Heseltine: 'divert spending to help struggling areas'

Government regeneration adviser Lord Heseltine today suggested that ministers should consider diverting some of their major capital spending towards areas that are currently so economically infertile that they will struggle to make successful bids to the government's £2 billion a year Single Local Growth Fund.

Lord Heseltine at the IED Conference earlier today
Lord Heseltine at the IED Conference earlier today

Speaking in London at the Institute of Economic Development annual conference, Heseltine warned that some of the public-private local enterprise partnerships bidding to the competitive fund would be unsuccessful.

In some cases, he said, this would simply be because the quality of bid was too low, and not necessarily because of unpromising economic circumstances.

But a few others would fail because "there is not the underlying strength in the local economy on which to build such bids," and there was not much that the bidding team could have done to change the outcome, given the priorities of the fund.

In such cases, he said, the government should consider whether spending from major capital programmes such as health, education and defence could be focused on creating "jewels in the crown of bombed-out economies".

For example, he said, the siting of a new regional hospital could be influenced by the need to revive a deprived area.

Once the site was chosen, he said, local leaders would be able to attract relevant investors such as pharmaceutical companies, medical equipment suppliers or universities to set up next door.

However, he added that he would not advocate making such decisions purely on the grounds of deprivation. "You would need to be aware of other factors," he said.

Earlier, IED chair Keith Burge had urged delegates to take more risks.

"I have been wondering whether economic development all too often goes for the safe option," he said.

"Maybe we should try to be more innovative. Those are the attitudes that will be required to achieve the shift we need in some of our cities".

He also announced that the IED was working up plans "with various bodies" for a commission to explore the future for "second tier" cities such as Blackpool and Sunderland.

"They are often written off, but some research says that they are the places where growth will come from," he said.

The headline sponsor of the conference is Turley Associates. Warwick Economics and Development, YTKO Group and Nathaniel Lichfield & Partners were event sponsors.

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