Michael Heseltine: Devolution of spending to regions will boost growth
Regions will create jobs and boost economic growth if they are given direct access to Government cash, rather than having the purse strings controlled from London, Lord Michael Heseltine has said.
The former Westcountry MP and ex-Deputy Prime Minister was speaking as a pilot project for Birmingham was launched that could be rolled out to the rest of the country.
During a three-month review, business leaders and civil servants will draw up plans which could see the Midlands determine where £1 billion of state money is spent, rather than leaving it to Whitehall bureaucrats.
South West business leaders last night said the pilot could pave the way for more self-determination on the peninsula in areas including roads and job creation, but warned a model designed for the urban north would be unsuitable for the rural South West.
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A proposal for a "city deal" to hand powers to Plymouth is already in the process of being worked up, while ministers have admitted being impressed by a draft "Duchy deal" for devolving responsibilities to Cornwall.
Lord Heseltine, whose autumn report on regional growth sparked the pilot scheme, urged the Government to allow areas to "be given their head" and allow councils and business leaders to drive growth "in a far more dynamic way than has previously been allowed".
The Conservative peer, MP for Tavistock in the 1970s, said there had been historic "distrust" in London about the capacity of councils in the provinces to be "up to the job" of making decisions on their own.
"That is why we have a system of micro-management, the ring-fencing of money, the control of grants, issuing of circulars and the accumulation of power in Whitehall," said Lord Heseltine.
"This is a chance for one of England's great cities to show there is a different way to do things – a better way."
He said the local enterprise partnerships (LEPs) – made up of business figures, councillors, and members of the voluntary sector, set up by the Government – were the vehicle which could bring together "wealth creators and those who administer the wealth" to lead the plans. Cornwall has an LEP, as do Devon and Somerset together.
Andrew George, Liberal Democrat MP for St Ives, who has been pushing the "Duchy deal", welcomed the move but warned it would be "dangerous" to apply an exact model formed in the north of England in the Westcountry.
The Cornwall MP said: "We have over the last century become a much more centralised country.
"We have to get back to territories, regions and authorities having confidence to take responsibility for themselves rather than a relationship with government where localities form an orderly queue and wait for hand-outs. But that's going to take a long time to change."
Liz Waugh, interim chief executive of the Heart of the South West LEP, which represents Devon, Plymouth, Torbay and Somerset, said: "We recognise there are some real opportunities presented by the Heseltine report – the devolution of budgets and removal of ring fences around departmental funding could prove invaluable in driving local, focused economic growth.
"We are mindful and acknowledge that aspects that work for an urban focused-partnership may not necessarily be appropriate or work well in a different context.
"With a mixture of rural and urban environments and four local authority partners, we have a large remit to reconcile, but are confident that working together, we can deliver real results."
The Greater Birmingham Project was formed in the aftermath of the Heseltine report, which concluded with 89 recommendations to help industry, including scrapping district councils.
One of his key measures put forward is to bring together separate sources of Whitehall funding supporting growth such as skills, employment, and infrastructure into a single £60 billion pot of cash.
It prompted the leaders of Greater Birmingham and Solihull LEP to ask if they could run a pilot scheme based on the report's recommendations – an offer which was accepted.
The Government will deliver a report on the scheme in the spring. Lord Heseltine said the current manner in which the money was distributed was decided by the staff in Whitehall departments, and not by people on the ground where the cash would eventually be spent.