Groups welcome Chancellor George Osborne's adoption of Heseltine report

THE Government has said it will adopt a report from Lord Michael Heseltine, which calls for a dilution of centralised funding to give regional organisations greater power to stimulate the economy. Deputy Business Editor Steven Hugill looks at what the plans could mean.

“IT should mean more jobs, more investment and more people coming to the North-East.”

This positive reception to Lord Heseltine's proposals, from Stephen Catchpole, managing director of local enterprise partnership Tees Valley Unlimited (TVU), encapsulates the broad mood in the region.

The support is clear.

The Government's decision to support the Conservative peer's report, which urges greater power for local growth funds, has gone down well.

Chancellor George Osborne has supported 81 of 89 recommendations from Lord Heseltine's No Stone Unturned review, which include increasing public and private sector partnerships and raising the number of skilled workers, meaning local enterprise partnerships will decide where Whitehall funding is used across the region.

The amount of funding made available – Lord Heseltine suggests a £58bn national pot – will be decided in June.

Mr Osborne is expected to use his Budget on Wednesday to back the report and allow the seven North-East local authorities to secure new investment, made more important after the abolition of regional development agency One NorthEast.

Mr Catchpole said: “We should be able to make sure that the money is spent on what we need, which should mean more investment in jobs.

“There has been major investment in the last three years here and we need to capitalise and build on that while making sure local people have the skills and access to jobs.”

The move is a fresh boost for the region after the Tees Valley and Sunderland last month moved closer to receiving City Deal status, which would allow them to take greater control of spending and regeneration projects, and Lord Andrew Adonis' review, which called for improved North-East transport links.

However, the report has received criticism from think tank IPPR North, who say the Government's decision to remove One NorthEast could have cost the region about 120,000 jobs because of a breakdown in foreign investment.

And Alex Cunningham, Labour MP for Stockton North, warned the changes would only work if local enterprise zones were allowed to use increased powers and resources in harmony.

But Paul Woolston, chairman of the North-East Local Enterprise Partnership (NELEP), which promotes business growth in Durham, Tyne and Wear and Northumberland, and commissioned Lord Adonis' review, welcomed the announcement.

He said: “The Government's response comes at a perfect moment, just a month before Lord Adonis' commission on our economic future is published.

“The opportunity to take the commission's recommendations and work with local partners to fit future spending and policy towards the needs of local markets and specialist sectors offers a huge chance to seize the initiative.

“With private sector job creation above the national average, exports still rolling out of our factories and foreign investment in the area as strong as it has ever been we are in a very good place to create more and better jobs for the future.”

However, Mr Cunningham, who called for “proper investment” on the City Deal programme, said he still had reservations.

He said: “I am sceptical about the plans, we need real resources and only have to look back to when we had a regional development agency where we had substantial resources to attract inward investment.

“We need resources with the power, we have a lot of good local people and authorities and the local enterprise zones who know the area and how to attract industry here.”

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