Government to take forward "overwhelming majority" of Heseltine's proposals for local economic growth

Out-Law News | 20 Mar 2013 | 8:00 am | 3 min. read

The Government will take forward the "overwhelming majority" of Lord Heseltine's recommendations to stimulate economic growth at a local level, including the creation of a single funding 'pot' for regional spending, it has announced.

A new Single Local Growth Fund will be established from 2015, to cover local housing, transport and vocational training projects, it said. Local authority and business partnerships, which are to be given more responsibility for their own spending plans, will be invited to bid for a share of this funding. They will be allocated a share of up to £500,000 over the next two years to devise local economic strategies, the Government said.

Deputy Prime Minister Nick Clegg said that the new arrangements would give local areas the power and incentives to drive local growth arrangements that met their own needs. Authorities and local business partners would be tasked with setting up the right governance arrangements, pooling resources and seeking additional funding from the private sector where necessary, he said.

"[Heseltine's] vision is the best way to foster local growth and stimulate the economy," he said. "A single local growth fund that Local Enterprise Partnerships apply to, joined up working between local authorities so they make strategic decisions on projects that boost growth such as infrastructure spanning their areas, and specialist support from civil servants."

"It's a big change from the hand-out attitude of the past that stifled innovation and turned the regions into powerless centres that relied on Whitehall for jobs and spending," he said.

In his Government-commissioned report, published at the end of last year, Conservative politician and former cabinet member Michael Heseltine recommended giving Local Enterprise Partnerships (LEPs) the responsibility for local spending plans. They would then be able to compete for a share of central government funding, to be distributed from a single funding 'pot', he said.

The report made 89 recommendations affecting industry, regulators and local and central government. These included closer relationships between government and the private sector, and changes to the regulatory and planning regimes. In its response (70-page / 1.7MB PDF), the Government accepted 81 of these recommendations in whole or in part, and said that it would consider a further three as part of the next Spending Review.

Among the recommendations rejected by the Government was Heseltine's call for the Government to clarify its position on increasing airport capacity in the South East of England before the next election. This will instead by considered by the Airports Commission, led by Sir Howard Davies, which is due to deliver an interim report by the end of this year. It has also rejected giving chambers of commerce an enhanced legal status, instead encouraging them to work more closely with LEPs to support businesses and provide advice at a local level.

According to the Government's response, funding from the Single Local Growth Fund will be allocated to LEPs according to the quality of their ideas and local need. LEPs are the local government initiative launched by the Government in 2010 to help deliver economic growth and decentralisation. They consist of partnerships between local authorities, businesses and other organisations, and there are currently 39 such partnerships in England.

The new 'Growth Deals' with LEPs will build on the Government's existing 'City Deals' programme, according to Cities Minister Greg Clark. These are tailored agreements entered into between the Government and some of England's largest cities and local regions, granting these places greater powers over local budgets and economic growth.

“The Government’s response to the Heseltine Review is a welcome starting point for increased local solutions for local growth," said Alan Aisbett of Pinsent Masons, the law firm behind Out-Law.com. "We have a promise of a single pot Local Growth Fund; increased availability of growth funding for LEPs, and a streamlining of EU funds to local priorities."

"However welcome this is it is little more than a vision. There needs to be greater emphasis on delivering the vision and this can only be achieved through providing sufficient resources to the LEPs and their partner local authorities to deliver new infrastructure projects and greater assistance to small and medium sized businesses," he said.

Separately, Business Secretary Vince Cable announced the Government's next steps in implementing its Industrial Strategy, in line with Heseltine's recommendations. Announcements included stronger partnerships between the Government and industry, and further support for the aerospace and automotive sectors.

"This support not only gives businesses certainty, but shows the Government is determined to back those sectors where Britain can deliver and compete on a global scale in partnership with industry," he said.