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After Regional Development Agencies were scrapped by the Coalition government in 2010, smaller scale Local Enterprise Partnerships (LEPs) were set up - effectively as partnerships between local authorities and business.

But those LEPs are now suffering from a lack of confidence, confusion and short-termism, the all-party House of Commons Business, Innovation and Skills Select Committee warned last week in a hard hitting report.

In particular, the funding of LEPs was sharply criticised in the committee’s report, which argues that this undermines efforts to revive the economy.

LEPs have each been offered £500,000 over two years, after the government bizarrely initially failed to allocate any funding at all. But LEPs must first find matched funding, usually from very cash-strapped local authorities, and the allocation process to LEPs anyway takes no account of different needs.

The committee urged ministers to set out funding for LEPs all the way through to 2020, to ensure they can drive “long-term growth”.

The committee’s chair, Adrian Bailey, stated that “to do this, they require the confidence to make long-term investments. The current funding commitments fail to provide this”.

He is quite right, and this is something I have been banging on about since LEPs were hastily set up back in 2010.

The BIS committee report also questions why responsibility for LEPs was spread across two different ministries – business and communities – a situation that had led to “confusion”. Just one minister should be responsible for them, it states.

Furthermore, MPs questioned whether the government had been too hands-off by leaving LEPs largely to their own devices. The committee argues that the government should from now on take a more active approach to monitoring LEPs and ensure that value for money is being achieved. That’s a key point – if LEPs take on new responsibilities their performance and use of taxpayers’ money must be democratically accountable. At the moment this is a key weakness.

As Adrian Bailey notes: “It is encouraging that LEPs agree they should be held to account. What is not encouraging is the current lack of any actual mechanisms by which to do so. LEPs have a significant impact on their local community; they would be failing if they did not.

Despite this, the ability for the local community to scrutinise their performance is patchy.

“If LEPs are to be held accountable for their performance, measurable indicators of that performance are needed. And they are needed in a format easily understood by local communities.

“LEPs receive considerable amounts of public money from central government. Being free to react to local issues does not absolve them of accounting for how it is used. Value for money must be demonstrated.

Overall, key recommendations by the committee include:

* Skills should be a core priority. LEPs should be required to demonstrate their levels of engagement with local education, in particular with skills and apprenticeship providers, FE colleges and schools.

* Ministers explore whether the matched funding rule is a barrier as LEPs “struggle to find other willing investors”.

* A single minister, in the department for business (BIS), to oversee LEPs – to end the current “confusion”.

* LEPs publish easily-understandable “measureable indicators of their performance”.

* Government should assess whether some LEPs should merge, to better match larger economic areas.

On the latter point, a single LEP for Greater Birmingham and the Black Country would surely make much more sense as one larger, harder-hitting body.

The Chancellor George Osborne recently backed Lord Heseltine’s call for LEPs to be able to bid for larger single funding pots, and draw down powers from Whitehall. But Osborne has yet to say how much they will receive (probably far less than Heseltine’s call for over £80 billion a year) – probably somewhere “in the low billions” – and has anyway rowed back from either giving LEPs more control over infrastructure spending, or job and business support schemes, or reviewing LEPs’ boundaries and governance structures.

Overall the BIS Committee’s report is hard-hitting and spot on. The All-Party Committee has done a very thorough job in examining how LEPs are developing and the barriers to them supporting growth, and makes some important recommendations as to how LEPs can be charged up to deliver growth. The government needs to respond to this well-laid out critique.

* Professor David Bailey work at Coventry University Business School