Michael Heseltine: Let regions lead on Industrial Strategy – and please sort out Yorkshire devolution

Michael Heseltine is an advocate of the Industrial Strategy.
Michael Heseltine is an advocate of the Industrial Strategy.
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IT is 25 years since I had the privilege of becoming President of the Board of Trade and my first question on arrival, not unsurprisingly, was “What is our strategy?”, to which the very surprising reply was, “We’re not allowed to use those words here”.

When I had the remarkable opportunity to produce my report No Stone Unturned about wealth creation, it took a week to negotiate an agreement with the Prime Minister and the Chancellor that the words “industrial strategy” should be included in the remit. That was possible only if I was prepared to say that it was with reference to other countries’ industrial strategy.

The fact of the matter is that every Government, of whom I have had any knowledge over the last 60 years, have wrestled with the complexities of what that actually means.

There have been many attempts to try to find a way to balance the conflicting arguments around this subject. I came from a small-business background. There were two of us, but I ended up presiding over some of the largest public expenditure programmes in some of the most advanced, sophisticated fields including space, aerospace, housing and, of course, urban deprivation.

The simplistic language of getting off one’s back, sacking a few civil servants and undoing red tape is a million light years away from the responsibility of presiding over major technologically advanced programmes on which our industrial wellbeing depends.

There is a tendency to talk about industrial strategy as though it was about industry – 12 per cent of our economy. If you are really going to talk about wealth creation across the economy, you have to talk about efficiency in the public sector just as prominently as excellence in the service sector.

Each government department has a responsibility to explain what its own industrial strategy is because they all sponsor industries in different ways. I believe it should have to answer to a collective forum of Ministers as to what it sees its opportunities are in furthering wealth creation, often incidental to the main function that it may have of running a health service or whatever it is responsible for.

The problem with this analysis is that there is no capability in government to monitor that particular assessment. The monitoring that takes place is by the Treasury, which, quite rightly and properly, is trying to contain public expenditure. There is a need for a competitiveness unit under the control of the Prime Minister and based in the Cabinet Office.

My second point is born of excellence. We are so good. We have proportionately far more than our fair share of the world’s great universities. We have wonderful schools, great teaching facilities and world-class training and skills facilities. The problem is the tail. There are too many people running organisations at the unacceptable bottom level of attainment in skills and schools.

I am not making this up; this is merely to quote Ofsted reports, which are chilling. They indicate a degree of complacency across the country about the failure of schools in particular, although I think training colleges are now to be included as well. If this were the private sector, there would be no capability to tolerate 15 to 20 per cent of your branches failing to deliver. The moment that you confront this issue, everyone knows where those schools are – their names are published – but when you ask “Why do you not do something?”, they say “Oh, it is the cuts… it is them… it is someone else… it is too difficult”, or whatever.

It is morally and economically unacceptable that we are training a proportion of people who will never produce the skills that we need to fill the gaps that already exist. That is doubly so if we are to obtain the supply of skilled labour that is now part of government policy.

Something needs to be done. This is not a debate about whether we have more or fewer grammars or whether the academies will do this or the other. This is looking at the individual schools that are failing, and co-operating at local level – I would say with local enterprise partnerships and the newly-elected mayors in the seven conurbations – for local communities to address the issue. It may mean that you will sack some governors. It may mean that you will get rid of some headteachers, but the acceptance of this level of failure in our skills provision is unacceptable.

My third point is the overcentralisation of our administration. We all know that Governments take decisions in London which, by a variety of means, are spread out across the country. We have a local authority system that, let us be frank, was relevant when the ​horse and cart was the means of communication. The Redcliffe-Maud report of 1968, looking at this issue economically, stated that we needed about 60 self-contained autonomous authorities. We still have about 350.

My question for the Government is: if you look at what we have achieved in those seven areas, including Birmingham, Bristol, Liverpool, Manchester and London itself, what about the other conurbations? What is happening in Newcastle, Yorkshire, South Hampshire and the East Midlands – great areas of economic importance?

What is the Government going to do to achieve what has been achieved in the seven conurbations in those that currently lag behind? It is politically charged – I am the first to recognise that – but the price that will be paid by those economies where people are not led effectively and do not enjoy sufficient local autonomy is politically unacceptable.

There is a very clear principle here. Central government must have the responsibility of determining what services are provided and the quality with which they are provided. The more they can delegate the execution and administration of those services to the people who live, eat and breathe the community of which they are members, the more effectively they will engender the support, enthusiasm, and involvement in the partnerships that are central to getting the benefits that we want to a wider community.

Michael Heseltine is a Tory peer and former Deputy Prime Minister. He led a House of Lords debate on the Industrial Strategy. This is an edited version.