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Local investment to drive growth – Lord Heseltine

The former Conservative deputy prime minister Lord Heseltine has challenged Government to take action and stimulate the economy through radical reorganisation of local government and business support mechanisms.

His hefty new report, commissioned by Downing Street, calls for the £49bn used to support industry to be distributed locally, rather than through central government. Devolving power from Whitehall would allow local leaders to make decisions about investment in the regions.

Lord Heseltine makes 89 recommendations, including allocating money to new LEPs over the next few years and increasing their responsibilities to wealth creation as well as social provision. He has accepted in interviews that many of his recommendations will be unpopular in Whitehall, as they seek to wrest political and financial decision-making control from central Government and civil servants.

A national growth council should be created, his report recommends, with cross-government focus on driving growth, a major devolution of funding, enhanced standing of LEPs and possibly reorganisation of their boundaries, more government leadership for major infrastructure projects and a role for employers in education.

He has backed the Government’s economic strategy in broad terms, but calls for more to stimulate growth in industry.

Lord Heseltine said: “Our ability to create wealth has suffered. What we need is a new partnership between the private and public sectors, between local communities and central government. Only in this way will we get the best use of our limited public funds and leverage in private investment.

“I have not left the Government with easy decisions. Some may paint my report as a set of criticisms – that is the wrong approach. To invite criticism is a sign of strength. What I have proposed is an opportunity on a grand scale.”

Chancellor George Osborne welcomed the report and said: “I wanted Lord Heseltine to do what he does best: challenge received wisdom and give us ideas on how to bring government and industry together. He has done exactly that.”

And business secretary Vince Cable said: “Lord Heseltine's independent report reflects his vast experience of government and business. It raises a number of important and cross cutting issues that impact on the Government's ability to interact effectively with business throughout the country.”

Shadow business secretary, Chuka Umunna, said: “Labour has led calls for an active government approach to support business and underpin regional growth – it is good to see Lord Heseltine echoing this in his report. We will examine his proposals and consider which ones we can take forward. We hope that ministers will take Lord Heseltine's proposals seriously.”

(Image shows Lord Heseltine, centre, at the launch of the Regional Growth Fund. Crown Copyright. Some rights reserved by Cabinet Office.)

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