The Heseltine review proposes government intervention to stimulate regional economic growth. But it’s likely to be blocked by London-centric politicians
Michael Heseltine should have had a powerful ally in the prime minister when he outlined his ambitious UK growth plan in Birmingham today.
After all it was David Cameron who zoomed to Bradford, shortly after becoming PM, to proclaim: ’For too long we have seen a dangerous imbalance in our economy between different parts of the country…’
He drove the message home further in another speech in Manchester, whilst his deputy, Nick Clegg concurred in Sheffield: ‘We need a significant and far-reaching rebalancing of the economy…there has been an over-reliance on one part of the country.’
Behind the warm words, however, Hezza and Cameron are poles apart. In the 29 months of a Tory-led government, a regional structure that might have delivered some equity across the country – eight regional development agencies, regional planning, government regional offices, and much else – has been scrapped at huge expense. Why? Because of a visceral dislike of all things ‘regional’ by some in government, notably those in the evidence-free zone occupied by, among others, Communities and Local Government Secretary, Eric Pickles.
The result is that England is now the only major economy without a regional strategy – except in one select corner. Remarkably, Greater London has not only kept its regional plan, development agency and select interventionist institutions, but also had its powers strengthened in the fairly recent Localism Act. In local government terms, it is truly a protected species – the equivalent of a medieval city-state set apart from the rest of England, truly another country.
Having scrapped development agencies – except in London, of course – the government created 39 new institutions called Local Enterprise Partnerships, or LEPs; non-statutory, business-led bodies with tiny budgets. But a report today by the Work Foundation says business leaders are so disenchanted with these bodies – ‘the government’s flagship measure for rebalancing the economy’ – that they are ready to walk away unless ministers give them real powers and finance.
Heseltine wants to do just that. The Treasury, so far, does not – with Chancellor Osborne privately dismissive of the thrust of the Hezza agenda for a coherent national industrial strategy backed by stronger powers for large cities and surrounding conurbations.
Embarrassingly, another government measure to stimulate growth, a regional growth fund – determined centrally – has delivered so little in two years that the Commons Public Accounts Committee recently reported it was ‘nothing short of scandalous’ that only £60m had reached front-line projects from an ostensible budget of £1.4bn after two years.
In short, much as Cameron– a son of Thatcher, after all – talks of ‘rebalancing’ the economy away from London and the south east, his instincts are to further bolster the economy of the UK’s only mega-region, to the detriment of everywhere else.
With the capital already getting the lion’s share of transport investment, and the PM’s favourite post-Olympic project – ‘Stratford high-tech city’ – riding high, what chance for the rest of England?
Heseltine, the old-style interventionist - one of the few remaining liberal, one-nation Tories – recognises that modern market economies only function with active government, setting out industrial and regional strategies, either covert in the form of tax breaks, and an active banking system, or more overt with direct stimuli.
Plenty of others, in the CBI, local government and big business, recognise this as well. Sadly, Osborne and the Treasury appear to be on another planet. But something has to give.