Economy: Growth

Debate between Lord Heseltine and Lord Gardiner of Kimble

Thursday 6th December 2012 Lords Chamber

[Lord Heseltine]

To ask Her Majesty’s Government what is their response to the Report No Stone Unturned in Pursuit of Growth.

[Lord Gardiner of Kimble]

My Lords, this is a time-limited debate and the limit for Back-Benchers is three minutes. I respectfully remind the House that this means that when the clock shows three minutes the speaker has already reached their permitted limit.

[Lord Heseltine]

My Lords, it is eight months since I set out my remit from the Government to comment on their national agenda for growth. A team of officials across Whitehall provided unlimited access to any department. No attempt was made to constrain or censure my comments. I thank the Government for that unique privilege. I am greatly indebted to the talented and dedicated team of officials who enabled me to produce a report regarded, even by those who disagree with its conclusions, as professional and well presented.

It has been suggested to me that my report should have been more focused on a limited number of targets. I do not accept that. The challenge we face is too immediate and too comprehensive. Any adequate response must involve the broad range of our institutions and our people. That is why I stress the leadership of the Prime Minister, the need for a comprehensive growth agenda, the involvement of every government department as appropriate and, critically, a central capability to ensure the delivery of the promises involved in such a strategy.

Yesterday, the Chancellor of the Exchequer directed most of his response to my central theme of localism. I am most encouraged by this and by his promise of a full response in the spring.

Uniquely, of all advanced economies, this country relies on central government and its bureaucracies to initiate, determine and administer economic policy. I believe there are consequences from this: the minimum of local initiative, the almost total absence of incentive for localities to add to government funding from their own or from outside resources, and a conformity of practice that ignores the diversity of local economies.

My report outlines an alternative concept. I argue that our local economies should be more driven by local factors. They should engage a wider involvement of local leaders and use competition to attract additional, non-governmental funding. As envisaged, most of the localist agenda should be led by the local enterprise partnerships. The Government have now made available sufficient funding to ensure their ability to do this. If any local authorities are still uncertain about this partnership with the private sector, I believe that the need to bid from a single fund will persuade them to participate, although my own view is that most of them will need no such encouragement. Against that background, their local people would not be impressed by the failure to seize such an opportunity; and, of course, such a failure would strengthen the case of those who, at every turn, argue that only central quangos or departments can be relied on to deliver quality of service.

I had, then, to consider the response of the private sector to a localist initiative. We talked to each of the groups that represent the private sector. We also looked overseas at the support available in competing economies. Our findings were published in an annexe to the main report and our conclusions were as bleak as those first reached by Lord Devlin, who conducted a similar exercise in 1972. At home and abroad, other countries have developed different but comprehensive support for their small and medium enterprises. This Government have set out an ambitious target to increase our exports to £1 trillion by the year 2020. The Prime Minister, on recent visits to Brazil and India, two of our target markets, found that there were no British chambers of commerce there at all. Led by my noble friend Lord Green, this Government have moved swiftly to remedy this problem. In the first instance he is working on 20 key markets, and he has appointed a number of new trade envoys. I think that is excellent, and I am very much in agreement with the remarks of my noble friend Lord Howell of Guildford and of my noble friend Lord Green himself in an earlier debate in this House today.

However, we need the same sense of urgency at home. Chambers of commerce, as they are now constituted, represent only a fraction of our companies. Let me give just two examples: Birmingham has fewer than 3,000 members; Milan has 350,000 members. As the noble Lord, Lord Haskins, knows, as he was present at the meeting in Humberside, where I discovered these figures, the chamber there has 1,000 members. The Federation of Small Businesses has 1,000 members. There are 70 entrepreneurs who have formed a breakaway group; that is 2,070 firms. There are 40,000 firms on Humberside.

An important route to the export market is to reach out to the overwhelming majority of companies that actually do not export. The British Chambers of Commerce’s own analysis revealed that 58% of exporting companies did so because overseas customers approached them in the first place. This is not exactly what we might call entrepreneurial salesmanship.

It is my belief that we need to provide more sophisticated services to support our small and medium enterprises across the range. They need to be private sector-led. Membership of chambers should remain voluntary, but it should be sufficiently attractive to draw more members. They should signpost advisory services, they should be involved in the provision of mentoring opportunities, they should encourage local procurement and they should provide a vehicle for the delivery of central departments' services.

The simple test is to ensure that our companies are supported by the same quality of services that our competitors enjoy overseas, whether it be the Small Business Administration in the United States of America or the more state-orientated proposals on the continent of Europe. The British Chambers of Commerce and its associated member chambers have now communicated to the Government their enthusiastic endorsement of such an approach in this country. I very much hope that this will be reflected in the Government’s response in the spring.

The Chancellor was good enough to say that the report has attracted wide support, and much work was already under way in the localist agenda. Greater Manchester has pioneered the concept of a combined authority. Liverpool negotiated the first city deal. The noble Lord, Lord Adonis, is working in the north-east on how to make progress there. More specifically, Andy Street, the managing director of John Lewis and chairman of the West Midlands and Solihull LEP, and Sir Albert Bore, leader of Birmingham City Council, have asked the Prime Minister whether I can work with them to develop proposals along the lines of my report, which the Government could consider as they reach conclusions. Such work would obviously include and involve the Birmingham chamber of commerce in exploring a wider role. I hope very much that the Prime Minister will agree to this suggestion and I fully recognise that it would involve no commitment to accept any proposals that arose from such an initiative.

The Chancellor’s response yesterday seems to have one novel feature. Most government reports are targeted at specific policies, activities and groups. It is easy for most people to feel that it is someone else’s responsibility and has little to do with them. The announcement of the single fund for local economic development and competitive bidding changes that. There are now 39 teams—the LEPs— of talented, motivated local people with the opportunity to attract public money in a way that serves their places, encourages them to raise additional resources and binds the public and private sectors together in a common cause. If I may borrow a phrase, we are all in this together.