Communities and Culture, Devolution and Constitution, Economy and Trade

Address to Cardiff’s Shared Prosperity Fund Conference

Lord Heseltine

Throughout my political career I have fought against centralisation – whether it was economic centralisation or political centralisation.

This is the reason why, in contrast to many people in Wales, I considered the Attlee government to be an economic disaster. It nationalised family firms and centralised the management in remote bureaucracies in London. It allowed the City of London to use shares in PLCs to buy out firms in the regions on a tax-free basis. And it introduced a punitive tax rate of 98p in the pound that effectively stymied enterprise. 

On the political front the first serious attempt to reform the way the UK was governed was the Redcliffe-Maud review of local government which recommended a major reduction in the number of councils to create more strategic local authorities that integrated town and country. Although the recommendations were not accepted, we managed to reduce the number of councils from 1400 to 400.

As regards the geography of the UK economy, the main theme of the Cardiff conference, one of the most damaging trends during my political career was the perennial stop-go cycles which accentuated the North-South divide. Stimulating the economy would lead to inflationary pressures in the south, in response to which governments would introduce measures to cool it down – but the cooling down of the south took place before any heating up had occurred in the north!

But the most formative experience of my career in place-making really began when I became Secretary of State for the Environment in 1979. In the previous Labour government my predecessor, Peter Shore, had begun to forge central-local partnerships with councils that were finding it difficult to deliver local regeneration schemes and he had already identified Liverpool as one of these councils. In 1979 I took over his partnership with that city

I decided to boost this partnership with Liverpool in the aftermath of the Toxteth Riots of 1981. Although some politicians wanted to contain the problems in the conventional way – through more policing and the like – I wanted to get to the bottom of the problems and try something new.

To that end I asked Margaret Thatcher if I could “walk the streets” of Liverpool to ascertain the nature of the problems and she agreed.

After three days of engaging with local people and key stakeholders, I discovered the real reason for many of the problems –there was no local leadership! In Liverpool I discovered plenty of branch offices of public sector bodies and plenty of private sector branch plants – all joined up vertically in a functional hierarchy running from the national level to the local level, but nothing joined up horizontally at the local level in Liverpool.

It was one thing to identify the problem but another to implement a solution because breaking the mould of centralisation in government is a constant challenge. But I was determined to do so, and I began by producing a plan for Liverpool that contained 30 projects. I became a sort of clerk of works. I realised the crucial role of leadership in problem solving. Years later in 1992 I created City Challenge. This was the beginning of the Challenge Fund era in which a public grant was made conditional on winning private sector involvement. The Challenge Fund philosophy had two very important consequences:

  • the losers made an effort to find out how the winners had won, and they were able to improve their bids in subsequent rounds; and
  • the process created what I called the “Bill and Ben” phenomenon, where public and private sector teams had to communicate horizontally in one place to overcome the legacy of functional hierarchies.

Creating local leadership through challenge funding is critically important for place-making in all our towns and cities. All important cities in Europe have local leadership through their directly elected mayors. The UK has been severely disadvantaged by the lack of this kind of place-based leadership, though it is now making up for lost time by creating city-region mayors – at least in England.

Although I am not so familiar with the political scene in Wales, I have always believed that there are five regional identities based on five regional economies in and around Cardiff, Swansea, North Wales, Mid-Wales and Pembrokeshire. If I had my way I would build on these regional loyalties in the following way:

  • they should each have a devolved deal covering all government departments to ensure an integrated approach to place-making;
  • they should have five-year rolling programmes agreed with government;
  • they should have devolved budgets;
  • there should be some top slicing to enable competitive bids from local authorities; and last but certainly not least
  • there must be someone put in charge who can be held responsible for local performance, like the city-region mayors in England

In my view these are the most important features of a sound place-making strategy because they deliver a holistic approach to regeneration based on public-private partnerships and they ensure political accountability.


This post represents the views of the author and neither those of the Politics & Governance blog nor Cardiff University.

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