Michael Heseltine and George Osborne are transforming local government, reports Political Editor Jonathan Walker, but who will be in charge and how much money will they have to spend?
A revolution is taking place in the way we are governed – and how large amounts of our money is spent.
George Osborne, the Chancellor, is banking on local enterprise partnerships to get the economy growing.
The bodies are set to spend billions of pounds between them each year, and take responsibility for attracting investment and creating jobs in the regions they serve.
And the Greater Birmingham and Solihull Local Enterprise Partnership (LEP) is first in line for a share of the cash.
But the partnerships may receive far less than the £70 billion suggested by Lord Heseltine, the Conservative peer who has championed the new approach. And it is unclear how, if at all, they are to be held accountable to the taxpayers whose money they spend.
The new role for LEPs was revealed in two carefully choreographed announcements.
Michael Heseltine, the former Deputy Prime Minister and now a member of the Lords, set out a blueprint for the new regime last year, in a report called No Stone Unturned, which urged the Government to scrap a wide range of projects administered by Whitehall and divert the money to LEPs.
Since January, he has been working with the Greater Birmingham and Solihull Local Enterprise Partnership, which covers Birmingham, Solihull, Bromsgrove, Redditch, Wyre Forest, Cannock Chase, East Staffordshire, Lichfield and Tamworth, along with their respective local authorities, to draw up proposals showing how his idea could be applied to the “Greater Birmingham” area.
Their findings were published under the title “The Greater Birmingham Project” on Sunday (March 17).
Less than 24 hours later, George Osborne, the Chancellor, announced he had accepted many of Lord Heseltine’s ideas.
Cash currently spent by Whitehall will be placed in a new national fund called the Single Local Growth Fund.
Local enterprise partnerships will then be invited to bid for a share of this fund. Their proposals will be known as Local Growth Deals, and the best will get the money.
Birmingham and its neighbours are not yet guaranteed any cash. But the Greater Birmingham Project document is effectively the first bid for funding to be sent to the Chancellor, giving the region a major headstart.
So what is in Greater Birmingham Project document?
*Using Government cash to improve transport infrastructure around the “M42 Economic Gateway” between junctions 4 and 6 of the M42 and the surrounding area, taking in Birmingham Airport, Birmingham International rail station, the planned new high speed station and Solihull town centre.
* Speeding up the creation of a series of “sector acceleration zones” designed to attract businesses to the region and help existing firms grow, including the Advanced Manufacturing Hub at Aston and Life Sciences Accelerator near Birmingham University in Edgbaston.
*Plans for the nine councils to agree a joint procurement policy to ensure they are spending money in a way which supports local employers.
* Other proposals which are mentioned in the document but not named as immediate priorities include creating a “Museum Quarter” in Birmingham around the planned new HS2 station close to Curzon Street, and measures “to give early help to families experiencing a number of difficulties, high obesity, drug and alcohol and other challenging issues.”
The plan also includes a commitment to supporting Birmingham Airport’s expansion plans. And it reveals that a new “supervisory board” involving the leaders of the nine councils involved will be created to “provide clear political accountability for the management of the Single Pot” of money.
The aim is to deal with concerns that the Local Growth Deal will involve spending large sums of taxpayers’ money, but the LEP Board which is due to spend it is led by business leaders, not elected politicians.
Bringing in a board made up of council leaders provides an element of democratic accountability, although it is not entirely clear whether the supervisory board of councillors will actually make decisions about how money is spent – or whether power will ultimately lie with the Greater Birmingham and Solihull LEP Board, made up of executives from the likes of John Lewis, KPMG and National Express.
The big question is how much money will be in the Single Local Growth Fund, and where it will come from.
Lord Heseltine, in his initial report published last year, identified a range of Government schemes which could be cancelled, freeing up £58 billion for LEPs over four years.
And in evidence to a Commons committee in February, he said he now believed that up to £70 billion could be found.
But his proposals involve scrapping a wide range of projects, including the Work Programme – the Government’s flagship scheme to cut unemployment – a £4.5 billion housing programme, the £2.6 billion spent on flood defences over four years and more.
In practice, Mr Osborne may well reveal that far less than £70 billion will actually be on offer. He will not announce a sum of money until the Public Spending Review on June 26 at the earliest.
Other proposals set out by Lord Heseltine last year, and backed by the Chancellor this week, included encouraging schools to build better links with industry – although Mr Osborne rejected the peer’s suggestion that every school governing board should include two employers – and creating sector councils to represent employers, along the lines of the automotive council which is up and running.
The Government also backed one of Lord Heseltine’s suggestions which would solve the issue of democratic accountability once and for all.
It agreed with the Peer that councils should be allowed to create shared “conurbation mayors”.
A Treasury document stated: “The Government also accepts Lord Heseltine’s recommendation for conurbation mayors and intends, at the next available opportunity, to seek legislation for such mayors where the authorities want this, as well as for any other provision necessary to make the existing legislation fit for purpose.”
In theory, this appears to mean that Birmingham, Solihull, Bromsgrove, Redditch, Wyre Forest, Cannock Chase, East Staffordshire, Lichfield and Tamworth could have a shared “Greater Birmingham and Solihull” mayor.