Region could get billions from Whitehall coffers in shift of power

First Secretary to the Treasury Danny Alexander said yesterday that Lord Heseltine had made “a compelling case” for extending the remit of Local Enterprise Partnerships (LEPs) to control significant public funds, and that he hopes to make an announcement “shortly” once negotiations at Whitehall have been completed.

Speaking at yesterday’s conference in Leeds organised by the IPPR North think-tank, Mr 
Alexander – a key member of the coalition “quad” which meets to make crucial budgetary decisions – hinted an announcement on devolution could come as early as next week’s Autumn Statement, but refused to be drawn on the full scale of what is proposed.

But after attacking the “dead hand” of Whitehall control which “stifles” growth in the regions, the Liberal Democrat made clear he was “very sympathetic” to the argument that devolution must be driven forward “further and faster” to kick-start the Northern economy.

Earlier this month Lord Heseltine published his radical programme for growth outside the regions that included a series of unprecedented measures to devolve powers and funding to LEPs.

The Yorkshire Post is campaigning for the Government to implement key components of the Tory peer’s plan as part of its Give us a Fair Deal campaign.

Mr Alexander also used his keynote speech yesterday to announce that the Chancellor’s statement next Wednesday will include £120m in new funding for flood defences up and down the country, as parts of Yorkshire and Britain continue to suffer severe flooding.

“The human cost alone makes funding flood defences worthwhile,” he said.

“But (there is an) economic cost too, not just in terms of lost working days and clean-up operations, but in 
terms of flood risk blocking investments.

“Next week in the Autumn Statement we will be allocating an extra £120m to flood defences up and down the country; safeguarding homes and businesses and opening up new areas for investment and growth too.

He added: “Providing that sufficient local funding can be found, the Leeds flood alleviation scheme can expect to be near the top of list of those benefiting.”

Sheffield, he said, “can also expect to benefit”.

Yesterday’s conference saw the launch of a major new report by an independent commission set up to explore ways of reviving the Northern economy.

The Northern Economic Futures Commission published a 12-point plan for growth, including calls for a massive devolution of funding from Whitehall along the lines envisaged by Lord Heseltine.

Commission chairman Geoff Muirhead said: “We should be taking responsibility for ourselves, and what we’re talking about here is being given the wherewithal to do that.

“The proposals aren’t particularly expensive – in most cases the investment comes as a result of better prioritisation and the rebalancing of existing national spending.”

Mr Alexander praised the report and made clear the proposals for devolution were ones he and fellow Lib Dem Ministers agree with.

“One of my guiding principles is that Government should seek to free local authorities to be greater masters of their own destiny,” he said. “Harnessing the potential of local communities and local businesses by decentralising power is a fundamental part of Liberal Democrat DNA – and also a core driver of coalition policies.

“I believe that decisions are better made the closer they are to the communities that are affected by them, and that this hold true not just for public services but for decisions that affect economic growth too.”

Warning of the “dead hand” of central control and the “stifling effect” it has on supporting local growth, Mr Alexander said the over-centralisation must now draw to a close.

“This report is a timely reminder that we need to push this agenda further and faster – because if you waver, the forces of centralisation are always ready to push back,” he said.

“There are now 39 LEPs in England; 11 in the North alone. They are driving ambitious economic agendas, and I think the proposals in both (this) report and Lord Heseltine’s report make a compelling case to extend their remit further.”

The Treasury Minister suggested that many of the ideas for devolution agreed in the “City Deals” signed off with urban areas such as Leeds and Sheffield earlier this year could now become a blueprint for other parts of the country.

“The City Deals agenda has provided a fertile test-bed for ideas in this space that have the potential to be expanded much wider,” he said. “For example, today’s report suggests the formation of a single funding pot for economic growth in LEP areas. Government has already adopted this approach in the first wave of City Deals... and I think there is a strong case for considering how this approach could be extended further.”

He went on: “The argument Lord Heseltine was making in his report was there should be a greater devolution of capital spending, and indeed of other sources of funding, that there should be more local control; more local control by LEPs. I’m very sympathetic to that argument.”

Hinting at difficulties, he said: “I’m not going to set out how far we’re going to go. It’s fair to say that this is not always the sort of argument that Whitehall has easily accommodated, so you might find some departments very much in favour of this in principle – but (then claiming) their own funding needs to be centralised for different reasons. I’m very unsympathetic to that argument.

“It’s a debate we’re having in Government at the moment, and I 
hope we’ll be able to announce shortly some steps in that direction.”