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DERMOT MURNAGHAN: Research by Sky News has found that Britain is experiencing a lopsided economic recovery, in fact London and the South East never actually suffered a double dip recession at all, so why is the north/south divide continuing and seems to be deepening? Well I’m joined now from Oxfordshire by the Conservative peer and former Deputy Prime Minister, Lord Heseltine, a man I’m sure who can put us in the right direction. This seems to be continuing Lord Heseltine – a very good morning to you by the way – in spite of the best efforts of people like you over the last three decades or so.

MICHAEL HESELTINE: Good morning. I think there is a very interesting thing happening in the British economy and that is the way in which London is becoming part of a global competitive scene and I don't think there is anything we could do to stop that and I certainly don’t think there is anything we could do to prevent it. Indeed, my whole instinct would be to encourage it, London has such strengths in depth across such a broad field of human activity, such high quality, that it’s bound to be a magnet for investment, for people, for tourists, for people who want to live here, this is a good place to be. So I think we’ve got a jewel in the crown in London. Now the problem is how you actually persuade a parliamentary democracy to accept that and to recognise that they can gain from it and that does mean you have to have positive policies to give a lot of encouragement to the areas that are not immediately in the area of London.

DM: And of course you just, well relatively recently, handed over a comprehensive report to the Chancellor on that very issue, No Stone Unturned. The Autumn Statement is coming up, do you get a sense that the Chancellor is going to use that as an opportunity to address some of those issues and in particular your prescription of more localism, more local decision making about the economy?

MH: Well people like me travel with optimism, that’s what keeps us going but I have been encouraged by two things really. First of all the government is not really talking about localism but there is a whole string of things that it has done over the course of the last couple of years to promote localism so the evidence is there that they want it and that they believe in it. Now what my report does, consistent with what they already are doing, is to encourage them to take a much bigger step to really, in a simple sense, to take policies to the local areas for initiation so that you get people in Liverpool, Manchester, Birmingham, Newcastle, designing the way in which the policies are created as opposed to groups of officials in London and I’ve shown how much money is available for that already, even after the cuts and suggested that instead of the initiation coming from Whitehall, it should come from the places themselves.

DM: Lord Heseltine, I just wanted to ask you on the broad thrust of the Autumn Statement, do you think the Chancellor has to stay on course, that as we talk about that localism, the help for regional economies, a bit of cash would help out there but there doesn’t seem to be much in the pot.

MH: Well no, that’s not true, there is a lot in the pot, it’s a question of who initiates the plans for spending it. Even after the cuts there are bits of skills money, there’s bits of housing money, there’s bits of transport money, there’s bits of education money, there’s a lot of money. I list it in my report, I think it’s £49 billion over the next four years plus another £11 billion of European money, so there is a huge amount of money but at the moment it is planned and initiated in London, although it’s all heading for the provinces. My own view is that there are a lot of very talented people out in the provinces and they would do a better job at working out what they need than officials in London can do.

DM: Can I just ask you about Lord Leveson’s report, with your publishing hat on, do you feel that the Prime Minister’s response is correct or that Lord Leveson, after all his months and thousands of pages deliberations has got it right and that publishers and the press could live with a little bit of light legislation as long as they are still in charge of self-regulation?

MH: Well I think that the Prime Minister has initiated an important debate. It is a very difficult and balanced argument and my own view is that everyone agrees something has to be done and I now think let’s have a proper debate, let all the arguments come out and let’s see if there is any way in which common accord can be reached, that would be the best way, if everyone on both sides of the argument could be persuaded that there way they could all agree but in the end this is a matter which parliament will have to determine.

DM: Well it seems that parliament and cross-party seems to be in favour of some kind of enabling legislation as proposed by Lord Leveson and we’ve kind of been having that debate, haven’t we, for months and years. Isn’t it time now to grasp the nettle and make the decision?

MH: Yes, that is true, it is important to make the decision but what I – and I’ve not been deeply involved in all of this but I detect that there were initial reactions which perhaps are not quite as rigid as the first days reporting indicated so that’s why I say I think this thing now need to get into the detail, it needs to go into a very detailed consultative process and that is happening.

DM: Okay, and lastly, Lord Heseltine, just internal party matters I suppose, the issue of showing you are in touch with the British public, gay marriage. We know that by and large the leadership of the Conservative party is saying this is something we want to have because it proves we are in tune with modern Britain but we know there are many within the party who say this would be a step too far for their constituencies. Do you think it is something that really the leadership should just drop altogether?

MH: Well it can’t just drop it altogether because the pressures on both sides of the argument are there and are not going to go away. The leadership of the Conservative party have in the end to produce policies which are acceptable to the party and to parliament but you will not do this without controversy.

DM: Okay, Lord Heseltine, thank you very much indeed for your thoughts this morning there, the former Deputy Prime Minister.

MH: Thank you.