No deckchair unmoved, but it's still not enough

30 November 2012

Just like London buses, we wait for months for something resembling an economic growth strategy and then two come along at once, writes Ed Cox, director of IPPR North

The 233 pages and 89 recommendations of Michael Heseltine's  No Stone Unturned report contains much to cheer about. The simple challenge that the country needs more than a plan for austerity is a welcome start. The strong emphasis on "reversing more than a century of centralisation" not simply with localist rhetoric and piecemeal initiative but though a £49bn 'single pot' for growth is a step-change in the debate that should make all political parties wake up and smell the coffee. And there are many other very sensible recommendations on procurement, local business support and schools which have not made the headlines but could make a significant difference at the local level.

But what is striking is Heseltine's preoccupation with structure. No stone unturned could equally read no deckchair unmoved as the detailed schema in the report's annex set out in fine detail. Heseltine's plans for a fundamental reorganisation of central government bodies and local structures are to allow for greater private sector involvement and a greater focus on growth. The emphasis on functional economic areas makes good sense and with it the bolstering of Local Enterprise Partnerships and Combined Authorities – something that Labour would do well to back at the earliest opportunity and put to bed any notion of reinventing RDAs.

But whilst changes to central government are eye-catching, the foundations of a centralist state are left firmly in place: the single pot, for example, will only be granted on the basis of competitive bidding to central government; R&D spending , transport infrastructure and welfare to work programmes remain controlled centrally albeit with a new mandate to demonstrate how they contribute to growth; and there is nothing in the report to enable local areas to generate more of their own revenue to drive their own growth (indeed the duty on local authorities to drive growth fails to recognise the funding crisis which many find themselves in).

The report also betrays the spatial blindness that afflicts so much government thinking on economic development. Whilst acknowledging  the under-development of the provincial cities and bemoaning that "in London we have created a functional monopoly" the report makes no attempt to address imbalances in the investment that has allowed this state of affairs to come about. It fails to see the glaring national solution to the south eastern airport capacity problem for example; it gives significant attention to Thames Gateway rather than Atlantic Gateway in the North West or other large-scale investment project outside London; and only makes scant reference to the importance of a regional dimension to a British Investment Bank.

In this respect the report of the Northern Economic Futures Commission, published on the 30 November in Leeds, has a lot more grit. The Commission has not been shy to make some significant demands of central government: it too demands a single pot approach, but with a more strategic approach to its disbursal; it calls for a radical decentralisation of skills funding and decision-making and a £1billion pot for innovation, research and development out of the £4bn proceeds from the sale of the 4G spectrum – the North's "fair share of the air".

But the emphasis of the Commission is far more about what the North can do for itself, beginning with a call to create half a million good quality private sector jobs, doubling the number of advanced apprenticeships; forming new, decentralised vehicles for finance and capital spending; taking greater local control of housing development; and ending with a call for more co-ordinated and vocal Northern leadership.

The Commission also calls us to learn from – and compare ourselves more readily with - our German or Scandinavian neighbours. Recent studies by the OECD show that different places need emphasis on different growth drivers and that it is insufficient for regions to rely on big cities alone to drive growth, just as our nation cannot rely exclusively on London. Growth at any cost can exacerbate inequalities and social problems but to counter this we need a clear vision about the role and purpose of different regions and places.

In Germany there is much greater clarity about spatial vision. This is particularly true in relation to infrastructure investment – a theme barely mentioned by Heseltine and yet heavily emphasised by the Commission who call for the formation of a Transport for the North to enable more decentralised strategic planning of transport issues within a wider national plan.

Whilst the economic development community awaits the government's response to Heseltine with baited breath, in the North of England there is no need for such hesitation. A regional policy, driven by the eleven Northern Local Enterprise Partnerships and their partner authorities themselves is surely the best way forward. But where there is common cause, let us be all the more strident. The economy outside London is still bumping along the bottom. Something needs to change fast.

This article first appeared in Public Servant magazine