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Heseltine's No 10 report blasts coalition over growth strategy Heseltine's No 10 report blasts coalition over growth strategy
(about 11 hours later)
Lord Heseltine will on Wednesday deliver an explosive critique of the government's economic policy when he publishes a six-month study commissioned by Downing Street that dismisses deregulation as the sole path to growth and lambasts Whitehall for the lack of a coherent state led industrial strategy.Lord Heseltine will on Wednesday deliver an explosive critique of the government's economic policy when he publishes a six-month study commissioned by Downing Street that dismisses deregulation as the sole path to growth and lambasts Whitehall for the lack of a coherent state led industrial strategy.
In a no-holds-barred report, the experienced former Conservative cabinet minister warns "continuing as we are is not an acceptable option", adding "the message I keep hearing is that the UK does not have a strategy for growth and wealth creation".In a no-holds-barred report, the experienced former Conservative cabinet minister warns "continuing as we are is not an acceptable option", adding "the message I keep hearing is that the UK does not have a strategy for growth and wealth creation".
His iconoclastic proposals call for a major restructuring of local government and handing £58bn of Whitehall cash to city-based engines of growth, co-ordinated by businesses and local councils.His iconoclastic proposals call for a major restructuring of local government and handing £58bn of Whitehall cash to city-based engines of growth, co-ordinated by businesses and local councils.
Among some ministers there was incredulity that David Cameron had asked such an interventionist figure as Heseltine to compile a report into every aspect of Britain's low growth.Among some ministers there was incredulity that David Cameron had asked such an interventionist figure as Heseltine to compile a report into every aspect of Britain's low growth.
The Tory peer told BBC Radio 4's Today programme that he had huge admiration for the government over its decision to commission a report from him, and said the chancellor, George Osborne, had backed the initiative.
"You have to be very strong and very confident to ask admittedly a very long-standing friend and supporter to look at what you're doing and suggest how you could do it better," Heseltine said.
Heseltine said the government was doing an "extremely good" job but that there were things that could be done "further and faster" than presently as he pressed the need for "urgency" in stimulating growth.
He said he had "told it as I see it" and was braced for resistance from some parts of Whitehall that feared losing some of its power base.
Heseltine said the fact that the published report appeared well-received by the union and business lobby alike underlined the "one nation" narrative he attributed to Cameron.
"I have had nothing but encouragement from the prime minister, from the chancellor and I've got baggage, they know my views, so there was bound to be in the report things that they've said, 'Oh my God, he's off again.' OK fine, but if I had done less than that, if I had tried to avoid the difficult issues, tried to sort of paper over anything that might be called a criticism, you people would say, 'What a waste of time, why did he bother to do all of that?'"
He added: "So I've told it as I see it but I've told it in a way that is very supportive of the opportunity this government has got. And if I may make what I think is quite an important point: the prime minister talks of 'one nation', no one believes that more passionately than I do. We've produced a report that is supported by the CBI and the TUC. If that isn't a platform one which you can talk bout one nation, I don't know what is."
The report, originally commissioned at the initiative of Cameron's then-strategy adviser Steve Hilton, challenges government policy on a vast range of specific issues such as a third runway in the south east, immigration, a wider public interest test to block foreign company takeovers, skills, and the structure of both central and local government.The report, originally commissioned at the initiative of Cameron's then-strategy adviser Steve Hilton, challenges government policy on a vast range of specific issues such as a third runway in the south east, immigration, a wider public interest test to block foreign company takeovers, skills, and the structure of both central and local government.
In remarks directed at the chancellor George Osborne that will be greeted with delight by the Liberal Democrats, he says the private sector will not invest in energy infrastructure "without real certainty about the UK's long-term energy policy". In remarks directed at Osborne that will be greeted with delight by the Liberal Democrats, he says the private sector will not invest in energy infrastructure "without real certainty about the UK's long-term energy policy".
He will also infuriate the Tory right by rejecting crude deregulation or tax cuts as the fast track to prosperity, saying "the principal void in today's investment climate is confidence – and tax changes will have only a limited effect on that".He will also infuriate the Tory right by rejecting crude deregulation or tax cuts as the fast track to prosperity, saying "the principal void in today's investment climate is confidence – and tax changes will have only a limited effect on that".
He says: "I reject the notion that regulation in itself hinders growth. Good, well-designed regulation can stop the abuse of market power and improve the way markets work to the benefit of business employees and consumers."He says: "I reject the notion that regulation in itself hinders growth. Good, well-designed regulation can stop the abuse of market power and improve the way markets work to the benefit of business employees and consumers."
Calling for a long-term industrial strategy, Heseltine says he does not "believe the current structures do enough to enable the government to work together coherently to drive through the change required".Calling for a long-term industrial strategy, Heseltine says he does not "believe the current structures do enough to enable the government to work together coherently to drive through the change required".
He added: "Whitehall continues to approach these issues from the individual policy priorities of different departments as if economic issues can be effectively addressed in a placeless vacuum."He added: "Whitehall continues to approach these issues from the individual policy priorities of different departments as if economic issues can be effectively addressed in a placeless vacuum."
Heseltine has consulted government ministers closely during the preparation of the report, but in an attempt to underline his independence he has largely kept the conclusions from ministers, briefing the business department only on Monday.Heseltine has consulted government ministers closely during the preparation of the report, but in an attempt to underline his independence he has largely kept the conclusions from ministers, briefing the business department only on Monday.
Osborne is bound to find some of the remarks in the report difficult to digest, although its criticisms of Whitehall and the planning process will be welcomed.Osborne is bound to find some of the remarks in the report difficult to digest, although its criticisms of Whitehall and the planning process will be welcomed.
The communities secretary Eric Pickles strongly opposes a local government reorganisation.The communities secretary Eric Pickles strongly opposes a local government reorganisation.
Heseltine is careful to endorse the government's deficit reduction strategy, but the wider criticisms in the report condemning the absence of a clear credible growth strategy have been seized on by Labour just weeks before an Autumn Statement that is likely to contain another downgrading of UK growth forecasts.Heseltine is careful to endorse the government's deficit reduction strategy, but the wider criticisms in the report condemning the absence of a clear credible growth strategy have been seized on by Labour just weeks before an Autumn Statement that is likely to contain another downgrading of UK growth forecasts.
Rachel Reeves MP, Labour's shadow chief secretary to the Treasury, said: "It's a damning indictment of this government that, halfway through this parliament, a former Conservative cabinet minister is still calling for a plan for growth.Rachel Reeves MP, Labour's shadow chief secretary to the Treasury, said: "It's a damning indictment of this government that, halfway through this parliament, a former Conservative cabinet minister is still calling for a plan for growth.
"Since the spending review two years ago we've had growth of just 0.6% compared to the 4.6% growth George Osborne said he would deliver. And the result of the government's failure is that families are worse off, long-term unemployment is rising and borrowing is going up.""Since the spending review two years ago we've had growth of just 0.6% compared to the 4.6% growth George Osborne said he would deliver. And the result of the government's failure is that families are worse off, long-term unemployment is rising and borrowing is going up."
In possibly his central proposal, Heseltine suggests nearly £48bn of current government cash earmarked for growth over four years in different Whitehall departments should be placed in a single funding pot for local areas. He proposes adding nearly £9bn of EU funding to the pot, saying current spending of this EU cash is bureaucratic and inefficient.In possibly his central proposal, Heseltine suggests nearly £48bn of current government cash earmarked for growth over four years in different Whitehall departments should be placed in a single funding pot for local areas. He proposes adding nearly £9bn of EU funding to the pot, saying current spending of this EU cash is bureaucratic and inefficient.
He suggests the 39 local enterprise partnerships (LEPs), the government's chosen engine of local economic growth, then bid for this pool of cash which would be diverted permanently from budgets of departments.He suggests the 39 local enterprise partnerships (LEPs), the government's chosen engine of local economic growth, then bid for this pool of cash which would be diverted permanently from budgets of departments.
But he criticises the current quality of LEPs that replaced the regional development agencies, calling for them to be strengthened saying "they currently do not have the authority or resource to transform their locality".But he criticises the current quality of LEPs that replaced the regional development agencies, calling for them to be strengthened saying "they currently do not have the authority or resource to transform their locality".
On local government, he complains England has 353 principal authorities, some unitary and some operating as two tiers with district and county councils, a structure, he describes as " baffling and bears no relation to modern economic activity". Legislation preventing councils becoming unitary authorities passed by the government should be repealed, he says.On local government, he complains England has 353 principal authorities, some unitary and some operating as two tiers with district and county councils, a structure, he describes as " baffling and bears no relation to modern economic activity". Legislation preventing councils becoming unitary authorities passed by the government should be repealed, he says.
Heseltine also suggests city mayors, largely rejected by referendums in May, should be appointed without the need for a local plebiscite. He complains that the government approach to empowering local economic communities has been complex and piecemeal. The government, he says, has "been prepared to dip its toe, or several toes, in the water but not yet prepared to accept the full logic of its position with the confidence it should".Heseltine also suggests city mayors, largely rejected by referendums in May, should be appointed without the need for a local plebiscite. He complains that the government approach to empowering local economic communities has been complex and piecemeal. The government, he says, has "been prepared to dip its toe, or several toes, in the water but not yet prepared to accept the full logic of its position with the confidence it should".
Turning to Whitehall he calls for a new national growth council chaired by the prime minister, a body that sounds similar to the national economic council set up by Gordon Brown, but abolished by the government. The council would publish a national growth plan, linked to departmental reports, and approve LEP bids for funding.Turning to Whitehall he calls for a new national growth council chaired by the prime minister, a body that sounds similar to the national economic council set up by Gordon Brown, but abolished by the government. The council would publish a national growth plan, linked to departmental reports, and approve LEP bids for funding.
He concedes the business department has published industrial plans but dismisses them, saying, "put crudely, who has heard of them or changed their behaviour as a consequence?"He concedes the business department has published industrial plans but dismisses them, saying, "put crudely, who has heard of them or changed their behaviour as a consequence?"
He adds: "There is a powerful appetite in the business world for the government to lay down a vision for how we will achieve long term prosperity in the UK and a plan to ensure its implementation through all departments".He adds: "There is a powerful appetite in the business world for the government to lay down a vision for how we will achieve long term prosperity in the UK and a plan to ensure its implementation through all departments".
He complains that in the regions, "disparate teams of civil servants from different departments are not working in a cohesive way".He complains that in the regions, "disparate teams of civil servants from different departments are not working in a cohesive way".
He also lambasts departmental business plans as "not being fit for purpose", and says Whitehall has no management information system in place to allow ministers to know "what their civil servants do, how much it costs, who authorised it what output measures have been set or, crucually, whether they are being met".He also lambasts departmental business plans as "not being fit for purpose", and says Whitehall has no management information system in place to allow ministers to know "what their civil servants do, how much it costs, who authorised it what output measures have been set or, crucually, whether they are being met".
Setting out a timetable for the government to implement his plans, Heseltine says: "Some will say there are criticisms. That is exactly the wrong approach. To invite criticism is a sign of strength, to accept it is a sign of confidence."Setting out a timetable for the government to implement his plans, Heseltine says: "Some will say there are criticisms. That is exactly the wrong approach. To invite criticism is a sign of strength, to accept it is a sign of confidence."