England

Have ministers really embraced Heseltine's revolution?

  • 22 March 2013
  • From the section England
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David Cameron and Lord Heseltine
Is David Cameron's government really fully backing Lord Heseltine's blueprint for growth?

On the face of it the government's decision to back the bulk of Lord Heseltine's blueprint for growth looks good news for England's cities.

But some are already wondering whether the government's pledge of support actually amounts to the revolution that the former deputy prime minister proposed in his No Stone Unturned report.

In that document Lord Heseltine set out a masterplan to unlock the economic potential of England's regions and cities.

His central beef - London and Whitehall has too much power and too much control over taxpayers' money.

Growth fund

Cover of Lord Heseltine's No Stone Unturned report
The cover of Lord Heseltine's report promises a rigorous search for ways of getting the economy to grow

The Conservative grandee believes that shackles the potential of the likes of Birmingham, Manchester, Newcastle and Leeds to become the economic powerhouses they were in Victorian England

One change he suggested was transferring £49bn of government money controlled by Whitehall into a Single Local Growth Fund that would go to the English regions to spend.

That would include money for transport improvements, housing and skills.

And the government has now confirmed it does plan to create that fund.

The Local Enterprise Partnerships (LEPs) across England will then be able to bid for money from it. The LEPs are boards of businesspeople and councillors in charge of developing local economies.

What's not clear though is how much money will be in it.

That will have to wait until June's spending round when the chancellor will make it clear just what will go into the pot.

Too little

But the left-leaning think tank IPPR North says it believes the fund might only amount to a few billion.

In addition, it won't begin operating until 2015. That's too little, too late according to IPPR North's director Ed Cox.

He said: "Lord Heseltine said a fund of £49bn was needed. Government sources are now suggesting the size of the pot will be in the 'low billions'.

"With a lot of that not released until after the next general election. This shows the government response has fallen far short of the Heseltine blueprint - and that is bad news for the British economy.

"We are also concerned that the whole process of how the share-out of money between individual LEPs is too centralised and potentially unfair to some."

And although the government has said it's accepted 81 out of the 89 recommendations made by Lord Heseltine, 21 of those acceptances are partial.

Can it really break the culture of centralisation in Whitehall?

The government says yes and insists it is already rolling out measures which will help LEPs and councils generate growth.

From November this year, LEPs will be given the chance to borrow up to £1.5bn to fund a pet infrastructure project.

Councils are also being allowed to keep any growth in business rate income to reinvest in their local economy.

It's also rolled out city deals to the likes of Newcastle, Liverpool and Manchester which will give the councils extra powers and borrowing capacity.

The government will also allow local authorities who work together to have their own "conurbation mayor" should they want one.

Power and incentives

Deputy Prime Minister Nick Clegg is convinced the government has accepted the need for change.

He said: "Over the last few decades, central government has systematically deprived local government of control and power. Only half of the money spent locally is raised locally, robbing our cities and regions of both the power and incentives to drive local growth.

"That is why we've already allocated £2.6 billion through the Regional Growth Fund. And through City Deals we are giving cities a core package of powers and freedoms.

"Lord Heseltine's review is the icing on the cake.

"His local vision is the best way to foster local growth and stimulate the economy. A single local growth fund that Local Enterprise Partnerships apply to will be a big change from the hand-out attitude of the past."

But of course there will still be considerable central control.

Money won't be handed directly to local areas for them to spend as they like. This is no Scotland or Wales-style devolution.

Instead they'll still have to convince officials or a panel of experts that what they want is worth spending money on.

That may provide a safeguard against embarrassing failure perhaps, but will it really empower cities and regions?

We'll know more after the spending review, but so far at least local enterprise partnerships have welcomed the news.

Stephen Catchpole, from Tees Valley's LEP said: "We should be able to make sure that the money is spent on what we need, which should mean more investment in jobs."

And these ideas will ultimately be judged on whether they can deliver the economic growth everyone is seeking.

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