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Greg Clark Letter from a Treasury Minister

Greg Clark MP: National growth requires local growth – that's why we're backing Lord Heseltine's plans

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Follow Greg on Twitter.

Yesterday, the Government responded to Michael Heseltines’s report – No Stone Unturned – accepting 81 of the 89 recommendations made. The former Deputy Prime Minister described the Chancellor’s adoption of so much of the report as “one of the most strategic supply-side decisions that I can remember.”

It is no coincidence that this came at the beginning of Budget week. The policies that have been endorsed have the potential to drive growth just as much as the macroeconomic and microeconomic policies contained in the Budget.

Just as a national economy can be one that helps or hinders business success, so too can particular localities be places that assist businesses to locate and grow or which impede the ambitions of businesses to expand production and take on new workers.

Land ready for development; fast and efficient transport communications; a dependable supply of the skills employers need; attractive housing; positive and dynamic leadership – all of these can make a difference to whether a place attracts jobs or sheds them.

In short, when it comes to growth, place matters.

And yet, for decades, the ability of different places to do what is necessary locally to attract and foster business investment has been steadily downgraded. Central government has progressively stripped our towns and cities of the ability to act upon their own initiative, requiring them to operate according to Whitehall templates instead.

Needless to say, this one-size-fits-all approach to policy fits no particular place. What might be needed to foster growth in Manchester is unlikely to be the same as in Cambridge; equally it is improbable that growth opportunities in Cornwall will much resemble those in Middlesbrough.

At the heart of Michael Heseltine’s recommendations is giving local areas the right to negotiate a deal with central government to take on powers and budgets that are held in Whitehall but applied locally – if they can demonstrate that it will be in the interests of both the locality and the nation.

There are a number of ways in which such an edge can be demonstrated. For instance, by levering in local and private resources to get more investment for the same amount of funding; or by offering better value for money through improved outcomes or reduced cost; or by pooling resources across different local authorities or different budgets to make a bigger and more coordinated impact.

Each Local Enterprise Partnership – covering the whole of England – will be invited to negotiate a Growth Deal with the Government. There will be competitive tension: the better and more ambitious the proposed deal, the more will be available from a single, unringfenced pot of money put together from budgets that are, at the moment, centrally determined.

As we reform the national economy – paying down the deficit, keeping interest rates low, creating the most competitive tax system in the G20, reducing regulatory burdens – we also need to transform our local economies, to make them places where everything possible is being done to attract and nurture growing businesses. This can only be done with the enthusiastic and empowered participation of civic and business leaders who are best-placed to understand the problems and opportunities of the communities in which they live and work.

By adopting Michael Heseltine’s recommendations, this week’s Budget Statement marks a watershed – the moment at which local economies were placed at the heart of national policy.


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