Heseltine: Kick-start growth by mega-fund for regions

Lord Heseltine
Lord Heseltine
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ALMOST £50 billion of public funds should be handed directly to local business and council leaders across England in the most radical shake-up of public spending in generations, a Government-commissioned report has concluded.

Conservative Party grandee Lord Heseltine today sets out a ground-breaking vision of how to kick-start growth, calling for unprecedented devolution of spending powers to the regions and a central role for business in deciding how public money is spent and how young people are educated and trained.

Lord Heseltine, who led successful regeneration projects under Margaret Thatcher’s government throughout the 1980s, was tasked by David Cameron and George Osborne back in March with bringing forward proposals for how to create wealth across the land.

But his report, published this morning, will make tough reading for the Government as it sets out a powerful critique of the coalition’s “piecemeal” approach to supporting the regions.

While praising initiatives such as the City Deal devolution packages and the regional growth fund, Lord Heseltine makes clear Ministers must now be far more ambitious in their approach.

“It is as though the Government is prepared to dip its toe, or even several toes, in the water – but is not yet prepared to accept the logic of its position with the confidence it should,” he states.

“We need to go further and faster to achieve an essential rebalancing of central and local powers and resources, extending not just to cities but to local areas right across England.”

To that end, Lord Heseltine wants to see a single “mega-fund”, totalling some £49 billion, created from existing Whitehall budgets for projects such as housing, skills training and infrastructure.

That money, he says, should be made directly available for regions to bid for through their new business-led Local Enterprise Partnerships (LEPs), and then spent by those bodies on carefully-devised local economic plans.

Such a vast spending overhaul is just one of a series of sweeping measures demanded by the peer.

He also calls for a shake-up of local government, involving the revival of region-wide directly-elected Mayors, the replacement of small district councils with wider unitary authorities, and a change to local elections so they are held only once every four years.

Other key proposals include an immediate clampdown on all failing schools and more direct business engagement in education policy. Business leaders should sit on boards of governors, he says, and skills funding money should be handed to the LEPs.

Most damaging for Mr Osborne and the Government is the suggestion they are lacking an adequate approach on the economy, as he calls for a new National Growth Strategy and a National Growth Council chaired by the Prime Minister.

“The Government machine needs to work in a fundamentally different way to deliver growth,” he states. “The Government must have a clear blueprint for the future to support wealth creation.”

It remains to be seen how much of the report will actually be adopted by the coalition.

Mr Osborne said he would “consider it very carefully”.

But the potential explosiveness of its contents were highlighted as Labour immediately sought to paint it as symbolic of the Government’s own failings.

Rachel Reeves, Labour’s Shadow Chief Secretary to the Treasury and MP for Leeds West, said: “It’s a damning indictment of this Government that, half way through this parliament, a former Conservative cabinet Minister is still calling for a plan for growth.”