Big changes affecting schools and businesses - and several other issues in between - could be in the pipeline if Lord Heseltine gets his way. Political Editor Jon Walker examines the idea to hand power from Whitehall to the regions.
Midland business leaders urged the Government to back new plans drawn up by Tory grandee Lord Heseltine to change the way the UK is governed – including handing more power to councils and employers.
At the heart of the proposals is a scheme to axe dozens of Government initiatives, saving a potential £49 billion over four years, which would be handed to Local Enterprise Partnerships (LEPs).
The bodies, partnerships of councils and employers, currently have almost no funding and no formal powers.
But, under Lord Heseltine’s proposals, they would become the leading bodies responsible for promoting economic growth, in line with plans developed by a new national economic council chaired by the Prime Minister.
His plans, contained in a 200-page report, also included:
* Creating regional ministers. A Cabinet minister would be named Minister for the Birmingham economic region, and would spend two days in the region every two months.
* Making councils more accountable by holding elections for every seat every four years. At the moment, some councils, including Birmingham, hold elections every three years out of four, for a third of seats at a time.
* Giving Chambers of Commerce an official role providing support for businesses.
* Giving local employers at least two guaranteed seats on the governing body of every secondary school.
Lord Heseltine admitted to the Birmingham Post that his proposals were so radical they would be “traumatic” for the government departments affected.
He said: “LEPs are the Government’s chosen engine of local growth and there are some early successes that demonstrate their potential. But at present LEPs simply do not have the authority or resources to transform their locality in the way our economy needs. This needs to change.”
A number of LEPs operate in the West Midlands. The Greater Birmingham and Solihull LEP is chaired by John Lewis managing director Andy Street.
Lord Heseltine identified £49 billion that could have been provided to LEPs during the current spending period, which ends in 2013.
That money will have been spent by the time his ideas are put into effect, but the examples were designed to illustrate the types of schemes that could be scrapped or handed to LEPs.
The spending he highlighted included £10.7 billion on adult skills and £3 billion on apprenticeships, as well as £1.7 billion on local transport projects
There was also £830 million on increasing access to broadband, the £2.5 billion “Work Programme”, which provides advice and support to people looking for a job, and the £2.4 billion Regional Growth Fund, which distributes money directly to businesses. Another £9 billion of money from the EU would also be added to the pot and LEPs would be invited to bid for the cash “on a competitive basis” for projects lasting at least five years.
But instead of being given the money automatically, they should be forced to bid against each other for a slice of the funding, he said.
And Lord Heseltine threatened to re-open old wounds with a warning that some LEP boundaries did not reflect local economies and should be changed. He did not name specific LEPs but an obvious example in the West Midlands would be the existence of separate Greater Birmingham and Black Country LEPs.
Birmingham and its Black Country neighbours are usually regarded as part of the same economic sub-region or city region, despite their distinct identities.
But councils were unable to agree on the creation of a single LEP when the bodies were formed last year.
The report was warmly welcomed by business leaders, who urged the Government to consider the proposals carefully. Birmingham Chamber of Commerce chief executive Jerry Blackett said: “We must ensure the report sparks a mature and grown-up debate and that Government, in particular, gives it very serious attention.”
“There has been no greater champion for city devolution than Lord Heseltine.
“Now his proposals give civic and business leaders the opportunity to deliver on the huge potential that is the UK city network.”
Birmingham Council leader Sir Albert Bore said: “Among the many proposals in the report, by far the most important is the creation of a single funding pot for economic development, infrastructure investment and skills which would be devolved to local areas.
“This echoes our own call for a more localist approach and the proposals we recently put to the Prime Minister. Giving the cities control of that range and scale of resources would enable us to drive growth and job creation more effectively than ever before.
“This is an extremely wide ranging and comprehensive report and naturally we will not support all of its proposals in detail. But by being characteristically bold Lord Heseltine has made a valuable contribution to a debate we have been leading with the other cities.
“It is vital that the Government and the other political parties now give it the positive response it deserves.”
But Ministers made it clear there was no guarantee the proposals would be put into action. Business secretary Vince Cable said: “Lord Heseltine’s findings show where Government can improve its performance in delivering better interventions. We will now need time to consider its numerous recommendations and will respond in the coming months.”
Labour indicated it would put some of the proposals into practice if the coalition government refused.
Shadow business secretary Chuka Umunna, said: “We will examine his proposals and consider which ones we can take forward.”
Lord Heseltine warned dramatic changes to the way Britain is governed were needed.
He said in the introduction to the report: “Britain’s economic decline has been long term, far reaching and about averages. Precisely because we still have so much in this country that is world beating, we can delude ourselves into thinking things are not that serious at all.
"We must not ignore the 30 per cent of UK companies with stagnant growth or turn a blind eye to the sink schools, the forgotten communities and their debilitating effect on society at large.”
? Next page: Give us the powers and we'll release the potential, says LEP
Give us the powers and we’ll release the potential, says LEP
Manufacturers also welcomed the findings of the Heseltine Review and urged the Government to put his ideas into practice.
Richard Halstead, Midlands region director of manufacturers’ organisation EEF, said: “This review is a welcome recognition that all parts of government need to get behind companies looking to grow to create the stronger economy we need.
“However, with such a wide-ranging review, the government needs to consider its proposals carefully to ensure they offer value for money and review how they would work in practice. This is particularly true of Lord Heseltine’s thinking on LEPs. Giving them the tools to make a real impact on issues such as planning and transport, and the power to cut through the obstacles to growth at the local level makes sense.
“But Government needs to make sure they are up to the task before giving them control of large slugs of public money and there are areas where it should be cautious about giving them additional powers.
“In particular, it should look carefully at the case for giving LEPs control of funding for skills. We have been here before and it has not worked. The last thing we need is another level of bureaucracy between the employer and the provider.”
Andy Street, chairman of Greater Birmingham and Solihull LEP, said: “The debate about the future of economic development is one we warmly welcome and it was appropriate that what I am sure will be a lively and productive discussion was kicked off in Birmingham.
“While there are many ideas contained within Lord Heseltine’s report, the striking idea that stands out is that regions have much more potential.
“If we are to unlock this potential, the regions need more control over their economic destinies and we welcome the concept of a single pot or settlement as suggested in the report.
“We are also encouraged by Lord Heseltine’s endorsement of the capabilities of the LEPs as drivers of economic development.
“This is something we have been working to demonstrate here in Greater Birmingham since we were established and we firmly support the idea that only a powerful private and public sector partnership can deliver the step change we so desperately need.”
Birmingham council leader Sir Albert Bore is to meet Lord Heseltine to discuss how his proposals can be put into practice.
?Next page: The Whitehall schemes Lord Heseltine would cut ?
Whitehall schemes Lord Heseltine would cut
The huge number of Government programmes designed to create jobs and improve skills was highlighted in Lord Heseltine’s report – when he called for them to be scrapped so the money could be given to LEPs instead.
He argued that £49 billion could have been provided to LEPs over four years from the schemes.
A small selection of the projects Lord Heseltine names included:
* Growth Accelerator
* Business in You
* Designing Demand
* Rural Growth Networks
* Manufactory Advisory Service
* Waste and Resources Action Programme
* Passport to Export
* Gateway to Global Growth
* International Trade Advice
* Export Marketing Research Scheme
* Knowledge Transfer Networks
* Knowledge Transfer Partnerships
* Health Innovation Challenge Fund