The Interview: The Rt Hon Michael Heseltine MP

Des McConaghy ("Local Government News" April 1990)


Balancing Act


Michael Heseltine would switch from RSG-type formulae to Comprehensive Local Plans. This emerges as one key feature of his ideas for local government reform. In this exclusive interview with LGN's Des McConaghy, Heseltine says elected mayors should co-ordinate local bids for money. But McConaghy asks the 64,000 D-Mark question: what about Whitehall?


LGN: We face urgent and priority tasks. How can central and local government achieve a more effective partnership?


Heseltine: I don't see this as a question of "priority tasks". I see this as the management of national services and arranging for a specific mix of those services in a local area. My basic argument is that today, with sophisticated modern management techniques, the central government can have a much closer part in solving these tasks that was implied by a formula distribution of central resources.


In other words central government should be prepared to be much more involved specifically and locally because we are paying most of the bills. And we are not getting the quality of service - Liverpool being a classic example. In such cases things cannot be simply left to local management.


LGN: It is a matter of keeping a balance between central and local perceptions, is it not; two legitimate areas of concern? You had experience of both levels when Mrs Thatcher gave you the "Minister for Merseyside" Brief?


Heseltine: She didn't give me a Brief. I asked to become Minister for Merseyside.


LGN: Well, there was a bit of paper issued by 10 Downing Street which said that you would be "promoting the best use of resources which the central government commits to Merseyside" I wonder why you never actually did that?


Heseltine: The answer to your question is that the essence of the task I had to do in Merseyside was to restore confidence and give focus and dynamism to what was happening - and prove that things could happen. I tried to draw the community more closely together in a very divided city. Cities grow from many initiatives and, as Minister for Merseyside, I wanted to prove that good and positive things could happen. That's what we set out to do and I think it has had an effect.



LGN: It was indeed splendid to see things happening - like the Albert Dock Project in Liverpool. But you emphasised management. Can our National Audit Office (or Public Accounts Committee) really measure the benefits? All major resource decisions are finally subjective and political, so where do your "sophisticated modern management techniques" come in?


Heseltine: That's different. You spoke of what I did in 1981 after the riots. Of course those initiatives are not a substitute for coherent national policy in dealing with local government and all the many services of the nation which are administered locally. A lot of these are national services funded largely from the centre. The task is to provide a degree of local accountability without exceeding a reasonable exercise of local discretion. The danger is that you try to constrain those exceptions by formulae - which then wrongly applies to others.


I want to see how we can get local people to play a positive role in what is happening. They should have maximum freedom while recognising the responsibility of government.


LGN: While recognising the superior national mandate?


Heseltine: The superior mandate, exactly! My view is quite clear. There is a partnership but central government must be prepared to intervene where local administration cannot manage: but we must do that locally and specifically without affecting every area.


LGN: But would you not agree that all such interventions become even more important, politically, if governments continue to reduce the revenue support grant distributed by formulae for the general or routine tasks?


Heseltine: My approach is quite different. We should diminish the significance of the formula money and increase the significance of the overt bids for money.


LGN: Are you suggesting, then, that all local budgets would be part of the new bidding process?


Heseltine: Yes. Instead of the big spending Departments in Whitehall each concentrating on their own bit, the local community will submit an overall local plan.


LGN: That sounds a bit like the comprehensive socialist planning system being rejected in Poland?


Heseltine: It is nothing to do with socialism. It is about making communities put together their own ideas of how they can benefit. We must then judge their bid and see that they have involved the local community in the process; the local industrial, commercial and academic communities - and the people themselves - in what sort of city or town they want it to be. And when they have worked that out they say, "we can raise this much, this is what we want from the centre".


LGN: So beyond a certain threshold their bid for supplementary resources will be justified by a comprehensive local plan. That, of course, raises familiar problems about the diagnostic capacity of Whitehall.


Heseltine: Yes, that means Whitehall has to take an interdepartmental, multi-disciplinary approach.


LGN: Those are fine words, Mr Heseltine. But you know yourself how difficult that would be. It has never happened!


Heseltine: It has never happened. That is perfectly true but nobody has ever tried to make it happen.


LGN: Surely Mr Heath's 1970 re-organisation of the central government attempted that - and you were a Minister in that Government? The creation of new "super- departments", the use of "Programme Structure" (and CPRS for co-ordinating interdepartmental PARs) were all such an attempt. You yourself applied this in DTI - but it achieved little effective co-ordination.


Heseltine: Well I can only say that I now believe you could make it happen. And at the local level you need one guy to talk to - something like an American Mayor, democratically elected chief executives who would, on their record, have to secure re-election.


LGN: And at the central government level?


Heseltine: It has already started. The Minister for Merseyside was the first example. In 1981 I urged my colleagues to set up Ministers locally, not just on Merseyside. I tried to get them all over the country. David Hunt has this now for "Inner Cities"; it has taken eight years for my ideas to have effect.


LGN: But that is a limited application. And Peter Walker appointed Ministers for six cities back in 1972; to look at total resources needed. It didn't have the desired effect. Do you really think you can pull Whitehall together by appointing Ministers all over the country?


Heseltine: You have of course a perfectly fair set of questions. But I think you focus the business of the local authority through one man who must then bid for funds, that will be the focal point: the neck of the funnel.


LGN: I tried that in Whitehall following Peter Walker's ideas for "urban audits" and bidding for priority tasks. But the Whitehall Directors just said; "How would we know what was a good bid and what was not"!


Heseltine: Well they can bloody well find out!


LGN: Exactly my own words at that time. But you know they were not about to do so.


Heseltine: But that was what Eric Sorenson's job in Merseyside was about. Civil servants actually went out to find out - and that is what is happening now with all these "Action Teams". They now do know. You can bring civil servants back from these areas and they will tell you site by site - area by area - what is happening. That is the start of what I am talking about. I would do it on a larger scale. When I started these ideas they said it couldn't be done. It is happening, it is having an effect - but I would go much further.


LGN: But how would you relate all your comprehensive plans to the management of government business. At the centre of all that is the Treasury and PESC. It is a mechanism for the management of the economy but it is not particularly "objective-orientated" and so it doesn't allow coherent territorial inputs from such plans; it hasn't any overt "constituency dimension"!


Heseltine: It is a finance director's tool. I have a solution to that though I have yet to deal with it in terms of Whitehall. I recognise it is there. And there is an umbilical link between local officials and Whitehall Departments and that is one reason why governments have such trouble with excessive public expenditure; it is being stoked up by both central departments and local officials.


LGN: So we do need control. But you may agree that we also need to tinker with PESC to forge a more positive relationship between Whitehall. The Treasury's PESC sets the scene but it is a top down aspatial planning process.


Heseltine: I am with you on that point. You have an important point about the "top down" process. We talk about "local government" but actually it is entirely "top down". And it is not a very effective process for the reasons you have stated. It is also formula driven, and while we don't have the details, don't really monitor the results, we blame local government when things go wrong. But if you get local authorities to make a comprehensive local plan - and then adjust central departments to meet such requirements - you would then have a different ball game altogether.


LGN: But that's the difficult bit.


Heseltine: I know that! But we must get into the business of monitoring results and linking cash with results - all within a highly visible debate and maximum public scrutiny of the whole thing. I created the Audit Commission which was an important step in this direction - but they have a lot further to go.


LGN: Is there not a difficult overlap between your Audit Commission and the National Audit Office (NAO) since, as you said, central agencies now run most local delivery systems. For example, the amount Liverpool Council raises from local taxes and borrowing is only about 13% of overall public spending there. The rest is fragmented action of Whitehall agencies operating in a budgetary haze.


Heseltine: There is an interesting point here. The Audit Commission are doing well in measurement. They are not doing well in exposing the stark realities cocooned in their official reports. The language of the Audit is too polite. Too many badly-managed authorities get away with it.


LGN: However their reports also reflect a limited brief. For example, the Commission's recent "Urban Regeneration" Report notes £280 million spent by DOE's "Estate Action" but ignores almost £2 billion planned by DOE's Housing Corporation. The latter (poor and covert targeting and almost culpable financing) is a matter for NAO.


So one house is financed by one central agency and the adjoining hose by yet another central agency - with a totally dissimilar financial regime. In Toxteth you can stand on one spot and see one agency demolishing good flats and yet another building them. The city is coming down with civil servants and even their "task forces" have task forces! But nobody really knows what's going on. Would you not agree that flashy reports and clever little bar diagrams are no substitute for effective political control at local levels?


Heseltine: I am in favour of the maximum exposure of information, the proper measurement of outputs and inputs. I am in favour of the public discussion of all these things, and one executive, where the buck stops. And I am for a system where year by year increasing resources could be put up for competitive bidding - with the discretionary programmes of central government increasingly put into the pot.


Suppose then that central government, rather than crawling over the detail of every capital programme, approached its responsibilities from the standpoint of the whole. Instead of allocating most of the taxpayers' money by formula - automatically calculated by reference to the number of people or other statistic related to each local authority area - suppose central government increasingly backed the best plan? This should lead to a national structure able to balance local initiative and central control.



Des McConaghy's commentary on his Interview with Michael Heseltine was published in the subsequent June 1990 Edition of Local Government News under the rubric, "The Terrible Simplifiers" (1990D)


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