Lord Heseltine’s plea that ministers and top civil servants help drive his £49bn programme to boost economic growth in the regions has been ignored by the Treasury.
The chancellor is minded to give the “sponsor” role to lower-grade Whitehall directors and director generals rather than permanent secretaries and politicians.
In another disappointing move for local government, George Osborne has declined to create a dedicated senior team to work in the regions.
So-called local growth teams will instead be made up of officials already operating in government departments’ regional offices. They will be “working together” but not necessarily as a single unit, a Treasury spokeswoman said.
The details of how the government will implement proposals from Lord Heseltine’s review of economic growth emerged following the publication of the Treasury’s official response.
Summing up the local government mood, Solihull MBC chief executive Mark Rogers said: “You could be disappointed that the government has not been more ambitious.”
The Treasury response was issued the day after the Greater Birmingham & Solihull LEP released a report on how it had worked with Lord Heseltine to develop his proposals.
Lord Heseltine’s report called for core cities to be given their local growth teams, made up of secondees from Whitehall as well as the local authority and business representatives.
Mr Rogers said he expected council chiefs and departmental director generals to be seconded to these local growth teams.
“Given the importance of the economic growth agenda and what we are trying to pull off with the single pot, you are going to need a heavy hitter,” he said.
South Tyneside MBC leader Iain Malcolm (Lab) said he was disappointed that officials but not ministers would be appointed as sponsors. “It is a shame if we have a situation where civil servants instead of politicians are speaking up for the regions,” he said.
The government response, published on Monday, recommitted the chancellor to a single funding pot and detailed the required governance and processes for LEP funding bids.
It included a promise that some skills, transport and housing budgets would be included. However, media briefings have suggested that the funding pot will be in the “low billions” rather than the £49bn Lord Heseltine recommended when the final package is announced in the June 12 spending review.
The official response also laid down five tests determining whether funding is devolved and made it clear that innovation funding did not fit the devolution criteria.
Susan Priest, director of the South East LEP, called for the government to reconsider and to ensure governance demands were “appropriate for the task”.
The South East LEP comprises 35 councils, including Southend-on-Sea BC. Southend chief executive Rob Tinlin said the government’s “minimum” requirement of a joint leaders committee as a governance arrangement could prove “too unwieldy”.
Southend has already indicated that it will activate a ‘South Essex’ joint leaders committee as part of its city deal negotiations. Mr Tinlin said there was “no sense in having multiplicities of governance”.
The South East LEP includes 35 councils, including Southend-on-Sea Council. Its chief executive Rob Tinlin said the government’s “minimum” requirement of a joint leaders committee as a governance arrangement could prove “too big [and] too unwieldy”.
Southend has already indicated to the government that it will activate a ‘South Essex’ joint leaders committee as part of its city deal negotiations. Mr Tinlin said there was “no sense in having multiplicities of governance”
Ministers seem to envisage the deals occupying a middle ground between Lord Heseltine’s preference for a competitive process and one negotiated with officials. All areas will receive some funding, but not necessarily the freedom to spend it as they wish.
- LEPs must create “effective governance” structures. The government’s preferred option is a “combined authority”, such as the one formed this week by council members of the North East LEP.
- Laws will be introduced to create the role of “conurbation mayors” where they are wanted. Another “minimum alternative” would be joint leaders committees or other such “binding and long-lived decision-making structures”.
- Local areas will draw up and submit strategic growth plans before entering an “iterative” negotiation process for growth deals which includes “new levers, resources and flexibility”.
- Areas judged to have the best growth plans will receive the biggest slice of the single pot. Whitehall’s focus will be on “governance, capability, strategy and growth”.
- Areas judged to lack “effective governance” could still receive single pot funding but spending decisions would be subject to “central controls”.
- Funding allocations will be handed to combined authorities where they exist. A nominated local authority will receive funding in areas without LEPs