No Stone Unturned �

NO STONE UNTURNED � H T in pursuit of OW GR The Rt Hon the Lord Heseltine of Thenford CH Unless I can secure for the nation results similar to those which‘ have followed the adoption of my policy in Birmingham … it will have been a sorry exchange to give up the town council for the cabinet. (Joseph Chamberlain). ’ NO STONE UNTURNED The Rt Hon the Lord Heseltine of Thenford CH October 2012 NO STONE UNTURNED in pursuit of GROWTH Contents Overview: One man’s vision 3 Chapter 1: The worst economic crisis of modern times 11 Chapter 2: Localism – building on our strengths 27 Chapter 3: Whitehall – a confident, strategic centre of government 59 Chapter 4: Government and growth – catalyst, enabler, partner 87 Chapter 5: Private sector – broadening the capacity for excellence 121 Chapter 6: Education and skills – the foundation for growth and prosperity 155 Chapter 7: Making it happen 183 Annexes A. Acknowledgements 187 B. Summary of recommendations 202 C. How the system fits together 212 D. Single funding pot 215 E. Illustrative single funding pot bidding framework 218 F. Key elements of a government management information system 221 G. Glossary 225 [ii] NO STONE UNTURNED One man’s vision > our shared responsibility for creating wealth The worst economic crisis of modern times > the scale of the international challenge Localism – building on our strengths > reversing a century of centralisation > enhancing the standing of Local Enterprise Partnerships (LEPs) to bring together partners across the private and public sectors to drive local growth > empowering LEPs to lead local economic development through a major devolution of funding Whitehall – a confident, strategic centre of government > delivering the Prime Minister’s vision for growth > a smaller and more highly skilled central government machine > a strategic partnership with all sectors of the economy Government and growth – catalyst, enabler, partner > decisive government leadership for major infrastructure projects > effective public sector procurement, driving innovation and securing our industrial base > maximising the benefit of the UK’s research base Private sector – broadening the capacity for excellence > raising the ambition and capabilities of the average business > a new role for chambers of commerce > a voice for UK plc Education and skills – the foundation for growth and prosperity > the end of underperformance > a role for employers in the education of the children they will one day employ > ensuring investment in skills reflects the jobs available Making it happen [1] NO STONE UNTURNED One man’s vision The Government should set out a comprehensive strategy for national wealth creation, defining its view of its own role – and the limits of that role – together with those of others in local authorities, public bodies and the private sector. This report makes 89 recommendations. Some will say they are criticisms. That is exactly the wrong approach. To invite criticism is a sign of strength. To accept it is a sign of confidence. We are all too close to the economic crisis. There is opportunity on a grand scale. Huge infrastructure demands and hungry institutional funds – link them. Excellence in industry, commerce, academia – extend it. England’s cities pulsing with energy – unleash it. Every one of us needs to rise to the challenge. NO STONE UNTURNED in pursuit of GROWTH 1. In March 2012 the Prime Minister asked me to report to the Chancellor of the Exchequer and the Secretary of State for Business as to how we might more effectively create wealth in the UK. 2. The Chancellor announced the terms of my review on 21 March and offered me the support of a cross departmental team of officials to assist in the task. I cannot overstate my gratitude for such a privilege or for the dedication with which that team has worked to reflect my views even where they conflict with departmental policies. The views expressed here are entirely my own although they have been much influenced by the large number of people from all aspects of our society to whom we have spoken and to whom I am indebted. 3. We are experiencing the worst economic crisis of modern times. As a consequence many of the old certainties have come under intense scrutiny. There is a hunger for ideas that could contribute to the restoration of growth. There is no shortage of proposals. But what strikes me – and encourages me – is the unanimity of, among others, the CBI, TUC and The Times that Britain needs an industrial strategy. The very words are controversial. With them comes the baggage of past attempts and past failures. My history – business and government 4. It is 57 years since I moved to London from Oxford University and my home in Swansea. Two formative experiences since then have profoundly influenced my views. These are central to the report I write today. 5. First the experience of leaving a small business to become a minister of the Crown in 1970. My journey in business started as half owner of a boarding house in London. From there we moved into property development, the construction industry, employment agencies and publishing. We made mistakes, bad judgements and were over confident. Fortunately the good judgements outweighed the bad. Cash was always tight but by the time I left to join the Government we employed 400 people. 6. My early speeches would reveal my support for the simplest of notions of the role of government. Get off our backs, cut the red tape, deregulate, lower taxes. My laughter would have been loudest at Ronald Reagan’s later joke – ‘I’ve come from the Government. I’m here to help’. 7. Before leaving the company I was still involved in the minutiae of everything that happened in the business – even approving every petty cash voucher over 50p. By contrast, on my first day in government I was asked to read a few pages and sign off the £6 million electrification of a rail line in the east of England. I asked to see the managers responsible. ‘Minister, if you start doing that you will be left with no time for your official work’. It was clear from the start that government ministers were meant to approve papers and make decisions, not involve themselves in the hard grind of turning those policies into reality. This was the public sector, although on that occasion I did see the managers. [4] One man’s vision 8. My subsequent journey in government was broad: the complexities of local government reform, the planning system, Britain’s role in space, the saving of Rolls-Royce, Concorde, defence procurement, our international competitiveness agenda. Time and again I was confronted by the way other governments aided and supported their wealth creating capabilities. My view of government’s role was never quite so simple again. 9. Experience indicated that there are some things only government can do to drive growth in the economy. It must do those relentlessly and to the very highest standards set around the world. There are many areas where government should stand aside completely. But in the vast majority of cases we will only get the very best results for our economy if government, the business community and local leaders exploit their skills and resources in partnership. 10. Whether we look at the well established mature economies such as the United States or the new thrusters of the BRICS – Brazil, Russia, India, China and South Africa – there is one clear message we overlook at our peril: the public and private sectors are interdependent. Only by working together and learning to understand each others’ strengths and capabilities will we succeed. 11. The second formative experience was Liverpool and the 18 months I spent visiting the city and its surrounding area after the riots of 1981. This immersed me in the realities of one of England’s greatest cities. The Prime Minister accepted the argument that the riots were not just the reaction of a gang of yobs on the street. They were the result of deep, intractable, social and economic issues which the Government had a duty to address. It was important to get under the skin of the issues. 12. People often ask me if my experiences in Liverpool changed my views and are surprised when I say no. I had long believed in the individual as central to the process of innovation and enterprise, and was firmly committed to the value of choice and competition as integral to decision making in both public and private sectors. I believed enterprise was a natural human condition, invaluable in driving excellence and growth. More than a decade of front line political experience had taught me as well of the vital role of government and the public sector in securing essential public services and facilitating the growth of the economy. 13. What Liverpool forced me to confront was the extent to which these conditioning qualities had been driven from municipal England. The dynamism that had built the city was gone. Leadership relied on London. Liverpool’s challenges could only be overcome if the local community was engaged and enthused to harness its resources and build on its strengths in a much more effective partnership with central government. 14. Over many decades, power and initiative have shifted under governments of all persuasions from provincial England to its capital city and its bureaucracies. Strong local leadership in our great cities created the industrial revolution and made us what we are. London did not dominate. But of course the social conditions of those living in the [5] NO STONE UNTURNED in pursuit of GROWTH industrial cities were quite unacceptable. A long democratic process rightly tackled the consequences of urban squalor and often acute poverty.

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