Guest blog: Professor David Bailey, Coventry University Business School, UK
The Heseltine Plan appears to have been kicked into the long grass – by the current government at least. In something of a ‘rumble in the jungle’, Business Secretary Vince Cable last week poured cold water on Heseltine (or his plan at least). But behind the scenes, mandarins had anyway been doing their best to quietly kill it off, in true ‘Yes Minister’ style. You can imagine the scene; ‘Heseltine Plan, Minister? Oh that would be very brave of you’.
It was no great surprise. Indeed when Hezza first unveiled his impressive No Stone Unturned Report in Birmingham last year, a seasoned veteran of economic development and observer of Whitehall affairs warned me, sotto voce, that somewhere in Whitehall there was a small patch of turf being lovingly watered and nurtured by mandarins so as to be ready for the Hezza report to be deposited in, all in time for the next general election. And so it appears to have turned out.
Heseltine himself has said of late that there is a “battle” going on in Whitehall over his plans, with strenuous efforts by Ministers and Civil Servants to prevent decentralisation of funding to the LEPs.
Of course, key to this is cash. Back in March, George Osborne offered general backing to the Heseltine Plan in the government’s initial response, with further detail on the government’s response, notably the amount of departmental funding that would be funnelled via the Single Local Growth Fund, to be unveiled in June’s Spending Review.
While Hezza called for a ‘single funding pot’ of some £80bn a year into which LEPs could bid to pull down funding, the Chancellor George Osborne has not thus far stated how much will actually be made available. So while claiming to back the Heseltine report, the Chancellor’s words ‘low billions’ indicate that he won’t actually put his money where his mouth is. If it does happen, the funding is likely to be peanuts.
As reported in regional newspapers recently, Cable of course had anyway tried to roll back on the Government’s clear commitment to enact the plan, saying that while the Government “is not saying ‘no’ to Heseltine”, he wasn’t convinced of the need to set out how much money would actually be devolved, noting “the idea of putting a precise number around the ‘single pot’… doesn’t mean a great deal.”
Cable’s remarks were later echoed by Cities Minister Greg Clark, who said that “the decision as to whether to follow Michael (Heseltine) in putting a single number on it will take a time.”Cable and Clark’s argument seems to be that with all 39 LEPs likely to be bidding for funding then there’s no need to set out precisely how much money would being made available in advance. But when added to Osborne’s ‘low billions’ comment, this fuels fears that the government will do little more than pay lip service to implementing Heseltine.
Tarzan, of course, has been trying to up the ante, saying that any failure by the Treasury to put a precise figure on the funding available would signify a major rolling back of his plan, saying that “I don’t see how they can carry out what they’ve said they’re going to do without there being a figure.
And he asked “how can you get 39 LEPs to bid for an invisible pot? They don’t know the size of the pot; they don’t know how ambitious to be; and if they don’t know the composition of the pot they don’t know what to include in their bids. So I don’t see how ‘invisibility’ is compatible with what the Government has said.” And no figure, he said “would not be a satisfactory outcome…It means central government has clung on, kept control of all the budgets.”
Meanwhile, Osborne can carry on making out he is behind Heseltine’s proposals. It’s true that central government departments have been asked by the Chancellor to come up with funds that could go into the Hezza Pot, but how much they identify – let alone actually let go of – has yet to become clear.
And everything has anyway been postponed to 2015/16 which just happens to coincide with a General Election. In other words it will be the next government which implements – or not – Heseltine.
As things stand, oddly it might be a future Labour government that could be keener on implementing Heseltine than a future Conservative one. Labour in particular is trying to figure out what to do with LEPs, recognising that it couldn’t – if elected – scrap them as the current government did with RDAs as that would cause yet more chaos and alienate businesses which have put considerable time and effort into making a go of LEPs.
In addition to the lack of hard cash, Osborne has also rowed back from either giving LEPs control over infrastructure spending, or job and business support schemes, or even reviewing LEPs’ boundaries and governance structures.
Of course officially the government is keen to give the impression that it is responding to Heseltine positively and that a decentralisation is taking place. So while the government announced they are ‘accepting in full or in part 81 of Lord Heseltine’s 89 recommendations’, the reality is much less encouraging as a detailed examination of Annex A of the Treasury’s response to Heseltine indicates.
Of the 15 Heseltine proposals relating to ‘local growth deals’, the government actually ‘accepts’ just nine of them. In addition, on the local leadership of innovation, as the economic development commentator David Marlow has noted, even ‘accept’ means, de facto, enduring top down control of this vital agenda.
Indeed, in interpreting the government’s position on Heseltine, Marlow bemoaned the fact that the “inability of LEPs and (local authorities) to position innovation and knowledge-economy at the centre of local growth strategies in cities and areas seeking to be globally competitive will leave a massive hole which no amount of single local growth fund is likely to fill”.
But going back to Cable, what was especially interesting about his recent comments was his point that LEPs don’t have the capacity to handle such big amounts of money. That may well be the case, but let’s recall that it was a Cable-Pickles double act which made sure that LEPs were largely toothless talking shops. How ironic then that having scrapped RDAs, the replacement LEPs don’t – according to Cable – have the capacity to handle serious money. And the BIS Secretary is spot on in noting that giving big wads of public cash to unelected bodies would be inappropriate.
Yet this argument over a lack of democratic accountability shouldn’t be used to forestall broader devolution. England remains the most centralised state in Western Europe, and will do even after City Deals are enacted.
Look north, though, and some interesting developments are emerging, as Ed Cox at IPPR North notes. In Greater Manchester, Greater Leeds and the North East, new ‘combined authorities’ are being built of cooperating councils which have the legal footing to receive large amounts of public cash and which have some public accountability.
It’s these cooperating councils which offer the potential for channelling public money down to the local level without it just going via LEPs. That’s something councils here in various parts of the country could usefully look at – and in so doing overcome some of the fragmentation that we see with our LEPs in some places.
Professor David Bailey works at Coventry University Business School and is an Editor of the journal Regional Studies