There’s been a huge ‘Yes Minister style’ scrap going on in Whitehall over the Heseltine Plan for decentralisation, whereby Local Enterprise Partnerships (LEPs) could bid for funding from a ‘single pot’.
Heseltine of course has been highly vocal in arguing for a decentralised pot to the tune of £70bn, and had resisted strenuous Treasury efforts to avoid having to come up with any figure at all, saying that not putting a precise figure on it would signify a major rolling back of his plan. “How can you get 39 LEPs to bid for an invisible pot?” he asked.
And over the last few weeks Hezza has warned that small-beer funding would be a “slap in the face” to business leaders who are spending large amounts of time to the LEPs. The fear is that they could walk away if there’s not serious cash on the LEP table. So all eyes were on this week’s Spending Review to see what figure Osborne came up with.
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But the figure that Osborne announced for 2015-16 was tiny – just £2bn. That’s even less than the £3bn expected by commentators, and falls well short of what the Centre for Cities thinktank saw as a minimum need of £5bn a year with more powers for cities to invest in own local economies.
While Slasher Osborne noted that there may be scope for to increase funding in future years, it all leaves the feeling that Hezza had been stymied by Whitehall. Localism loses out. Or as fellow Birmingham Post blogger John Clancy put it on twitter, ‘#WhitehallWins’. As always, it seems.
Osborne has for some time been making out that he is behind Heseltine’s proposals while offering very little in reality, and the Spending Review entrenches that position. And this has anyway all been postponed to 2015/16: in other words it will be the next government which implements – or not – Heseltine’s plans.
In addition to the lack of hard cash, Osborne has also rowed back from either giving LEPs control over infrastructure spending, or job and business support schemes, or even reviewing LEPs’ boundaries and governance structures.
Officially the government keeps up the rhetoric that it is responding to Heseltine positively and that a significant decentralisation is taking place. I doubt it very much. While the government announced they are ‘accepting in full or in part 81 of Lord Heseltine’s 89 recommendations’, the reality is much less encouraging as a detailed examination of Annex A of the Treasury’s response to Heseltine indicates.
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As regional papers – including the Birmingham Post - recently revealed, BIS Secretary Vince Cable has made a huge effort to pour several buckets of extra cold water on Hezza’s big plan, arguing that the LEPs don’t have the capacity to handle big amounts of money (all a bit ironic given that it was a Cable-Pickles double act which stymied the LEPs in the first place).
But Cable was right in highlighting that giving big piles of public money to unelected LEPs wouldn’t be right. He instead favoured City Deals. They are a good start but in many cases don’t go far enough – including here in Birmingham, which needs more power to invest locally.
Yet this argument over a lack of democratic accountability shouldn’t be used to forestall broader devolution, especially to English cities, Birmingham and the Black Country included. England remains the most centralised state in Western Europe, and will be so even after City Deals are enacted.
Look north, though, and some interesting developments are emerging. In Greater Manchester, Greater Leeds and the North East, new ‘combined authorities’ are being built of cooperating councils which have the legal footing to receive large amounts of public cash and which have some public accountability.
It’s these cooperating councils which offer the potential for channelling public money down to the local level without it just going via LEPs. That’s something local councils here could usefully look at.
According to a recent BIS Select Committee report, the LEPs are characterised by a lack of confidence, confusion and short-termism. Add in the lack of resources for the LEPs that we've just seen in the Spending Review and the question arises as to what they’re really for. What’s the point of them if they have so little in the way of resources?
* Professor David Bailey works at Coventry University Business School