Heseltine report calls for action to stimulate growth

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Media captionEd Miliband taunted David Cameron with quotes from Lord Heseltine's report on growth and energy

Former Conservative party deputy prime minister Lord Heseltine has urged the government to take bolder action to stimulate the economy.

In a new report, commissioned by Downing Street, he says that people think the UK "does not have a strategy for growth and wealth creation".

He wants to devolve power from London to the English regions.

In the Commons, David Cameron and Ed Milliband argued over whether the report backed or damned the government.

Lord Heseltine's report, No Stone Unturned, makes 89 recommendations to help industry. One of its key aims is to move £49bn from central government to the English regions to help local leaders and businesses.

The aim, he said, was to devolve power from Whitehall and re-invigorate the big cities that had fuelled the growth and wealth that the country had enjoyed in past decades.

Lord Heseltine, head of the Department of Trade and Industry in the 1980s, said the government should allocate growth funds through the new Local Enterprise Partnerships (LEPs) that are being established in England in place of Regional Development Agencies.

In 2010, the government invited local business and civic leaders to come forward with proposals for establishing LEPs that reflected natural economic geographies.

Lord Heseltine believes these bodies could be key to stimulating regional growth, but said that, at the moment, LEPs did not currently have "the authority or resource to transform their locality in the way our economy needs".


At the national level, however, the government should show greater leadership in promoting major infrastructure projects, Lord Heseltine said. A national growth council should be created, chaired by the prime minister and with a cross-government focus.

"Central government must retain control of important, large scale infrastructure projects. This includes our motorway network, national rail network and airports, as well as our energy networks," Lord Heseltine said.

In all these sectors, there must be greater investment and a clearer strategy of what the UK needs. He cited the delay and "inertia" over building extra airport capacity in the south east, and called on all the political promises to make firm commitments in their next manifestos about how they will resolve the problem.

Lord Heseltine also backed suggestions that pension funds should provide funding for infrastructure projects. With yields on investments in stocks and shares at historically low levels "there is a well of money looking for a better return than currently available in the market," he said.

He said that throughout the regions there was excellence in industry, commerce and academia, which should be extended and that cities were "pulsing with energy" that should be unleashed.

He backed the government's economic strategy, and said it was taking the right path to recovery. But later, in an interview with the BBC, Lord Heseltine said there was "an urgency" about stimulating growth. "Across the world there are emerging economies that want our jobs and our wealth," he told the Today programme.

"We need to mobilise the skills of provincial England. I want to shove power out of Whitehall, into the provinces," he said, adding that "London has acquired too much power".

'Received wisdom'

Lord Heseltine admitted his ideas would go down like a "lead balloon" in parts of Whitehall because he was suggesting government departments should lose some of their power.

Asked whether his conclusions might be at odds with thinking in the Treasury, Lord Heseltine said: "I do not work for the Treasury, I work for George Osborne. And George has been behind this initiative."

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Media captionLord Heseltine: Towns and cities ''need to have a bigger say in the way that money is spent''

He added: "I have got baggage, they know my views. There are bound to be things where they say, 'oh my god, here he goes again'. I have told it as I see it, but I have told it in a way that is very supportive of the government."

In the Commons, the Conservative and Labour leaders disputed the report's sentiments. Mr Milliband said that Lord Heseltine's comment that people believe there is no growth strategy was damning.

But Mr Cameron cited the report's conclusion that the coalition government was "on the right track". He added that it was an "excellent" report, and told Mr Milliband that it was pointless to just trade quotes

Chancellor George Osborne said he would "study it [the report] very carefully". He said: "I wanted Lord Heseltine to do what he does best: challenge received wisdom and give us ideas on how to bring government and industry together. He has done exactly that."

The Institute of Directors (IoD) business group welcomed the devolution of power to the local. The TUC also supported the report, but said that ministers are going to have to change their attitude towards civil servants, public bodies and unions if they want this strategy to succeed."

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