By Mike Thatcher | 11 July 2013
Lord Heseltine has described the government’s proposed funding for the local growth pot as a ‘significant start’, despite it being well below the figure recommended in his No stone unturned report.
The former deputy prime minister had originally called for £49bn over four years plus £9bn from European funding to help stimulate growth and boost local areas. In the Spending Review, however, Chancellor George Osborne only promised £2bn a year.
But Heseltine told delegates at the CIPFA conference today that the actual figure on offer was £20bn. This comprised the £2bn over six years, £5bn of European money and £3bn from the Regional Growth Fund and City Deals.
‘Is £20bn a fixed sum of money that anyone else can remember the government making available for local people to spend? I can’t remember any initiative of that sort in my life. So it’s a start, a significant start,’ he told the conference.
Speaking later to Public Finance, Heseltine suggested that the sums available for the local pot could grow over time.
‘The chancellor used an interesting word when he described the funds as “rising” through the period. I think it’s his intention to get the thing under way, to see it as part of a long-term trend. And it is now up to local people to prove the faith that is being shown in them is justified.’
In his speech at the London conference, the Tory grandee emphasised the importance of ‘gearing’, with private sector investment supplementing government funding.
‘What would the gearing be? I don’t know. If it’s one-to-one that’s £20bn we didn’t have before; if it’s one-to-two that’s £40bn we didn’t have before.’
Much of the public sector funding will be transferred from Whitehall budgets. The money will then be invested through Local Enterprise Partnerships, which bring together local authorities and businesses.
Heseltine suggested that the transfer of the funds from central to local control had not gone down well in Whitehall.
‘Just think if it was your money that somebody else was getting. That is not a formula for popularity. Of course, there is civil war and the civil war will go on,’ he told delegates.
‘If the local pot advocates and practitioners do it weakly or badly, central government’s claws will be into that money as fast as you know.’
Mariana Mazzucato, professor of science and technology policy at the University of Sussex, spoke at the same conference session and highlighted the importance of public sector-led innovation,
She said it was wrong to suggest the state’s role was simply to fix market failure. In reality, governments had played a key role in a number of innovations such as the internet and the iPhone.
She gave the BBC as an example, pointing out that it had not restricted itself to ‘documentaries about giraffes and ballet’ like other public broadcasters around the world.
‘The BBC has done soap operas, but it also created the iPlayer, which is one of the most innovative platforms for brodcasting around the world. And it was done in-house – they did not outsource it to Serco as much of government has been doing.’
