Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Follow Greg on Twitter.

Yesterday, the Government
responded to Michael Heseltines’s report – No Stone Unturned – accepting
81 of the 89 recommendations made. The former Deputy Prime Minister described
the Chancellor’s adoption of so much of the report as “one of the most strategic
supply-side decisions that I can remember.”

It is no coincidence that
this came at the beginning of Budget week. The policies that have been endorsed
have the potential to drive growth just as much as the macroeconomic and
microeconomic policies contained in the Budget.

Just as a national
economy can be one that helps or hinders business success, so too can
particular localities be places that assist businesses to locate and grow or
which impede the ambitions of businesses to expand production and take on new

Land ready for
development; fast and efficient transport communications; a dependable supply
of the skills employers need; attractive housing; positive and dynamic
leadership – all of these can make a difference to whether a place attracts jobs
or sheds them.

In short, when it comes
to growth, place matters.

And yet, for decades, the
ability of different places to do what is necessary locally to attract and
foster business investment has been steadily downgraded. Central government has
progressively stripped our towns and cities of the ability to act upon their
own initiative, requiring them to operate according to Whitehall templates

Needless to say, this
one-size-fits-all approach to policy fits no particular place. What might be
needed to foster growth in Manchester is unlikely to be the same as in
Cambridge; equally it is improbable that growth opportunities in Cornwall will
much resemble those in Middlesbrough.

At the heart of Michael
Heseltine’s recommendations is giving local areas the right to negotiate a deal
with central government to take on powers and budgets that are held in
Whitehall but applied locally – if they can demonstrate that it will be in the
interests of both the locality and the nation.

There are a number of ways
in which such an edge can be demonstrated. For instance, by levering in local
and private resources to get more investment for the same amount of funding; or
by offering better value for money through improved outcomes or reduced cost;
or by pooling resources across different local authorities or different budgets
to make a bigger and more coordinated impact.

Each Local Enterprise
Partnership – covering the whole of England – will be invited to negotiate a
Growth Deal with the Government. There will be competitive tension: the better
and more ambitious the proposed deal, the more will be available from a single,
unringfenced pot of money put together from budgets that are, at the moment,
centrally determined.

As we reform the national
economy – paying down the deficit, keeping interest rates low, creating the
most competitive tax system in the G20, reducing regulatory burdens – we also
need to transform our local economies, to make them places where everything
possible is being done to attract and nurture growing businesses. This can only
be done with the enthusiastic and empowered participation of civic and business
leaders who are best-placed to understand the problems and opportunities of the
communities in which they live and work.

By adopting Michael Heseltine’s
recommendations, this week’s Budget Statement marks a watershed – the moment at
which local economies were placed at the heart of national policy.