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Heseltine: fiscal freedoms unlikely for most councils

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The powers and controls the government is proposing handing down to councils do not amount to true devolution, government special adviser Lord Heseltine has said.

Speaking at the Local Government Association’s conference in Harrogate, former deputy prime minister Lord Heseltine told delegates they were unlikely to be granted the freedoms they want, especially fiscally.

He said: “When one talks of devolution it’s not realistic to talk about freedom. This is a partnership concept. Central governments are elected and they are entitled to have their manifestos implemented and it cannot be contemplated there is a sense of freedom at a local level which can actually frustrate the clear mandates upon which governments are elected.”

When one delegate put it to him that the government’s offer was decentralisation as opposed to devolution, Lord Heseltine agreed. He said: “This is not freedom, this is a partnership. My own experience of local and central government is there is no structure which would enable all local authorities to be self-sufficient.

“So you are always going to have redistribtution from the prosperous centres to the less prosperous areas. Once you have that you have to have rules. I am sympathetic to the word partnership rather than ‘freedom’ or ‘devolution’.”

In May chancellor George Osborne said he wanted to see if the country could “go further down the road of fiscal devolution”. Lord Heseltine said while the government had introduced the business rates retention system, and is trialling pilots for the retention of 100% business rates growth in Cambridgeshire and Peterborough, and Greater Manchester and Cheshire East, he thought councils had to “live in the real world” and realise there were “an awful lot of councils which can’t finance themselves”.

Lord Heseltine said budget cuts and the way in which councils can work together were the two “hurdles” in the way of maintaining the momentum of the devolution agenda.

On future structures Lord Heseltine said it would be “idle to pretend government is going to devolve back to the same structures of local government from which they have been taking it for decades”. Councils must design structures, such as combined authorities, that “reflect your local economies” instead, he said.

Lord Heseltine said local enterprise partnerships were “proving invaluable in making a reality of the devolution agenda” and added it would be “inconceivable” for them not to be involved in councils’ future plans.

Lord Heseltine admitted the issue of elected mayors “does cause a problem” in many areas but added: “If you’re going to have effective power structures and compete with America, France, Germany, Japan, every advanced economy, then you have to have [a structure] that’s robust and accountability that’s convincing. Everyone knows the difficulties in achieving this but it’s quite difficult for government to do some of the things you’re asking it to do. The opportunity is there and like all opportunities you don’t have to grasp it. You can go on as now – that option exists. I think it would be the wrong one but it’s up to you to put forward convincing answers for leadership and structure.”

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Readers' comments (1)

  • The truth about pretend devolution outs from all the Heseltine waffle. What's all this stuff about structures competing with the USA etc got to do with the imposition of unwelcome elected mayors. What's next - commissars!

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