Heseltine slows drift in economic development

Yesterday saw the publication of the government’s response to Lord Heseltine’s review. Back in November we blogged about the review being a trip down urban policy memory lane. The government’s apparent willingness to accept the vast majority of the review’s 89 recommendations has done nothing to quell our concern that the current policy narrative around economic development needs a deeper overhaul and be more innovative.

Of course, it has its merits, but let’s be frank, this at the very least should have been the interventionist starting point in 2010. However, in 2010, we got a stand aside approach from government and a hasty disruption of what had gone before.

So we have wasted nearly three years, with an economy drifting along, and we have now got to a policy place which is a mere variant of where we were in the 90s. But we live in very different times.

The government and Heseltine have now slowed the drift. But the review and government response does little to instil confidence that deep central structural reform is on the way; that economic policy goes beyond growth; and that social and environmental priorities will be embedded at the heart of the activities of the local enterprise partnerships (Leps).

The original publication was nostalgic because many of Heseltine’s recommendations, particularly around localism, are things we have seen before: single funding pots (remember SRB and city challenge?); competition; local economic strategy; local growth teams; and cross public private partnerships.

To see this as ‘progressive’ is merely to reveal the poverty of thinking and expectation.  The review was based on narrow definitions of economic growth, and a policy rhetoric that was not necessarily balanced with today’s economic challenges.

In the context of how other countries and places do economic development, this is standard fare. And from our perspective, there is a danger that all of this may lead to a return to our unsuccessful past in terms of economic development instead of a socially just future.

A truly progressive and alternative review would have, in our view, been determined by three factors.

First, whilst recognising that more powers are needed for localities to stimulate change, the centralist barrier of the treasury and central government is a far more inherent challenge to growth. The key barriers to growth do not lie in the hands of individuals and localities but in an archaic welfare system, a silo-operated departmental culture, treasury orthodoxies, a central government to local government disconnect, and a series of regulations which prevent local development. Central structural reform is needed on a big scale to enable local economic change.

Second, the review is based on simple and traditional ideas of growth such as increasing competitiveness, gross domestic product and the productivity of the UK as a whole.

Progressive local economic development is not all about growth; instead it is respectful and considerate of social and environmental concerns. Effective places are shaped by all forms of capital including social and human and not just economic and physical. There needs to be a more reflective and alternative understanding of growth and the inputs to it in its widest sense in policy-making.

Third, the review promotes homogeneity of place when it comes to local economies. Any allocation of funding pots to Leps will undoubtedly be based on a demonstration of the ability of area’s to grow and develop. All Lep areas are intrinsically different with varied economic and social challenges, meaning that growth may well not be the only applicable outcome for places where social inequality, poverty, and environmental concerns are key challenges. There needs to therefore be a recognition of the heterogeneity of place and its economic, social and environmental priorities.

There is a need for a new narrative-focused economic development strategy from central government, where the focus of policy is not just about growth but about a consideration of people, places, alternative finance, social return, social business, working within environmental limits, and cooperation.