now open and closes on 21 January 2011. The RGF is a £1.4 billion discretionary fund that will operate for 3 years between 2011 and 2014 to provide economic support for projects which can stimulate long-term, sustainable economic growth in areas that are currently dependant on public spending.

To qualify for RGF funding, applicants must show that the proposed project is:

•Located in a suitable area (with high levels of reliance on the public sector).
•Additional (i.e. why the project would not otherwise proceed at the proposed location due to market failure).
•Able to create sustainable private sector growth.
•Value for money (with a focus on job creation).
•In compliance with EU State Aid rules.


The White Paper provides detail on the approval of the first 24 Local Enterprise Partnerships (“LEPs”), which have been created with the purpose of identifying areas of economic opportunity in their local areas. LEPs are intended to replace the Regional Development Agencies which will cease activity in March 2012.

The Government has not been prescriptive in setting out specific duties that LEPs must perform, but potential roles include:

•Applying directly or co-ordinating applications for RGF funding.
•Partnering with local authorities to create local transport, housing, community low carbon energy and other development plans.
•Liaising with the Government to identify key local investment priorities and leveraging funding from the private sector.
•Making representations on national planning policy to help streamline the delivery of future projects.
•Promoting “local asset backed vehicle” schemes, which allow local authorities to use surplus and brownfield land assets to lever investment from the private sector.

LEPs will not be defined in legislation and there is no prescribed legal structure. They will not be funded by the Government and must meet their own running costs through funding from local authorities (which are already facing cuts) or local businesses.

What does this mean for infrastructue investors?

The White Paper places particular emphasis on the importance of local transport infrastructure and housing as enablers of economic growth. In addition, it identifies the development of a low carbon economy as a key strategic objective of investment. However, the ability of the RGF and LEPs to deliver on these objectives remains to be seen.

In particular, the eligibility criteria for RGF funding (described above) and the limited size of the fund when spread over 3 years may limit its relevance to larger scale local infrastructure projects. However, a clearer picture will emerge once applications for funding are submitted in early 2011.

Further, the White Paper raises more questions than answers on the role that LEPs will play. The absence of Government funding makes it unclear how LEPs will have sufficient resources to develop competitive applications for RGF funding or deliver infrastructure projects in the absence of such funding. However, investors may be interested in reviewing the LEPs’ business plans, many of which place the development of improved transport, community energy and social infrastructure at heart of their proposals.

The White Paper also provides further detail on the package of incentives that local authorities will be able to draw on to help deliver economic growth objectives, including the New Homes Bonus and the proposed introduction of Tax Increment Financing.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com