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Heseltine: Local Enterprise Partnership settlements set to be “transformational”

Long awaited announcement in July of Government's £2bn cash allocation to England’s 39 local enterprise partnerships (LEPs) will be “transformational” for local government, Lord Heseltine, chair of the body advising ministers, said last week.

Heseltine's comments came while in conversation with Infrastructure Intelligence editor Antony Oliver during the final session of the ACE Annual Conference held in London (view a video interview with Lord Heseltine, recorded after his keynote, above).

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The annual £2bn Local Growth Fund will be allotted for the first time in July this year and is being competed for by LEPs through Local Growth Deal applications.

“The announcement of the results of the bidding process will be the big story [this year],” he said. “There is billions available, it is transformational stuff. It is not as much as I asked for but no one has got this much before.”

“Competition is an incredible motivator and introducing it into the public sector is a game changer”

Lord Heseltine is chair of the Regional Growth Fund Advisory Panel along with vice-chair Lord Shipley and is advising ministers on which LEPs should receive what money.

Lord Heseltine insisted that the best way to make local government focus on wealth creation is “to make it compete,” for funding against the many other regions seeking investment.

“The process is in its infancy but central government has to change the means of handing out the money and LEPs have to prove they can deliver,” he said.

But Lord Heseltine warned that, on the evidence he has seen so far on LGF bids, LEPs “have to raise their aspirations in my view”, accepting that while there were a number of very organised and forward thinking LEPs, many had work to do to boost the quality  of bidding.

Local Growth Deals and the introduction of bidding for LGF funding are the result of Lord Heseltine’s report “No stone unturned in pursuit of growth” produced in March 2013. This made the case for a major rebalancing of responsibilities for economic development between central and local government and between government and the private sector. At the heart of its proposals were measures to unleash the potential of local economies and leaders.

“Competition is an incredible motivator and introducing it into the public sector is a game changer,” Lord Heseltine said at the ACE annual conference.

“I am an interventionist. There will be people in this room who want to get rid of red tape but no other country is doing it. The idea that that adds up to an industrial strategy doesn’t bear any scrutiny.”

He explained that while the industrial revolution was driven by business buccaneers in the northern cities, the necessary need to improve conditions of the workforce and reallocate the wealth created had removed any entrepreneurial impetus.

“In place of the buccaneers we got the great departments of state, functionally divided monopolies allocating cash to local government which is not in the business of wealth creation. The answer this government believes is the LEPs.”

In a wide ranging conversation at the conference Lord Heseltine also focused on the importance of better education for the young in driving an economy into growth. “The single most important element is the energy, talent and educational attainment of the younger generation. What can businesses do if they can’t get the people they need or have to fund them staying at home doing nothing.”

Private sector relationships with schools is critical, he said. “Lots of schools have no private sector governors, no private sector careers advisers or visits to local industry. This is incomparably important. Engagement of young people in their careers gives them enthusiasm to learn more. Look at Chinese and Korean schools which are generally producing numerate and literate children.”

He also suggested that Governments need to be hands on if they want to encourage concerted growth.

“I am an interventionist. There will be people in this room who want to get rid of red tape but no other country is doing it. The idea that that adds up to an industrial strategy doesn’t bear any scrutiny.”

If you would like to contact Jackie Whitelaw about this, or any other story, please email jackie.whitelaw@infrastructure-intelligence.com.