Create positive pressure to make things happen, says Heseltine

Lord Heseltine
23 May 2017

Twitter FacebookLinkedIn

Print

The regional political challenges in delivering the infrastructure the UK needs are many, but Lord Heseltine, one man who has been there and done that, thinks they can be overcome.

To deliver effectively on the ground, cities must first get themselves into a structure that is accountable and effective, because in order to develop the potential of the city region you need leadership and an administrative machine. You need this to do the job and create the confidence to encourage the devolution in the first place.

The structure we are pursuing at the moment is a sub-regional structure. The combined authority is the larger of the effective vehicles that we are creating, but of course as we have seen with the Northern Powerhouse, you can have an accumulation of combined authorities in order to produce a regional relevance.

It is all about being part of a democratic process but huge forces are at work resisting it and they are not going to give in easily. It is therefore a question of creating pressures that prevail. But talking is easy. I have spent 40 years of my life trying to achieve it with very limited results compared to what we need, what we should have and what every other country has got. I started off in the 1960s when we had 1,400 local authorities. We are now down to 400. We need 60.

In the past six years we have made more progress than in the rest of my life and it is an ongoing process. You see that in conversations that have been successfully concluded – the Northern Powerhouse, the Midlands Engine and in one or two other areas. Other ongoing discussions have a high prospect of being concluded and the process is underway, but there are challenges.

Devolution is not an absolutist concept, it is a partnership, so a balance must be struck with national needs as far as infrastructure investment is concerned. There is a role for central government in providing the main arterial connections but that is not to say that they cannot do it in conjunction with a well-informed local power base.

In terms of funding development, the financial institutions want risk-free money and the Treasury wants to pass on the risk. Putting risk into the negotiations is always the stumbling block. We need to develop prototypes that the Treasury has approved in advance.

Surely there has to be a way of getting the private sector to commit to projects? I have a solution. For example, if you are going to build a public sector project for £100, then you go to the institutions and you say this is a £100 project. If it was done in the public sector it would carry all the cost overruns. So we will agree it is a £100 project and cost overruns will remain in the public sector. But the private sector is only prepared to put in £40 of the £100 because the rest is negative value. So we agree to that. The consequence is that the public sector is left with £60 investment and the overrun but it has got £40 from the private sector. I do not see why deals like that cannot be done because the public and private sectors know exactly what they are getting – a £100 deal for £40. The answer lies in the Treasury – it must come up with the schemes.

There is every sign that the government is pursuing a devolution agenda. I would wait to see how comprehensive it is but there are no grounds at all for thinking that the big urban conurbations will not pursue a devolution agenda. I have no doubt that if the government could get Newcastle and Leeds over the line with their deals then they would leap at it.

Where the infrastructure sector can play a role is that you should be making a big scene. “Why is my city being deprived of a devolution deal and all that entails because of the ‘amour propre’ of the little guys who run our councils?” That will get you a big story in the local press. It might make you enemies but it needs to be done.

Lord Heseltine is a former secretary of state for defence, environment and trade and industry and most recently he was a special advisor to the Cameron and May governments on regeneration and devolution issues.