Heseltine tells UK businesses they must work more closely

Speaking at the British Chambers of Commerce (BCC) annual conference in Westminster yesterday, the Tory grandee – who has produced a radical report for the Treasury on how to kick-start growth – attacked the “fragmentation and proliferation” of business support organisations in the UK and called for wholesale reform.

The Government will respond next week to Lord Heseltine’s central proposal to shake up the public sector by devolving billions of pounds of public spending to local areas to spend for themselves.

But the peer made clear yesterday that he believes business leaders also need to get more organised if they are to compete with foreign economies.

“Look at what other countries have been doing for years,” Lord Heseltine said.

“The Paris chamber of commerce has 400,000 members. The London chambers have 9,500.

“When a German company goes to India, it finds a chamber with 110 staff and 6,000 members. When a British company goes to India, there is no chamber.

“There has been little effective action to address the issues of fragmentation and proliferation.”

The conference also heard Labour leader Ed Miliband set out his widely-trailed proposal for a series of regional banks to boost local growth.

The Doncaster North MP told business leaders he believes “Britain needs a wholly new banking system” and called for a network of regional banks to be set up with the specific remit to lend to firms in their local areas.

Responding to the proposal, BCC director general John Longworth said he agreed banking has become “too concentrated” but that a more immediate response was needed than what Mr Miliband was suggesting.

“There is no question we have a too-concentrated banking sector in the UK but that would be a long-term solution,” Mr Longworth said. “We need to do something immediately.”

He praised the coalition for its plans for a “British Business Bank” but said it would require more capital to be effective.

“We are very pleased the Government set up a Business Bank, but it is not going to come soon enough and it is not going to operate in the way we wanted it to,” he said.

“We need another £9bn pumping into it, so it can raise £100bn to be able to lend to business.

“The Bank of England could underwrite it.”