The Chancellor said yesterday that he intends to implement a “huge amount” of the sweeping reform programme proposed by Lord Heseltine this week, designed to boost growth in the regions.
Mr Osborne’s intervention is highly significant as it had been widely expected that the Treasury would seek to resist the most radical proposals set out in Lord Heseltine’s 228-page report.
The Tory grandee had been asked by the coalition to come up with ways to boost growth outside London, reporting back on Wednesday with a call for the biggest shake-up of public spending in decades.
The centrepiece of his report is a proposal to hand £49bn of funds already being spent by Whitehall in the regions directly to local council and business leaders, to spend on their own local growth plans.
Perhaps predictably, the plan was warmly welcomed yesterday by two of Yorkshire’s Local Enterprise Partnerships (LEPs) – the business-led bodies that would be in charge of the spending under Lord Heseltine’s scheme.
But more unexpected was the response of Mr Osborne, when asked to name just one of the 89 recommendations made by Lord Heseltine which he actually intends to implement.
“I think his idea about giving local areas much more control over public spending is a great idea, and it will lead to concrete action,” the Chancellor said.
“I am absolutely clear it’s a great report, and you’re going to see a huge amount of it implemented.
“I think he has done a real service not just to the Government, but also to the country.”
Mr Osborne dismissed suggestions the report represents a criticism of Government policy, saying many of the recommendations build on work the coalition is already undertaking.
“I and David Cameron asked Michael Heseltine to do this report,” the Chancellor said.
“A lot of the (proposals) are urging us to go further down a path we were already walking down – giving more control to local areas; enabling cities, making sure the great cities outside London are also centres of growth and activity. It’s fantastic stuff.”
The Heseltine plan is also likely to win the backing of Deputy Prime Minister Nick Clegg, a passionate devolutionist and the driving force behind the Government’s City Deal agenda.
He told the Yorkshire Post on Monday: “I entirely share Michael Heseltine’s view that for far too long Governments of different persuasions over-relied on the private sector dynamism of the South East to provide a pot of money which is then redistributed through public subsidies to the rest of the country.
“That model is not only politically very centralised, it’s economically very centralised as well.”
There was further cause for optimism yesterday when the former head of the civil service, Sir Gus O’Donnell, said he believed Whitehall would welcome much of what was being proposed.
Sir Gus – the most senior man in Whitehall between 2005 and 2011 – wrote: “As Hezza (sic) rightly points out, (a growth plan) must extend beyond Whitehall and be accompanied by real devolution to the regions.
“Where I disagree is with his view that it will be resisted by Whitehall. This is not true. On a recent visit to Leeds, I saw what can be achieved by business and the various tiers of government working together.”