'No Stone Unturned' - Implications for Whitehall with Lord Heseltine and Lord Adonis

Speakers:

• Michael Heseltine (Baron Heseltine of Thenford); former Deputy Prime Minister & author of ‘No Stone Unturned; In Pursuit of Growth’
• Andrew Adonis (Baron Adonis of Camden Town); former Secretary of State for Transport & adviser to Labour’s review of industrial policy

Chair: Peter Riddell

Peter Riddell opened the event by explaining its context; Lord Heseltine’s review of creating the conditions for growth had recently been released and the government would formally respond in the Autumn Statement of December 5.

Michael Heseltine set out structural flaws with Britain’s governance which weakened the potential for growth; the UK was over-centralised compared with other OECD countries, with Whitehall ensuring that teams of London-based officials worked out what policy should be, instead of place-based policies being introduced. Ministers of all ideological hues had established quangos as they became disenchanted with local government with it being unclear who in Whitehall was responsible for monitoring the performance of different elements of government. The lack of management information on government performance made it impossible for Ministers or Permanent Secretaries to evaluate the performance of their department. Highlighting two recommendations from his report, he urged departments to be more proactive in working with industry (for example the Department for Health working with the medical equipment industry) and for the UK civil service – one of the finest in the world – to train their counterparts overseas.

Andrew Adonis placed the Heseltine Report’s 89 recommendations into four distinct categories; on creating dynamic partnerships between the public and private sector, responsible capitalism, an active state and decentralisation. He began by paying tribute to Heseltine, saying that along with politicians such as Roy Jenkins and Ken Livingstone, he was one of the few executive politicians in recent history who understood how to get things done while in power. He saw the need for far closer relationships between the public and private sector, highlighting the lack of secondments between the senior civil service and private sector. Secondments were rare and where they were taking place, typically saw civil servants seconded to other, effectively public entities such as HS2 Ltd or to quangos. The risk-averse attitudes of government lawyers towards procurement obstructed responsible capitalism, with advice obstructing possible deals such as government encouraging Hitachi to open a train manufacturing plant in North-East England. This – in Adonis’ view – stemmed from an incorrect viewpoint that EU procurement law “stood in the way of virtually everything”. He expressed his support for Heseltine’s recommendations on an active state but drew a distinction on decentralisation, arguing that local institutions required democratic accountability. The alternative – as had been the case with Regional Development Agencies – was that they were simply too easy to abolish by incoming governments.

Questions were asked about whether the Treasury would support the Heseltine Review’s recommendations; Michael Heseltine emphasised that 80 out of 89 recommendations could be implemented without any devolution of power, and that the only positive consequence of the recession might be that it had made people query how far deregulation and laying off employees could usefully go. Andrew Adonis highlighted the need for activist ministers and difficulties in government procurement, with current attitudes to public sector salaries standing in the way of bringing in people from the private sector to work in crucial roles in government. Michael Heseltine concurred, warning that improved government training for civil servants running major projects risked training up civil servants who would then go and work for more money in the private sector.

Lord Sainsbury asked about whether the centre of government needed more power to instruct departments; Michael Heseltine saw the need for ministers to put more thought into how their departments could play a key role in a growth strategy, while Andrew Adonis saw the need for the centre of government to play a role equivalent to the centre of “any other major organisation” in driving performance.