Heseltine review calls for major increase in number of unitary authorities

All two-tier English local authorities outside London should pursue a path towards unitary status, the Heseltine Review has recommended.

The report, No stone unturned in pursuit of growth, said: “The Government should encourage this and work with authorities to clarify the process and enable it to happen.”

The Heseltine Review also called for local authorities to be given a new overarching legal duty to have regard to economic development in the exercise of all their activities and functions.

“Where local authorities share a functional economic market area they should be required to collaborate on economic development,” it said.

The Tory peer made 89 recommendations in total, including that:

• Proposals for formal collaboration between local authorities that reinforce the standing of the Local Enterprise Partnership (LEP) and enhance the partnership with the private sector across a functional economic market area, should be encouraged and prioritised for government approval. All proposals to move to unitary or combined authority models should be scrutinised by a Growth Council chaired by the Prime Minister.
• The Government should remove all legislative barriers that are preventing local authorities from collaborating within functional economic market areas, including moving to a unitary status.
• Local authority council members should be elected using the same cycle across England where the whole council is elected at the same time every four years.
• Legislation should be passed to enable combined local authorities, and other combinations of authorities, that wish to elect a conurbation mayor to do so.

Other key recommendations include a call for central government to identify the budgets administered by different departments which support growth. “These should then by brought together into a single funding pot for local areas, without internal ring fences,” the report said.

Local partnerships should then bid for funds from central government on a competitive basis. Bids would be for a minimum of five years starting from 2015/16.

Responding to the report, Sir Merrick Cockell, chairman of the Local Government Association, said: “Lord Heseltine is absolutely right to champion the role of local areas in delivering growth. This report provides clear evidence that giving local areas more power and funding to nurture business opportunities is absolutely essential to national economic recovery.

“The coalition has ruled out top-down structural reform of local government, so the issue is a moot point. The more urgent priority for councils is helping local businesses to drive growth and create jobs, and the report proposes a number of helpful measures. As well as empowering local areas it is important that central government agencies also do their bit to promote growth.”

Sir Merrick said the LGA endorsed Lord Heseltine’s idea of bringing money from different Whitehall departments into a single pot to fund skills, transport and support for SMEs.

“Local economies are complex and national funding streams are not always as coordinated, flexible and responsive as we need them to be in order to get projects off the ground in good time,” he said.

The LGA chairman added: “It is important that Whitehall hands responsibility for administering any money to sub regional areas so that it can be awarded based on local needs, rather than an inflexible set of national criteria.

“This will help avoid creating perverse outcomes, such as the shocking skills mismatch in this country which, among other things, last year saw fewer than 40,000 people trained to fill around 72,000 new jobs in the building and engineering trades.”

Sir Merrick welcomed Lord Heseltine’s acknowledgement that there were variations in the economic potential of different regions. “It is important that all areas benefit from national economic recovery and that those places with less potential for short-term growth are not left behind,” he added.

Further recommendations from the Heseltine Review include:

• Government should streamline its management of EU Common Strategic Framework funds in England, “strip out the bureaucracy of multiple programmes and align local allocations from the four funds with the single funding pot”.
• All LEPs, in collaboration with local stakeholders, should lead the development of a long-term strategy and business plan for their area and that will be used to bid for economic growth funds from central government.
• The Government should allocate LEPs up to £250,000 of new public funding to develop their local economic strategies. LEPs should also review their boundaries after a three-month period to ensure they have a good match with their functional economic market area and that they do not overlap.
• At the earliest opportunity civil servants based across the country should be ‘brigaded’ into Local Growth Teams, structured around clusters of LEPs. They will be primarily tasked with joining up government and local partners in the areas of their responsibilities to facilitate, identify and realise economic opportunities.

More widely, Lord Heseltine called on the Government to set out a “clearly comprehensive” national growth strategy and establish a Growth Council.

He suggested that chambers of commerce should have an increased role in building a stronger relationship between businesses and LEPs in their area.

The peer also recommended a restructuring of the regulatory regime, injecting the planning system with greater urgency, and appointing an experienced chief procurement officer in every Government department.

Lord Heseltine said the Government was moving in the right direction on the issue of the speed of the planning system, but he thought they could do more.

He suggested that for any planning application still undecided after three months, the planning authority should publish a clear and unbiased statement of what the issues are. This would have a galvanising effect on planning authorities and statutory consultees, the report argued.

Any application still undecided after six months should go automatically before the Planning Inspectorate. The report added that the appeals process should be speeded up along the same lines.

“I believe that the most likely effect of these proposals is that faced with the possible intervention of the Inspectorate, local planners will simply do the job that they are paid to do more quickly,” the peer said.

Commenting on the report overall, Lord Heseltine said: “My recommendations do not single out a few headline proposals for areas we need to improve on. What we need is a new partnership between the private and public sectors, between local communities and central government.

"Only in this way will we get the best use of our limited public funds and leverage in private investment. I have not left the Government with easy decisions. Some may paint my report as a set of criticisms - that is the wrong approach. To invite criticism is a sign of strength. What I have proposed is an opportunity on a grand scale.”

The Chancellor of the Exchequer, George Osborne, said: "I wanted Lord Heseltine to do what he does best: challenge received wisdom and give us ideas on how to bring Government and industry together. He has done exactly that. This is a report bursting with ideas and we will study it very carefully."

Business Secretary Vince Cable said the Government would need time to consider the report’s recommendations and that it would respond in the coming months.

Philip Hoult

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