Oral evidence: Business-University collaborationHC 249-vTuesday 8 July 2014
Oral evidence, 8 July 2014.
Witness
The Rt Hon Lord Heseltine of Thenford CH, gave evidence.
Chair
Good morning, Lord Heseltine, and thank you for agreeing to address the Committee again. Apologies for being slightly later than we intended. I am sure that you will be able to tell us everything that we want in the time available. I understand that we have got you until 11.45? Is that correct?
Lord Heseltine
I think so, yes.
Chair
Good. Right, let’s crack on, then. I will start with the possible and perceived tension between, if you like, central business and local businesses. LEPs are expected to work with local businesses and local universities in order to drive innovation, and yet you have got BIS and TSB run by a government innovation policy that is nationally driven. Do you feel that these two approaches are incompatible, or could they actually complement each other?
Lord Heseltine
The latter.
Chair
The latter, yes. Do you wish to add anything more?
Lord Heseltine
There is a philosophical point about the role of central government and the role of local government, and how they interrelate. My full recognition is that governments are elected with policies; they are fully entitled to pursue those policies, so in any localist agenda, the input of government will be very important. One is loosely talking about partnership, as opposed to a central imposition, and the philosophical area one has to explore is the way in which the government can implement its policies, engaging the maximum enthusiasm, choice and initiative from the local communities, who are obviously a vital part of any implementation strategy. It is a matter of how you actually make the machine work that combines the proper rights of government and the strengths of the local communities.
Chair
My next questioner is Brian Binley. I think you have got a declaration to make beforehand.
Mr Binley
I need to declare an interest. I am non‑executive chairman of a company I founded, which works very much with Haymarket. It is right and proper that I say that, and say thank you, I suppose.
Lord Heseltine
I had better declare an interest as well, in that case. I do not know what it is, but I ought to declare it.
Mr Binley
Secondly, I need to say that I am the vice‑chairman of the Northamptonshire LEP.
Lord Heseltine
I declare an interest in that, because I live in Northamptonshire.
Mr Binley
I know you do, sir. Thank you for that. Now, on to the question that I wanted to ask, and it is about LEPs, as you will understand. The Government has said that the universities are key to the success of LEPs, and I might add that we have a very good relationship with Northampton University, which is a very forward‑looking university, I am delighted to say. However, three years after the LEPs’ foundation, much of the evidence from the higher education institutions describes confusion around the role and the strategic priorities of LEPs. Do LEPs need further time to establish themselves, or does this point to a lack of strategy, and if it is the former in some cases—because I think the LEP situation is very patchy, actually—how might we improve that situation?
Lord Heseltine
I have got two answers to that specific question. The first is time; the second is competition. The LEPs have gone through a remarkable learning curve. The LEPs of today are unrecognisable from the LEPs of three years ago, and in a very short period of time, they have transformed themselves from basically a very small consultative process to today’s driving position, in which they co-ordinate the wealth creators in an area and have massive influence on the allocation of government funds. That is just a piece of historical analysis of the last three years. It would be amazing to me if there was not a varied patchwork of performance, for many reasons, and I will just give you an indication of some of them. First of all, there are parts of this country—largely, the less prosperous parts—that have been the recipients of government aid for a long period of time. They are used to the experience; they are experts at delivering the experience. The more prosperous parts have no such experience, and therefore have had to go through a catch‑up process, which is only partially complete. There will also be, secondly, a varied quality of performance. That is why you need competition, in order to be sure that the standards that you emulate are those of the best, not the commonplace or, worst of all, the worst. Thirdly, and very interestingly, there will be areas that do not have the inherent local strengths upon which to make an effective bid. Competition reveals that, and then focuses attention on the ability of government to address the structural weakness of those particular areas.
Mr Binley
Thank you for that. I am grateful. There are several reports—and the Witty Review of universities and growth is one of them—which have called for higher education institution representation on LEP boards. I am surprised that LEPs have not got that in the areas where they have got universities, because we certainly have in Northampton, with Nick Petford as the vice‑chancellor. Having said that, what are the other key features of successful collaboration between LEPs and higher education institutions?
Lord Heseltine
People. It is down to people.
Mr Binley
It is just down to the quality of individual personalities. I am sure that is right.
Lord Heseltine
One should admire that, praise it, and recognise it. After all, what made those cities was people. It was not some great God‑given master plan; it was just a huge range of buccaneers, who created this country in that extraordinary short period of time in the 18th and 19th centuries. We want to replicate that.
Mr Binley
But it is not about government in this respect; it is about people ensuring that the contacts are made and the partnerships developed, is it not?
Lord Heseltine
Correct. My experience of travelling extensively around the country, talking to LEPs, is that the universities play a very vital and interesting part. I am rather surprised that your question—I do not have the statistics—suggests that there is not a close relationship in some parts. I find that difficult to understand, but if it is the case, I reckon that the chances are it will be put right.
Mr Binley
Thank you.
Chair
I was intrigued by your comment about, if I heard it correctly, buccaneers on LEPs. Are you saying that they should be staffed by buccaneers?
Lord Heseltine
I was referring to the 18th and 19th century entrepreneurs. They were buccaneers.
Chair
It was not inspired by the presence of Mr Binley on one of them?
Lord Heseltine
I have to say that our commercial relationship is one that I have not studied.
Nadhim Zahawi
Lord Heseltine, the University of Hertfordshire and the Hertfordshire LEP said that the concentration of devolved resources around research‑intensive universities by HEFCE and cities through the City Deal process and the City Skills fund left serious gaps in innovation funding that disadvantaged many other areas. Do you agree with that? Is that something that you have picked up on your travels?
Lord Heseltine
If you are travelling extensively amongst people who are responsible for activities, “funding gaps” is on everybody’s lips. Everybody wants more; it is human nature, and I do not criticise them for that. You will always find someone who has got criticisms. They may be legitimate or not, exaggerated or understated. The issue is how you address the issue, and to me there are two ways in which that particular question can be addressed: either through the mechanism of central government sponsorship, or by persuading the Local Enterprise Partnership to divert more of the money that is available to it in meeting that requirement. Those are general answers to your question; I cannot know about the Hertfordshire situation without a briefing, but those are the only two ways I can see that issue being addressed—if it is in the mind of government so to address it, because the Government may not take the view that there is a shortage of funding in that particular category. Again, that is a matter for government.
Nadhim Zahawi
That was really the point. Putting Hertfordshire aside and their LEP, what they are really saying is that because of the concentration by HEFCE on the research‑intensive universities and then the actual mechanism of that, as well as the City Deals, from government and the City Skills Fund, because those mechanisms focus in a particular direction, you have got the outliers like Hertfordshire. Do you think that is a genuine concern?
Lord Heseltine
That is another manifestation of the same point: that we have not got enough funding, or that there is enough funding but other people have got it, which is virtually the same thing. The only way that you can meaningfully have a discussion about that is if you are deeply involved in the facts, and I am not.
Nadhim Zahawi
Fair enough. Catapults are national centres for innovation, which I am sure you are familiar with. Do LEPs need their own innovation hubs, similar to the Fraunhofer model?
Lord Heseltine
I believe that LEPs will consider such options, and where appropriate argue for them. I am familiar with catapults, which are a very welcome innovation, just as I am with UTCs, which are not dissimilar in this case. They are, again, a major innovation, and LEPs are urging, in some cases, for more. The excitement of all of this is that there is this local dynamic, looking at where they can stimulate growth and the pursuit of excellence, with the capacity to influence the flow of funds in that direction. It does require an element of discipline on central government to say, “If this is what you think is the best way forward, we will hear you,” as opposed to saying, “No, we have got a formula, and this is the formula and this is how it happens.”
Nadhim Zahawi
So less formulaic, less rigidity, and more flexibility.
Lord Heseltine
Absolutely, but there will always be an element of partnership. Central government has the right to have its policies implemented, and so a LEP saying, “Well, we fundamentally disagree with government,” is not going to make progress. It is just not a way in which you can see the system working.
Nadhim Zahawi
Thank you very much.
Chair
Could I just pick up that? You have quite rightly pointed to the potential innovation and drive that comes from, if you like, the localist approach there. However, they are in receipt of public money. Do you think that the Government’s processes and ability to measure the effectiveness of LEPs as a basis for determining funding is adequate, or should it be refined, developed, or what?
Lord Heseltine
I think that there are significant opportunities to improve the administrative arrangement between central government and the LEPs. Having said that, the latest announcement yesterday does take the agenda forward, to the extent that we are no longer just talking about theory: we can look at the practice, and see what has happened after the first bidding round, because we have got a list of schemes. If I may make a suggestion to your Committee that you may find helpful, I could ask officials in the Cabinet Office to produce a list of the projects that have come from the Regional Growth Fund, the City Deals and now the single pot that relate to the partnership between universities and the wealth‑creating sector.
Chair
I think that would be extremely helpful indeed. We would be most grateful if you could do that.
Mike Crockart
This question actually relates to your answer to one of the previous questions. You talked about LEPs looking for the best way forward for their area. Is there not a danger that much the same thing will happen under this structure as happened previously with the regional development agencies. They were criticised by one think tank IPPR, which described “biotech and ballet” as a shorthand for economic strategies. Are we not in danger of creating a similar situation where LEPs will look for the best way forward, and they will all identify biotech as the great new thing? How do we stop that from happening? How do we make sure that LEPs are trying to do effective collaboration, rather than looking for the next big thing?
Lord Heseltine
I am back on the first answer, and that is the relationship between central government and the LEPs. I see central government increasingly becoming a quality assurance presence, as opposed to an executive agent. In other words, they will be standing back to look at how the money is spent and how they can influence the search for diversity and quality, rather than being preoccupied with the actual execution of the policy; in other words, the local element will become more of the executive, as opposed to the central government, who will become more preoccupied with the quality arguments. Now, that is a generalised answer to your specific question. When I talk to LEPs, there is always that danger, and we had this conversation best illustrated on the Humber, where Siemens have announced a very exciting development. The temptation is, therefore, for people to say, “Job done.” Actually, however successful Siemens’ investment turns out to be, the job will only be very partially done, because you are dealing with a huge company, very diverse, with many strengths and many opportunities. If the LEP process is working well, and if they use the professionalism that is inherent in the LEP, they will not let themselves be focused on a tiny part—however important—of each local economy. They will see the picture in the round. That is absolutely essential, but in the bidding process, I would see the question you asked as being part of the Government’s question: “This is your LEP bid. You are telling us that it is all about biotechnology; well, what proportion of the local economy is biotechnology? On your wildest assumptions, how much more could it be, and what proportion would it then be?” The answer will, of course, be that it is very small now; however successful, it will still be very small, and you are left with a huge amount of the economy that you have not talked about.
Mike Crockart
I accept that. You talked about government’s role being a quality assurance role. How do you stop that moving from being quality assurance to being picking winners?
Lord Heseltine
It is very difficult, because, of course, everybody does pick winners. One must not lose sight of the fact that, in the end, if you are spending money, you are not picking losers—at least, you are not intending to pick losers. The private sector makes as many mistakes as the public sector. The virtue of the private sector is that it identifies its mistakes much more quickly and eradicates them much faster and much more effectively. In the public sector, it is much easier to say, “Well, just another heave—another dollop of money, and it will all be alright on the night,” and all the political pressures pile in behind that much more popular approach. I think we need to be mature about the words “picking winners”, because the whole process of government support in these areas is about picking winners.
Mike Crockart
But if the focus is on picking winners and creating clusters where there is strength, how does that fit into the strategy of trying to get greater growth in the regions where those clusters, perhaps, do not already exist?
Lord Heseltine
That goes back to the third of the reasons I gave, where there is insufficient inherent strength. This takes you back to the article in The Economist, a year or six months ago, in which it argued that government should just face up to this and let those economies go. I wholly reject that; it is not going to happen, and the politics is just impossible, but I believe the morality is impossible as well. I welcome the clear articulation of The Economist that there is an argument of that sort that some people believe in; I do not, but they do. It is what they said to me in Liverpool in 1981: “Why bother? It is finished—done.” I did not accept that view, and look at Liverpool today, thanks to the extraordinary resurgence of confidence and innovative behaviour by Liverpudlians. Where there is no strength, and that would be my third category of possible reasons, then the challenge for Government is how to inject strength. I now look back on a lacuna in my report that I should have spotted at the time. It is what I call “bending spending”. You see, my report dealt entirely with the funds available through local authority spending, a very large sum of money, but it is dwarfed by what is available in the big capital spending programmes in the rest of Government. You will think of defence, health, major roads, airports and academia. These are massive capital spending programmes. We are now dealing with the bids that are not very good because there is no basic strength. If you recognise that, then it is up to Government, in my view, to say, “What are we spending that could be diverted into those areas?” I will give you an example. This is not a draft; I am talking out loud, but you will get the flavour. The regional hospital is always going to be very expensive and quite a long way away from most patients, because you cannot afford that many regional hospitals when they are specialist and excellent. A huge number of patients are going to travel quite a long way to the regional hospital, which gives you flexibility about location. If you have a choice within a broad area of the country as to where to put the regional hospitals, the Government should question whether it should be in an area of relatively weak economic performance, because with a major regional hospital you can bring the pharmaceutical industry, the medical equipment industry, academia and UTCs—all specialists—in around that particular cluster that you are creating. We have just brought, for example, the army back from Germany at a cost of I think £800 million, which is going into Wiltshire. It is a perfectly legitimate decision. It could have gone into a more deprived part of the country perhaps. I only raise the question; I am not advocating it or anything like that. Airport development, HS2 and the Chancellor’s visionary statement about linking the Mersey to the Humber—these are major strategic wealth-creating possibilities. That is what I call “bending spending”: just looking at the profile of the national economy to find the weakest areas and saying, “What can we reasonably do?” I think one would be staggered by the discretion that is available.
Ann McKechin
Lord Heseltine, I wonder if we could just tease out a bit further this relationship between central Government and regional or local government. The Witty Review focused on industrial sectors rather than postcodes, and the Government’s Eight Great Technologies campaign as well as the industrial strategy prioritised sectors rather than places. To what extent is this compatible with actually allowing local areas to try to set their priorities? Is this back to the issue that you mentioned earlier this morning, about setting a quality assurance or some degree of direction?
Lord Heseltine
To me, the question is based on industrial strategy, and how that process works. I personally am a supporter of the innovations that Vince Cable has been making in setting up these Industrial Councils, which must deal with issues like research, innovation and higher education in that they are all interrelated with a particular specialism. I put this as a legitimate policy priority of Government. So if, for example, you are dealing with the aerospace industry, Government wants to support it, which it has done in many ways through the Council. It is bound to wish to see that Government strategy reflected in the work of the LEPs, and it is quite entitled to expect that. It is equally entitled to say that we are funding A, B and C projects, or C, D and E research projects. We cannot afford to proliferate that into 20 different areas when we have concentrated on five. The LEPs, who are at the receiving end of that particular degree of support, know they have the Government support, and will be encouraged to build on it and extend it. It is all this concept of how the partnership works.
Ann McKechin
The point you made in response to my colleague Mike Crockart is about the fact the Government perhaps sets these policies and considers where, for example, a catapult centre might be in terms of an area that may be of low economic growth, which might be one way of attracting people into that locality, rather than spending the money in an area that is already pretty prosperous. Do you think that is the role of Government when it looks at that industrial strategy—that it also looks at how it tries to move the wealth out of perhaps more prosperous areas and into those that are less prosperous?
Lord Heseltine
I do not think I would use those words; I think we are probably quibbling. I am looking at concepts that build on strengths, and if there are no strengths, injecting strengths is a part of the strategy I would advocate. I am not sure we are very far apart.
Mr Walker
I want to ask about SMEs and their role in all of this—smaller businesses in general. First, after yesterday’s announcement on the Local Growth Fund, I think it is appropriate to say congratulations on the influence that you have brought to bear on that, and the paradigm shift between the centre and the bottom-up approach. Just echoing your comments earlier on the buccaneers who formed the cities in the 18th and 19th century, I think it is appropriate that we should be having this debate under a portrait of one of the Chamberlain family, who had such an enormous influence on that process and brought so much understanding of the civic development of cities into national politics. Do you think that there is a genesis from what is happening with the LEPs and the devolution of an enormous amount of Government spending power to bring a new generation of politicians in from the provinces who can make big changes at the centre?
Lord Heseltine
I am trespassing outside my particular—well, no, I am not really. This is what I believe.
Chair
Has it ever bothered you before, Lord Heseltine?
Lord Heseltine
I was hoping you would say something like that. In my report, I published alongside each other the Redcliffe-Maud recommendations of the 1960s and the LEPs of today, and it is a bit of a historic joke. We all know where it is going and, I believe, so it should. I believe in unitary authorities. I was part of your father’s remarkable reforms when we reduced 1,400 authorities to 400 in the 1970s, just after Redcliffe-Maud had said you should go down to about 60. I think he was right, and I am quite clear that we would be better with unitary authorities and with mayors in charge. I was at a fascinating meeting in Liverpool a fortnight ago in which there were 100 mayors from across the world. The fascinating thing is that all have the same problem with this huge accumulation of humankind in dense urban areas: the problems of educating them and giving them skills, attracting investment, law enforcement, drug eradication and the general problems of poverty and trying to innovate and drive. The fascinating thing is that amongst the world leaders of this are British companies. We are renowned for our excellence in the financial services industry, but, my word, you go and look at the civil engineering and the architectural industries. These Brits are out there, all over the world, pioneering the best. You are at the heart of my conviction that we are heading in the direction of unitary authorities, with directly elected people running them, and, for our money, that we need.
Mr Walker
Thank you. I realise I have slightly taken us off the topic of university–business collaboration. I think your point there was very relevant though. A lot of the leading companies, in terms of the development of cities, are large companies coming out of the UK and doing business around the world. It has been put to us that only about 4% of the overall R&D spend of businesses in the university space comes from smaller businesses. We were just discussing this; Brian and I are a bit sceptical as to whether the number is actually that low or whether it is to do with the fact that larger businesses are more likely to be formal in their approach and therefore more easily measurable. Professor Alan Hughes told us there is a real order of magnitude problem in thinking SMEs are going to do something dramatic on the research front. Do you agree with that?
Lord Heseltine
I am a bit of a sceptic about generalisations because I have no doubt at all that there are huge numbers of very small companies that are pioneering right at the front of the technological excellence. It is perfectly true that they do not have a fund distributed from central government, and therefore measured by the public accounting processes. What they do have is the genius of the university from which they came, and it is all in their head, and they are building extraordinary, very small companies based on their intellectual capabilities and their accumulated experience. I do not know how you evaluate that as opposed to someone who gets a contract from Government to pioneer leading edge technology in aerospace. Equally, if you do give a contract—I mean I am guessing, but it would be a line of enquiry—if, say, X million goes to Rolls-Royce to do some carbon-fibre technology, how much of that X million is spent in Rolls-Royce as opposed to through the supply chain, which would not be measured? I am a birdwatcher—this is not irrelevant. If you go into the jungles where the birds often are, you realise that you have got a myriad of species, most of which are very small, but without the canopy of the big trees, none of them would exist. So what I did in my report was to go to a very small number of very big companies and say, “Could you tell me how many subcontractors you have got?” Then I went to the biggest of the subcontractors and I said, “How many subcontractors have you got?” What you realise very rapidly, and this is the canopy all over again, is the giants are the jungle that actually supports countless small companies. Take away the canopy, and you burn up the small companies.
Mr Binley
I am going to push you just a little further to get this on record, because you know that we live in an area where motorsport and aerospace small companies operate sizeably. You also know that there is no structure—that they decide to make a change that is based on research, they put the change into effect, they move forward and it becomes a part of the process, but it is never written down anywhere. It is not a part of a formal structure, is it? That happens in our part of the world quite a lot. I just wonder if you would pay tribute to that, because I think Professor Hughes is so wrong, and we need to be firm in that respect.
Lord Heseltine
You are asking me whether the detail is recorded. I do not know, but I am not against recording for the benefit of others to learn. I think emulation is a very important part of what we are trying to do. Basically, what we are trying to do in this country is to raise the standard of the average closer to the standard of best. The great difficulty in this dialogue is that Britain has many of the world’s best companies, best universities, leading edge initiatives and all these things. We are absolutely at the frontier at the top end. So the debate can easily end by saying, “What are you talking about? We are already doing all these things. Look at all these great names out there doing this, that and the other.” The answer comes when you say that our productivity is 20% below the Germans and the Americans. The answer comes when you realise we are now 21 in the world league of education. At the beginning of a recovery from the worst recession in modern times, we are short of skills. It is all in the substructure that we have concentrate—in showing people at that level how to do their job more effectively, not telling them, because that is a disaster, but by exemplification, support, education or whatever it may be to raise the standards down at the bottom. It would be very interesting if Ministers, instead of going to the most successful companies and schools, went to the least successful companies and schools.
Chair
A revolutionary approach. William Bain, I think you have a supplementary.
Mr Bain
We heard last week from the University of Warwick and from Coventry University that in their view there is still too much of a silo mentality within Government, with individual Departments having their own agendas. Their sense was that there needed to be much more collaboration across Government in order to support the widest possible business-university engagement. Do you agree with that finding, and, if so, what changes to the machinery of Government would you advise making to increase and bolster that collaboration?
Lord Heseltine
I would agree with it, and it is, of course, at the heart of the report that I produced on how you start dealing with it. Let me say at once that, from where we were two or two and half years ago, we have moved a great deal. I pay tribute to those people, both in central government, conspicuously the Minister for Cities, Greg Clark, but many of his colleagues, and those at the receiving end, the LEP end, who have transformed the scenery in which this is all happening. Now, your question is: has it gone far enough? My answer is no, I do not think it has. The challenge for central Government is to think more holistically about the local economy. The LEP represents a local economy; there are 39 of them. I do not know of machinery in government, other than through the City Deal process, that is looking from central government’s point of view at those individual local economies. One of the recommendations I made in my report to try to deal with this was that each Cabinet Minister would be given a titular responsibility for two LEPs. All it meant was that they would meet perhaps once every four or six months with the Board of the LEP to discuss how things were going. They would not have any executive responsibilities for those LEPs in this capacity, but simply sit round the table, and instead of spending their day preoccupied by their functional responsibilities in Government, they would say, “Well, how are things?” The LEP would say, “This is where the problems are, this is what is not happening, these are the opportunities and this is where we would like to see more input,” or less input, less bureaucracy or more bureaucracy. Just that process of taking Cabinet Ministers out of their functional responsibility for a morning is important. It was the Cabinet Secretary’s suggestion that that ought to be mirrored by Permanent Secretaries. If you think about a Permanent Secretary’s job, they are functionally preoccupied. Their whole job is delivering a functional programme for Government. In their function, we all know, and your Committee is exploring this, there is an incredible overlap between all these different aspects of Government. They interrelate. Get them together and you get a bigger bang for your buck. Getting Permanent Secretaries out of their functional silos, as I think your question asked, to think holistically just for a time would be two very simple cost‑free initiatives at central Government level. The second area that needs to be addressed is how the local relationship between Government Departments and the LEPs works. At the moment, again, you have got these functional official divisions operating close to the LEPs, but not coherently. There needs to be a local ear and voice of Government that has a more coherent, comprehensive approach, as opposed to a functional approach, alongside other functional approaches that do not correlate. I think that is how you create that, or frankly recreate it, because it did exist two or three years ago when there was a central civil servant locally based to co-ordinate the voice of government. Then I think there is a third. In order to encourage and stimulate, one wants to think about the sort of person that the Government has in day-to-day contact with the LEP. Instead of being someone who sees his or her job principally as measuring, sponsoring and recording, you need more of an initiating spirit: someone who says, “Have you really done all you could in this area? We all live here in this local community. You seem to have got an awful lot of land that you are not using.” In other words, someone who is on their side but questioning whether they are doing a good enough job. It is an attitude of mind in the Civil Service, and you may need to have more interchange between public and private sector civil servants, although that is not essential. I have worked with so many civil servants who had this quality that I am articulating, and I believe it would be an important innovation, logically associated with the devolution that I am talking about.
Mr Walker
Just to come back on the issue of public procurement, because your report specifically identified public procurement as an area where the Government could do more to prosper and support innovation. In its response, I see that the Government came back and talked about its Small Business Research Initiative, and talked about the way in which procurement can be used to support small businesses. Given what you were saying and the very striking analogy you were drawing of the jungle and the interrelationship between large businesses and small, is it right for the Government to focus specifically that procurement aspect on small businesses? We are about to see legislation coming, which we are deliberating next week, with a Small Business Bill coming into Parliament. Is all that focus on small businesses versus large actually a distraction, in some ways, from the aim of getting communities and economies to work together?
Lord Heseltine
Small businesses are politically sexy, so it is not surprising that people concentrate on them. One of the amazing phenomena of the last 18 months or so is the incredible number of small businesses that have begun and, one hopes, will succeed. I well understand why there is this preoccupation. I just sense that I am closer to the point of your question in that the big people have got a huge role in improving the quality of the smaller ones. The supply chain opportunity is absolutely fundamental in this respect. One of our worrying points, if you talk to some of these big companies, is that their anxiety is about the quality of the supply chain. There are lots of exciting things going on. Again, it is exactly the point I was making. There are big, really successful companies driving the quality of their supply chain. We just need more of the big successful companies to do it. Interestingly, where the universities are playing a role is in the creation of the growth hubs locally. If you look at the structure of this country compared with virtually every other capitalist economy, the quality of support for our companies locally is just not competitive. Again, there are big changes under way. Particularly UKTI are transforming the infrastructure through the chambers of international support for exports. The domestic scene is obviously vital if you are trying to get more exports: you have got to get more exporters. The ones who are not exporting you have to get into exporting, so you are trying to get them, encourage and mentor them and all that. It needs some sort of effective infrastructure, which in too many places we do not have. The universities have played an interesting role through the Regional Growth Fund, for example, in distributing money from that fund to the Wave 2 City Deals, to create chamber-based growth hubs. It is pretty piano stuff in politics; nobody is that interested in the minutiae, but the country is up against very formidable growth hubs in all our competing economies.
Mike Crockart
You have mentioned your report once or twice. We last spoke about it in this Committee in early 2013. At that point, you did say that 81 out of 89 recommendations had been accepted by the Government.
Lord Heseltine
That is true.
Mike Crockart
Or course, accepting recommendations and implementing them are two entirely different things. What is your overall assessment on how the implementation of your recommendations has gone?
Lord Heseltine
You are absolutely right to make the point that you can accept, and that can be the end of the story. I have not done a measurement, and it is quite difficult for me to say this, but I think my report has triggered a momentum that is unstoppable. It has broadly reached all‑party support, which I set out to try to do. The issue now is not whether we do it, but how fast do we do it, and on what scale? That is the battle that I am very pleased to see. The Chancellor’s speech in Manchester of Monday of last week is the most strategic speech I have seen a Chancellor make. It is all based on the sort of thinking behind No stone unturned. Whilst you can go through and find odd bits that the Government has rejected—there were those eight areas they rejected—and you can find some that they accepted but have not implemented, by and large the big thrust of what I recommended is moving as well as could reasonably have been expected, and all the evidence is the momentum is gathering pace.
Mike Crockart
So your judgment would be that it is not that useful to tick off which recommendations have made it into implementation because the agenda has changed and has moved to that more generally?
Lord Heseltine
As government reports go, we have not done badly. Not many of them get as much as that one has done, so I am well pleased. The mere fact we are having this discussion is an indication that the process is under way.
Chair
Lord Heseltine, we have finished our formal line of questioning. However, you have touched on a number of issues, some of which were not directly related to your responsibility or report, that we would like to question you on, and they cover a disparate range of subjects. First of all I am going to bring in Brian Binley.
Mr Binley
Lord Heseltine, it has been a fascinating discussion this morning. Being a businessman myself, I am delighted with the progress we have been making at the LEP level. We are genuinely making some really important progress to the point where I think both major parties are intimating that they will use LEPs more. Given that unusually unified view, what more could they do? Which areas do you feel could be developed over the next four or five years to the benefit of the nation?
Lord Heseltine
You will not have had time to go through the detail of the Government’s announcements yesterday, but if you go through it you will find that there are three small but significant areas that have not received any coverage, and it does not surprise me. The Department for Education has worked on an initiative with Northamptonshire and with the North East about the quality of education. The DWP has worked on employment initiatives in a small number of areas, including Buckinghamshire. Buckinghamshire is very interesting, because it is an area with very high employment, large numbers of jobs, and yet 5% unemployed. So, examining why that is in benign economic circumstances is a very interesting area of co-operation between a major Government Department and a local authority. The third area, which is even more all‑embracing than the two I have mentioned, is the work being done in collaboration with Graham Allen, the Member of Parliament for one of the Nottingham seats, looking at outer estates. This is very interesting; I have been up there and discussed this possible area of co‑operation. All those three initiatives are within yesterday’s Government response, so that really answers your question. Those areas could all be very seriously extended.
Chair
I have another couple of questions. First of all, going back to one of my earlier questions on the relationship between Government and LEPs—perhaps I should have pursued it further at the time—it occurs to me that you said, and I think I am paraphrasing you fairly, that there were grounds for improvement between the Government and the administration of LEPs. Could you be a bit more specific and point to one or two areas where you think things could be done better?
Lord Heseltine
Did we not do that? I went through the various proposals of the Cabinet Ministers and Permanent Secretaries taking a sponsorship role.
Chair
I think you did in answer to a subsequent question. I did not make the connection.
Lord Heseltine
No, I think I was answering that question.
Chair
So basically that is the way that you think administration would be improved?
Lord Heseltine
I made three suggestions.
Chair
Okay, we will look at those. Secondly, you touch on university technical colleges. I realise this is not specifically part of your particular report. I make it quite clear that I support UTCs. However, I do not think there is enough of them to provide on, if you like, the technical skills agenda that is needed to meet the demand. Do you think there is an argument for expanding the funding of them to incorporate BIS funds as well as those of the Department for Education?
Lord Heseltine
The funding is a matter for Government, but on the important question you put of whether we need more of them, the answer is yes. I came across a UTC the other day where a big company has undertaken to take every pupil coming out of that UTC. One company: every single person. You can say, “That is fantastic. What a success story.” That is a perfectly legitimate observation, but to me it means we have not got enough.
Chair
Just following that through, and this is a slightly more philosophical question, do you feel that the creation of the UTCs is a reflection of the failure of the broader educational system to incorporate within its culture the priorities and curricula that are needed? Do you feel that by creating UTCs, in effect you may be reinforcing a separate silo between them?
Lord Heseltine
At the end of the 19th century, people started comparing our education performance with Germany and America adversely. This is not a party-political point, but Tony Blair’s “education, education, education” reflected the facts that he saw at the time. It was the great area of priority. Michael Gove, who I believe is a very innovative and determined Secretary of State, is fighting the same battles. To me—and I have never been in education politics—I see the whole issue of employment, of primary, secondary, further education and universities, as part of the same process. There is an argument for getting a much more co-ordinated approach locally, and I think the LEPs could do that. There are lots of stepping stones. Simply getting employers, public and private sector, involved in the career patterns and advice for schools seems like an elementary step, but you can build on that by having governors from the employing world. There could be websites talking about employment outside when they have left school. There are endless opportunities. I go back to this Buckinghamshire experiment: when you start finding areas full of employment and yet 5% unemployed, and you go into it, what you find very rapidly is that there is a problem with the educational system. This whole thing has to be tackled constructively and coherently, involving employers in the process. There is a lot of goodwill from employers, who after all through their taxes pay the costs of employment, and they cannot get the skills. They have got complete identity of purpose in trying to lick this problem, but the system does not encourage them, or even allow them in some cases. I do think the LEP journey and the wide acclaim from all the parties is a very important opportunity in dealing with this issue. At the moment, we have hardly begun.
Chair
Thank you. That certainly concludes questions on this subject. I would just like to conclude with a question that is almost totally irrelevant to the subject we have discussed, but did arise from a comment that you made. Since I have you in front of me, I cannot resist. I was very interested by your comments about being a jungle birdwatcher. Did your well-known nickname arise, as I have always assumed, from your historical mace-waving activities, or from your jungle bird-watching activities, or maybe something else?
Lord Heseltine
It arose because at a younger stage I was a birdwatcher, long before some highly impertinent person gave me the derisory name. No, I have been a birdwatcher all my life.
Chair
Thank you. That concludes our questions. Thank you very much, Lord Heseltine. As usual, you have been very good value for money. Oral evidence: Business-University collaboration, HC 249-v 21