Britain to devolve public spending in bid to boost growth

LONDON Mon Mar 18, 2013 11:48pm GMT

The Palace of Westminster is seen in London October 12, 2009. REUTERS/Kieran Doherty

The Palace of Westminster is seen in London October 12, 2009.

Credit: Reuters/Kieran Doherty

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LONDON (Reuters) - A plan to devolve potentially billions of pounds of public spending to local authorities and businesses in Britain won a green light from the government which is trying to find ways to get the economy growing again.

Kicking off a series of announcements before Wednesday's budget, The Treasury said on Monday the coalition government had approved almost all the recommendations drawn up by Michael Heseltine, a former Conservative deputy prime minister.

The scheme will see public money for projects such as housing and transport, now controlled by various government departments, pooled into a single pot from 2015.

The amount of money to be allocated to the new "Single Local Growth Fund" will be decided in a spending review in June.

Employer groups cautiously welcomed the announcement, saying national-level policies should not be watered down.

Regional groupings of local authorities and businesses - known as local enterprise partnerships - will bid for the funds and, if successful, oversee how they are spent.

Heseltine had said shifting public spending away from central government would make the country more competitive.

He said on Monday the government's decision to accept the majority of his recommendations was "the most strategic supply-side decision" he could recall.

"In essence, it accepts that London and its functional bureaucracies should rely more on the incentivisation of England's provinces and less on central instruction," Heseltine added in a statement released by the Treasury.

One issue left for a later decision was how to devolve funding for training and apprenticeships to the local level.

Officials at the Department for Business Innovation and Skills (BIS), led by Liberal Democrat Vince Cable, have argued that fixing Britain's skills shortage required a national approach, people familiar with the negotiations said last week.

EEF, a group representing manufacturers, sounded a similar note on Monday, saying funding to improve Britain's skills shortage was most effective when employers, rather than local bodies, had control of training budgets.

The CBI, another employers group, said it was essential that programmes which need national or sector-based planning, such as a programme to boost innovation, were "not undermined."

The government rejected a proposal to make greater use of its existing powers to investigate foreign takeover bids of British companies, arguing Britain was committed encouraging open markets and inward investment.

(Reporting by Tim Castle and William Schomberg; Editing by Stephen Powell)

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