Give government money to local business groups, says Heseltine

Posted on 31 Oct 2012

Lord Heseltine has recommended large scale devolution of government funds to the regions in a report that wants a small central government machine and more power for Local Enterprise Partnerships (LEPS).

In the review, presented in a deliberately personal style, he calls on the Government to take bold action to stimulate the economy.

Author of the report Lord Heseltine - photo courtesy of University of Salford
Author of the report Lord Heseltine - photo courtesy of University of Salford

The report was commissioned to measure how effective central government and government agencies are in responding to business needs and to create growth.

It says the UK does not have a strategy for wealth creation, and Lord Heseltine calls the current climate “the worst economic crisis of modern times” and argues that local business and political leaders are best placed to invest the money.

The report, called ‘No Stone Unturned’, makes 89 recommendations, many of which focus on the more effective deployment of £49 billion of public funds used to pay for a swathe of business support.

Lord Heseltine says that the current plan for economic growth is not working. The main proposals to stimulate growth include:

  • large scale devolution of funding
  • enhancing the standing of Local Economic Partnerships (LEPs) to bring together private and public sectors
  • making a smaller and more skilled government machine
  • a push on major infrastructure projects, with better government leadership
  • a role for employers in education

While the report calls for a smaller government machine, it also recommends that government take a more decisive role in certain aspects of business support.

Bentley's factory in Crewe. The Heseltine Review calls for more public spending power for provincial business support, such as LEPs

Business gave the proposals strong backing.

Speaking on BBC Radio 4 on Wednesday Julie White, managing director of D-Drill, a manufacturer of construction equipment, said that giving more power to local business groups was a good idea.

“I’ve been on the local Chamber of Commerce for years, they know what we make, they know our business and our apprentices. Its better that the LEPs (Local Enterprise Partnerships) who know these companies deploy the money because the alternative is a minefield.” She says D-Drill, with 120 staff, takes on 10-15 apprentices a year and this is the kind of local business decision that needs a more local sympathetic ear.

Mrs White also said she wanted government to interfere less and “leave companies alone to get on with our business”. The review actually recommends more targeted government involvement in local business, but Mrs White qualified her appeal saying “we want government to get involved in reducing regulation rather than lots of new schemes,” and suggested that one good intervention would be to provide National Insurance hand-outs for apprentices.

Chief executive of manufacturers’ group EEF, Terry Scuoler, warned that with such a wide-ranging review, the government must consider how the proposals would work in practice.

“This is particularly true of Lord Heseltine’s thinking on LEPs,” he said. “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 make sense. But, government needs to make sure that 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.”

He added that in particular the government 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.”

Leader of the CBI John Cridland also backed regional rebalancing. “[Lord Hesltine’s] key point is that we need more local action and leadership, which must be right,” he said.

“To successfully rebalance the economy towards private sector growth, every part of Britain needs to grow – we must not just rely on the usual suspects of London and the South-East.

Mr Cridland wholeheartedly backed greater powers for local business groups. “LEPs have so far lacked the power and resources to impact local growth. Given this review highlights a number of additional areas in which LEPs can help support private sector activity, it is even more vital that they are given appropriate resources to help them to meet this challenge.”