Local expertise should be at the heart of industrial growth policy


Public-private partnerships, local communities and businesses, and a rationalisation of industry associations should all play a part in helping engineering and manufacturing flourish in the UK, says Michael Heseltine

My father was an engineer.  Coupled with my own experience of years as articled clerk auditing other people’s books, that background gives me some feel for the discipline.  Politicians live in a very different  world.

Yours is a world of infinite  care, of meticulous inspiration of ruthless quality control.   Even the most articulate of my profession would not use such words about politicians.   But our worlds are interdependent.  We make the rules and create the economic climate in which you have to operate.

The present economic crisis is longer than any of modern times.  Much of the responsibility has to be shared with our trading partners.  If there is a silver lining — and it is difficult  to find — it is that the very scale of it has forced us to look very closely at the competitiveness  of our economy.

Engineering expertise alone is not sufficient to grow the manufacturing sector

There is much to be proud of in Britain, and it is easy to identify  examples of excellence — but the global economy will judge us on the standards of our average. We must face the simple truth — there are no easy options left.

Tax cuts, devaluation, red tape, fewer civil servants have been tried. They have not proved effective.  They have one thing in common.  They expect solutions to come from someone else. They don’t change the pattern of people’s behaviour fast enough and to that extent they disappoint.   I think we need to ask a different  sort of question.  What would change the attitude  and behavioural pattern of large numbers of decision makers?

“There is much to be proud of in Britain, but the global economy will judge us on the standards of our average

We need a new partnership between the private and public sectors, between local communities and central government, the better use of public money and consequently the leveraging of private investment.   We need what other counties unashamedly call an industrial strategy. This is what I recommended in my review, No Stone Unturned in Pursuit of Growth.

Such a strategy needs to initiate as close to the people who create the wealth as possible.

Since they were formed, I have sat in front of many of the 39 Local Enterprise Partnerships.   Each time, I am struck by the talent, knowledge and experience of the people in the room.  The LEP boards are made up of leading figures in local business, local government  and universities – and they are the people who are aware of the issues faced in each locality.

Compare these boards to the groups of civil servants who currently  make decisions about skills, housing and various other functions.   Now, I am a fan of the British Civil Service, but they are not able to bring the levels of experience and knowledge to these decisions as a LEP Board.

In my report, I recommended that LEPs should be given the resource to develop local economic plans.  I proposed £250,000 for each of them for two years, and I was very pleased that this recommendation  was accepted by the Chancellor in his Autumn Statement.

The Chancellor has also accepted the idea that LEPs should be invited to use these plans to bid competitively  for part of a national single pot of public money, available to them from 2015.  The single pot should consist of those parts of current departmental  allocations that could support growth.

“If some local organisations are not up to the job the solution is to improve them, not to centralise further

One concern I hear repeatedly is that LEPs and chambers, do not currently have the capacity to deliver my vision. This scepticism about local organisations is so deep that,  whenever faced with a problem, the solution has been to take central control. But if some organisations are not up to the job, the solution is to improve them, not to centralise further. No company with an underperforming subsidiary would move all its activities to head office.

There are many things government  can do which underpin the national economy, but government cannot advise business on how to grow. For that we need a world class business support infrastructure that is private-sector  led, that is accessible in every community, and has deep reach into the business community. That is what all our competitors  have.

Specialist trade associations can also play an important role in delivering a powerful and effective voice for business.  They should be playing two very important roles: providing a co-ordinated  voice for sectors when talking to government; and improving sectoral performance through activities such as training, skills development, supply chain development and UK productivity per worker.

All too often, however, sectoral representation in the UK is fragmented, duplicative and often poorly resourced.  Anyone can set up a Trade Association and there are over 3,000 of them

I believe that rationalisation is needed to achieve better standards. To encourage this, central government  should reintroduce the concept of lead associations. Departments need to say which trade associations they will deal with for a particular sector.  This is common practice overseas. The lead association takes on responsibility  for ensuring the views of the entire sector are fairly represented, and steps are taken to draw all trade associations operating in a particular sector into new, more strategic working arrangements.

This article is taken from a speech given by Lord Heseltine to the EEF