Delight as Treasury agrees to Heseltine blueprint

inisters yesterday hailed a “landmark” moment as the Treasury published its long-awaited response to Lord Heseltine’s high-profile report on kick-starting growth in the regions, accepting 60 of his 89 recommendations outright and a further 21 in part.

The Yorkshire Post has been calling for large parts of the Heseltine plan to be implemented as quickly as possible as part of its Give us a Fair Deal campaign.

The Tory peer’s central idea was the creation of a £15bn-a-year ‘mega-fund’ from existing Whitehall money, for local areas to bid for and spend on key ‘growth’ areas such as housing, transport infrastructure, skills training and apprenticeships.

The Treasury said it will push ahead with the plan in one of the most radical shake-ups of public spending in years – but has so far failed to confirm how large the fund will be.

Sources suggested the fund is more likely to be “in the low billions”, with many areas of ‘growth’ spending – including on apprenticeships – maintained at a national level.

Nonetheless, Ministers are keen to stress the vast majority of the Tory grandee’s proposals will be enacted, and hailed a landmark moment for British industrial policy.

The Chancellor George Osborne said: “We asked Lord Heseltine to do what he does best – challenge received wisdom and give us bold ideas on how to bring Government and industry together.

“He did just that, and that is why we are backing his ideas.”

For the first time, local areas will compete with one another for funding, with the country’s 39 local enterprise partnerships (LEPs) tasked with drawing up growth plans and bidding for a share of the ‘mega-fund’.

Ministers hope the competitive element will reward areas with the best growth plans, and push each LEP – set up in 2010 following the abolition of the regional development agencies – to take on a more strategic leadership role.

The Minister for Cities, Greg Clark, said: “Growth Deals, building on the successful City Deals, allow every area to do what it takes to help businesses expand and create jobs.

“This is a watershed in the relationship between central Government and local places.”

The Deputy Prime Minister, Nick Clegg, added: “It’s a big change from the hand-out attitude of the past that stifled innovation and turned the regions into powerless centres that relied on Whitehall for jobs and spending.”

As Lord Heseltine envisaged, the new devolved fund will be in place for the next spending round, which starts in April 2015.

The exact size of the fund will be set out by the Chancellor in his spending review for 2015-16, scheduled for June.

The formal Treasury response published yesterday makes clear that transport, housing and some skills funding will all be included, but that the other areas of spending recommended by Lord Heseltine may yet be ruled out.

LEP leaders in Yorkshire welcomed the announcement, despite the uncertainty over the amount of funding available.

Lord Haskins, chairman of the Hull and Humber LEP – which has been working as a pilot area for the plan – said: “I am delighted the Government has accepted every one of the key recommendations.

“Since Lord Heseltine’s report was published, we have been preparing the way to implement his recommendations. This announcement means we will have the tools and at least some of the money to get on with delivering them.

“We now look forward to finding out in the Spending Review whether the funding available will match up with our ambitions.“

Katja Hall, chief policy director of the CBI, praised the plan but urged Ministers to be cautious when deciding which areas of spending should be devolved.

“The UK needs a robust industrial strategy that promotes trade and taps into business potential across the country – not just in the South East,” she said.

“The principle of pooling funding into a single pot is sensible, and competitive bidding will force areas to plan innovatively.”

But she warned: “The devil will be in the detail. We can’t forget that growth is the overarching objective here, with localism the means to an end. It is essential that major programmes which need national or sector-based planning are not undermined.”