Proposals from Lord Heseltine for devolution of money and power to the regions will receive short shrift from the government
Senior government ministers had already answered a central thrust of Lord Heseltine's formula for creating growth in England before he made a much-publicised pitch last week to transform the country's economic fortunes.
Heseltine thinks sweeping Whitehall reforms, leading to stronger localism and active support for business delivered by regional partnerships, will go some way toward narrowing the divide between an increasingly powerful London, the surrounding south-east, and the rest of England.
But barely two weeks before he launched what amounted to his alternative economic strategy, the government slipped through a growth and infrastructure bill designed to remove yet more power from town halls. So whatever the warm words of George Osborne and David Cameron, in welcoming Heseltine's bulky report, commissioned by Downing Street, the government thinks the opposite to Hezza.
As the Conservative-led Local Government Association (LGA) notes, the bill clashes fundamentally with the government's localism agenda with "sweeping new powers … to remove decision making from democratically accountable councils". This means a "massive shift of resources", says the LGA, from town halls to the Planning Inspectorate, a quango answerable to ministers. Instead of getting local approval, developers will be able to bypass town halls and make applications to this quango for, what the Department for Communities and Local Government calls, "economically essential development", yet to be defined but doubtless including more retail and business parks and much else.
Much of Heseltine's localist vision had been undermined before he even delivered his report. The Economist helpfully noted that the report underlined the "divide between tax-cutting centrists and regional devolvers" in the Conservative party – just as it did during Margaret Thatcher's reign, when Heseltine clashed with the former prime minister.
Heseltine and Cameron are poles apart. The government has already scrapped a regional structure that might have delivered some equity across the country: eight regional development agencies, regional planning and much else. Why? Because of a visceral dislike of all things "regional" by those in the zone occupied by communities and local government secretary, Eric Pickles. He will ostensibly oversee the new centralised planning regime.
England is now the only major economy without a regional strategy – except in one select corner. Greater London has not only kept its regional plan, powerful transport functions, development agency and interventionist institutions, but also had its powers strengthened in the Localism Act.
Having scrapped development agencies for the rest of England, the government created 39 institutions called Local Enterprise Partnerships (LEPs), non-statutory, business-led bodies with tiny budgets. But a survey by the Work Foundation thinktank finds business leaders are so disenchanted with these bodies that they are ready to walk away – unless ministers give them real powers and finance.
Heseltine wants to do just that. But dominant centrists in the government remain dismissive of the thrust of Heseltine's agenda for a coherent national industrial strategy backed by much stronger powers for large cities and surrounding conurbations.
There is, however, a glimmer of hope. Nick Clegg has unveiled "city deals" for 20 specific areas to complement eight approved in July. The aim is to devolve more power and funding, with councils working with LEPs to produce strategies for local growth.
A modest first step, perhaps – crucially, dependent on a changing mindset in the Treasury – but it seems to be the only show in town.
• Peter Hetherington writes on communities and regeneration