In its submission to a Commons select committee the IED said that too many Local Enterprise Partnerships [LEPs] are "under-resourced and overstretched" and lack a clear role.
The Department for Business, Innovation and Skills [BIS] select committee is carrying out an inquiry into the effectiveness of LEPs and the RGF.
Worryingly, the IED also said many LEPs "lack understanding of economic development" and was critical of the way that both LEPs and the Regional Growth Fund [RGF] are operated.
In its submission, the IED criticised a lack transparent LEP governance or cohesion saying they "do not represent functional economic areas" and have "little or no logic to their spatial coverage in most cases" and are "simply under-resourced and over-stretched, and therefore unlikely to deliver what is expected of them".
It described the RGF as "a piecemeal approach, allocating modest resources in a non-strategic fashion, with no clear evidence of value added to local economies nor of value for money to the taxpayer".
The IED went on to described the way LEP and RGF bids were approved as "chaotic", and characterised by "unclear guidance" and "bureaucratic delays".
Meanwhile, think tank the Centre for Local Economic Strategies (CLES) said, "If [LEPs] continue to be significantly under-resourced and follow a dated version of economic development, then they will not serve to deliver sustainable and equitable positive change."
The Royal Town Planning Institute (RTPI) also submitted evidence closer working between LEPs and local planning authorities and saying, "LEP activity and effectiveness varies across the country and lacks strategic direction".
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Local Enterprise Partnership
Department for Business, Innovation & Skills
Institute for Economic Development
Royal Town Planning Institute