Growth Deal and £500m manufacturing support package the response to Heseltine

AS expected, the Government has green-lighted most of the proposals in Lord Heseltine’s No Stone Unturned Report which give local enterprise partnerships (LEPs) more control over funding for regional economies.

Lord Heseltine made 89 recommendations to the Government, across areas of public policy that affect economic growth. The Government announced it is accepting the overwhelming majority of these recommendations.

The Government has also annopunced it is to inject £500m into key manufacturing sectors such as aerospace.

The Government says it will create a new Single Local Growth Fund from 2015 that will include the key economic levers of skills, housing and transport funding, with full details set out at the forthcoming Spending Round and harness the power of competition to get the best from places, negotiating a local Growth Deal with every LEP with the allocation of the Single Local Growth Fund reflecting the quality of their ideas and local need.

Local areas will be challenged to put in place the right governance across local authorities, pool resources, and find match funding from the private sector.

The Chancellor of the Exchequer George Osborne said: “We asked Lord Heseltine to do what he does best: challenge received wisdom and give us bold ideas on how to bring government and industry together. He did just that, and that is why we are backing his ideas today.”

Business Secretary Vince Cable said: “We have grasped the challenge that Lord Heseltine’s report posed to Government and accepted the vast majority of his recommendations. The plans will boost the UK’s competitiveness nationally and drive local growth through the local Growth Deals that we will be negotiating with every Local Enterprise Partnership.

“In line with Lord Heseltine’s report, today we have also announced a package of wider support that is a big vote of confidence for our industrial strategy, particularly the aerospace, automotive and agri-technology sectors.”

The move follows the release of the Greater Birmingham Project, a blueprint of how the recommendations contained in Lord Heseltine’s review could be delivered in the major regions.

Lord Heseltine, accompanied by representatives of the Greater Birmingham and Solihull Local Enterprise Partnership, gathered in Birmingham on Sunday to announce how the blueprint would work in practice.

Commenting on the Government’s response, Andy Street, Greater Birmingham and Solihull LEP chair, said: “The GBSLEP welcomes Government’s acceptance of the majority of Lord Heseltine’s proposals. That is a vote of confidence in the approach we have been taking over the last two years.

“The details of the response from government demonstrate that the approach outlined in our joint report with Lord Heseltine ‘The Greater Birmingham Project – the Path to Local Growth’ is right.

“That report shows how the concept of a single pot for economic development will enable us to accelerate the pace of growth.

“If our work with Lord Heseltine has had any role in framing the Government’s response, then we’re pleased to have contributed to the national debate.

“Now the hard work really begins as we begin our work to prepare our submission to the single pot. We are in a strong position to do this and, in the meantime, we continue our efforts to drive economic growth in the GBSLEP.”

Ian O’Donnell, Warwickshire & Coventry chairman of the Federation of Small Businesses, said:  “We feel that overall the Government has taken the right approach with the recommendations it is going to take forward from the Heseltine Review.

“As he rightly identifies, local economic development is incredibly important to growth and the development of small businesses. Funding for the regions has for too long been overly centralised and Lord Heseltine’s proposals will finally allow local communities to start to have direct influence over their local economies.

“While they still require further development, we believe Local Enterprise Partnerships (LEPs) are best placed to know what action is needed to help their local areas develop.”

Jan Thompson, Midlands chairman of property consultancy Jones Lang LaSalle, stressed that the most important element is yet to become clear: the level of funding which would be released from Whitehall to allow the LEPs to proceed with Heseltine’s proposals.

“It has become a rather over-used response, to government announcements around Budget time, to remind people that the devil is in the detail, but it’s still relevant and still true,” he said.
 
“It’s fantastic that the chancellor has accepted 81 of Heseltine’s ideas, but now we need to know the size of the ‘pot’ which will allow these concepts to become reality. There are rumours that the Treasury wants to scale back the funding quite considerably, so let’s hope these aren’t correct.”

Paul Kehoe, chief executive of Birmingham Airport, said:  “We welcome Lord Heseltine’s recommendations and thank him for the time he spent in Birmingham understanding the potential that cities like ours have. His report rightly recognises that for the national economy to prosper, we need to unlock the potential of economies across the UK.
 
“Lord Heseltine recognises that airports are at the heart of future growth strategies for our cities, opening the door to international markets and plugging them into global wealth. A city’s economy is only as good as its national and international connectivity, which is why investment in transport must be at the centre of any growth strategy and we will be putting this case to the Airports Commission.
 
“At Birmingham Airport, we could double the number of passengers overnight and our investment in our runway extension means that we will be able to serve high value markets like the BRIC economies from next year. We are committed to playing our role in helping Midlands’ businesses reach their full potential, and in so doing to maximise the economic growth potential of Birmingham.”

The Government’s decision to inject £500m into key sectors such as automotive and agricultural technology, should be seen as a signal of intent for the UK’s industrial strategy, according to John Leech, UK head of automotive at accountancy and advisory firm KPMG.
 
“The UK Government is seeking an on-going closer relationship with manufacturers than we have had in recent decades,” he said.

“In many ways, the automotive sector has been in the forefront of Government policy, most notably through the successful establishment of the Automotive Council, which has brought Government and the industry together in working parties to better position the UK industry. 
 
“Today’s announcement of the £500m funding was made alongside the Government’s announcements relating to the aerospace sector. And it is here that automotive manufacturers could also see hope of a future direction. 

“The creation of the UK Aerospace Technology Institute (ATI), which will see academics and the aerospace industry working together to innovate for generations to come, will be viewed with optimism by automotive manufacturers, that they too might enjoy Government support for long-term assistance in deep industry skills and technology. 

“That is something the industry would really savour.”