Agenda item

Government has announced that from 31 March 2024, Local Enterprise Partnerships (LEPs) will cease to have official recognition and that existing LEP functions will transfer to upper-tier local authorities or combined authorities, where they exist.

Following this announcement, it is important to establish a new governance framework to ensure local arrangements continue to meet government guidance. The County Council has agreed to create a controlling interest in OxLEP Ltd and become the sole member. To enable this to happen the OxLEP Ltd Board will need to consider and approve a revision to its Articles of Association and By-Laws whereby the County Council will become the sole ‘member’ of the company, exercising its membership functions through Cabinet.

Following agreement of Cabinet on 27 February 2024, the proposals for LEP transition are due to be considered by OxLEP Ltd Board on 12 March 2024.

If the proposed approach is agreed by the Board of OxLEP Ltd the County Council will need to review mechanisms for exercising oversight of the company, including paying specific attention to how the council will manage the sole member function and any additional audit and governance requirements.

The Committee is RECOMMENDED to

a.    Note the government announcement on the transfer of Local Enterprise Partnership core functions.

b.    Note the approach to LEP transition and proposed changes to OxLEP Ltd governance.

c.    Note that there will be further work on the governance arrangements during the implementation phase and an update will be brought to committee in approximately six months’ time.

Lorna Baxter, Executive Director of Resources, Nigel Tipple, CEO Local Enterprise Partnership, Chloe Taylor, Head of Economy, Anita Bradley, Director Law and Governance and Paul Grant, Head of Legal and Deputy Monitoring Officer, presented the report to the Committee.

The following was indicated:

·       OxLEP was established in 2011 as a partnership with local authorities, businesses and the education sector. It was part of a linked Council function to look at economic development.

·       In 2015 it was incorporated as a not-for-profit company limited by guarantee and the County Council acted as its accountable body in terms of the funding received and how the funds are spent.

·       The County Council was always represented on the board in terms of funding oversight.

·       In August 2023, government confirmed that from April 2024, the government’s sponsorship and funding of LEP’s would cease and the functions namely: business representation, strategic economic planning and delivery of government programmes, would be exercised by upper tier local authorities.

·       Given the decision to devolve the LEP responsibilities, before the end of March 2024, a revised governance framework was needed that ensured that the County Council, as the accountable body retained ultimate control.

·       To ensure orderly transfer of functions a three-phase approach would be used.

·       The government had confirmed in December 2023, that they would provide up to £240,000 per local authority area in 2024/25.

·       The relationship with the County Council had been exceptional and had also resulted in advancing investment in infrastructure development and borrowing being serviced by business rates.

·       The LEP’s activities included providing business support through the Growth Hub, providing skills development through work experience and apprenticeship, as well as business development and promoting foreign direct investment and strategic economic planning.

·       In facilitating the transition of functions to the County Council a resolution had been passed to change the membership of the company, and the member controlling interest would pass to the County Council on the 1April 2024.

In response to Members, the following was indicated:

·       The transfer of the functions to the Council OxLEP was by law, and since it was a company limited by guarantee rather than by shareholder, the issue was the oversight role that this Committee and the Council would need to play.

·       The transfer was treated as an executive function, which was outside the remit of the powers of Council as the decision had been made by Central Government to transfer the functions and the Council must act accordingly.

·       The Audit and Governance Committee, had oversight of the governance of the organisation, while Cabinet would have a decision-making function in relation to OxLEP.

·       In terms of governance, the County Council would need an appropriate shareholder arrangement as it currently does not have any companies, to ensure accountability.

·       The role of members included a mechanism to communicate the member’s views to the entity.

·       The exact nature of the transfer would differ between local authorities. The proposal was that the County Council controlling interest was created within the existing company structure and for the County to become the sole member of OxLEP Ltd. The company member function would be exercised by Cabinet during the implementation phase.

·       A commitment had already been made as part of the development process, to commence a consultation process around reviewing existing documents over the first six months of the transition.

·       In terms of the transition the decision was for the board of directors to resign their membership, and on the 1 April for the County Council to become the member corporately, which allowed the County Council to have full control of the activity of the company and the functions.

·       The directors remained non-executive directors, as long as the member was satisfied. A business plan and budget would be submitted to Cabinet for approval. A two-year budget had already been agreed.

·       The County Council would take over the executive function through the Cabinet.

·       Any changes to the constitution would come to the Committee for approval by the full Council as its main governance document and any review of OxLEP would have to form part of changes to the constitution.

Resolved: That the Committee

a.    Noted the government announcement on the transfer pf Local Enterprise Partnership core functions.

b.    Noted the approach to LEP transition and proposed change to OxLEP Ltd governance.

c.    Noted that there will be further work on the government arrangements during the implementation phase and an update will be brought to committee in approximately six months time.