From the TUC

Implementing Heseltine – A Single Local Growth Fund

27 Jun 2013, by in Economics, Politics

Implementing the Heseltine Review, ‘No Stone Unturned in Pursuit of Growth’ was always going to be politically tricky for the Government. On the face of it, a Conservative-led Government inplementing a report by a former Conservative Deputy Prime Minister should be straightforward enough. But we all know that Heseltine’s interventionist, One-Nation brand of Toryism (I use the word advisedly) is a long way away from that of the laissez faire, free-marketeers in today’s Conservative Party. What to do?

The Government said it would implement, in full or in part (an important detail) 81 of Lord Heseltine’s 89 recommendations. I could cynically say that it is the eight not implemented that are probably the most important! That wouldn’t be quite fair, but I do think the partial implementation of some recommendations renders them, if not meaningless, then certainly diluted. The TUC, for example, liked the idea of a National Growth Strategy, with concrete commitments against which it could be held to account, and a National Growth Council, chaired by the Prime Minister. Commitments concentrate the mind and Prime Ministerial authority is more likely to ensure that things get done. But those recommendations won’t happen, at least in the form that Lord Heseltine meant them to happen.

Today, the Government reports on implementing the concept of a Single Local Growth Fund (SLGF), as also envisaged by Hezza. In fact, the Government does seem taking this idea and running with it. The issue is the funding, or lack thereof, that could well render it toothless. The Spending Round has announced that over £2 billion of funding from across the transport, skills and housing budgets will be included in the SLGF in 2015-16. A further £2bn will be added year on year, bringing this total up to £12bn by 2020-21. Lord Heseltine didn’t stipulate a figure in his report. He did give an indicative figure, saying that had his formula been followed during the current Spending Review period (i.e. in the four years to 2015), the figure would be £49bn in four years (as opposed to the Government’s £12bn in six years). That shows the difference in the scale of ambition.

This reminds me a little bit of the situation regarding Catapult Centres. Catapults (ignore the silly name for the moment) are based on the German Fraunhofer model, and are designed to bridge the gap between academic research and business, in key sectors. They are such a good idea, but they are funded to a fraction of the level that our German counterparts enjoy, meaning they simply can’t get the same traction. In the longer term, it is important to get private sector money in, but if that is to happen, companies must be confident that they are backing a winning model, so we could end up with a Catch 22 situation: Catapults don’t get early wins, for lack of funds, which means companies do not support them over the longer term.

Are we seeing the same thing here with the SLGF? Partly. The UK’s ability to think big, in the way that the Germans, the Americans and the Chinese think big, has long held us back. Having said that, Heseltine’s recommendation was radical in a UK context. We are a country that loves to centralise, so it was always going to be hard going to implement this. Moreover, I suspect (and I have a lot of sympathy for the idea) that Local Enterprise Partnerships, to whom this money will be devolved, are simply not up to the task at present. They came about because the Conservatives wanted to scrap Regional Development Agencies when they took office, but LEPs, too, have less government support. There is something to be said for building their capacity first. A part of that task should entail welcoming the trade union contribution, following the constructive role we played on RDAs. Heseltine said of LEP boards: “What is missing is the experience of those from the shop floor of industry.”

Time will tell if LEP capacity is, indeed, built and in the longer term, more power (and money) is devolved to them. I won’t be holding my breath.

One Response to Implementing Heseltine – A Single Local Growth Fund

  1. Shaun
    Jun 28th 2013, 9:19 am

    As some who has worked on delivering ERDF for the past 12 years, there is a feeling that the Regional Growth Fund was a golden opportunity to maximise the impact of ERDF funding with this source. This opportunity was missed in Rounds 1 and 2 of RGF.
    Potentially heseltine’s idea of the Single Pot increases the opportunities to maximise the potential for ERDF. However, you are absolutely right when you state that the capacity of the LEPs is woefully lacking. In part this is due to loss of staff taking redundncy because of the cuts. It is laso due to the lack of support provided to the LEPs to employ staff and also the LEPs are now being asked to carry out functions which are completely different to their original aims.