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Whitehall is holding back growth plans

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“We now need to take the next bold step that will turn the tide on the excessive centralisation that shackles local ambition and creativity.”

So wrote chancellor George Osborne and business secretary Vince Cable in the government’s March 2013 response to Lord Heseltine’s review of government growth policy.

They said they agreed with Lord Heseltine’s “powerful case for decentralising economic powers from central government to local areas and leaders, as those best placed to understand and to address the opportunities and obstacles to growth in their own communities”.

The two men correctly recognised that the best solutions to England’s economic ills were local solutions. Whitehall is too remote to instigate a single national set of policies for a country, parts of which are experiencing economic stagnation and a dearth of jobs while other areas face a house price bubble and are attracting workers from across the globe. Far better to give power and money to local actors – elected councillors and business leaders with real knowledge of local needs – to spend in a way that makes the biggest difference.

However, beyond the grand words, the government’s response was disappointing. Lord Heseltine called for £70bn of funding relating to growth to be stripped from Whitehall departments over a five-year period and be given to local areas to spend on creating jobs and providing the infrastructure required for economic revival.

But the government only had the courage to take £2bn from Whitehall departments each year. Lo and behold, this is insufficient.

LGC reveals this week how the £2bn local growth fund is oversubscribed threefold. Scarcely credible, councils and their business partners are being told to “limit their ambitions”.

Let us recall that the ambitions in questions involve creating jobs, boosting prosperity and providing the infrastructure that will make Britain competitive in the decades to come.

The West Yorkshire Combined Authority is one that has run into problems. Ministers have stalled on finding a solution after its plans to create 22,000 jobs were thwarted by the council tax referendum.

Let us also consider the fate of the rest of Lord Heseltine’s £70bn – it is being held by Whitehall ministries to be used for their own purposes, hardly in keeping with decentralisation.

LGC this week features extracts from a New Local Government Network study into the success of combined authorities in urban areas. There is no doubt that establishing these has offered a means of getting much needed infrastructure and job creation projects off the ground. They have the potential to be considered a real step forward and the coalition’s greatest legacy for local government.

The plans and ambition to obtain local solutions to growth are in place. Local government has fulfilled its side of the bargain. This now needs to be matched by a farsightedness from ministers to let go of the reins and allow the great cities of England to drive the economy.  

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Readers' comments (1)

  • Simon Neilson


    It was always going to be difficult to reconcile the 'be ambitious' message promoted and encouraged by Government as we all submitted our SEPs with the money (and to a degree the flexibility of that money) available in the first round.

    In fairness, the LGF it is at least a step in the right direction - but we all accept there is much further to go. So long as Government learns from this first experience we can, to a certain extent, accept the various bumps in the road. To do so Government needs to listen to positive suggestions from LEPs, Local Authorities and others about next time round; needs to act upon those suggestions to make the process smoother and the expectations clearer; and needs to go further - to genuinely devolve and agree authentic 'growth deals', not just fund projects as is the current likely outcome.

    I and colleagues across the country stand ready to help and have made that offer to senior civil servants through ADEPT- this experience being a new one for many of those civil servants too, of course.

    Simon Neilson
    Executive Director: Regeneration, Walsall MBC
    Chairman: Planning, Housing and Regeneration Board, ADEPT.

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