Tory-led Government leaves hundreds of critical regional growth projects without funding
Labour has accused the Tory-led Government of refusing to invest in growth, with the huge cut in regional funding resulting in only 50 projects benefitting from the first round of the Regional Growth Fund.
Many critical projects that could drive growth won’t get any funding from the fund, which was created by the Tory-led Government following the scrapping of the Regional Development Agencies (RDA), Grants for Business Investment and the Strategic Investment Fund. The Government is allocating £1.4bn over three years to projects, two thirds less than the £1.4bn a year Labour were investing through the RDAs alone.
The total first round pot is less than the value of the scrapped RDA’s assets, which have been valued by the Government at over £500m. Assets cannot be sold to cash-strapped local authorities under deferred payments, meaning that strategic investment sites will be sold to the highest bidder in a Treasury fire sale.
The Tory-led Government haven’t made it clear whether they have topped up the RGF first round with new funding or this is money being brought forward from later rounds. Labour would have added an additional £200m to the funding today through a repeat of the bankers bonus tax. This would be a quick but effective way of boosting regional growth this year and help businesses create jobs.
The South was hit hard with only 8% of the overall bids, with the South East and the East of England having to share one project between them. In Yorkshire and Humberside, Sheffield Forgemasters have not received any funding after having their loan cancelled by the Government last year. The Government also need to make clear how much funding each region is being given and for which projects.
John Denham MP, Labour’s Shadow Business Secretary, said:
“By cutting funding for regional growth by two thirds the Tory-led Government is choking off the funding needed for regions to grow and create the jobs our economy needs. The Government is allocating £1.4bn over three years to projects, two thirds less than the £1.4bn a year Labour were investing through the RDAs alone.
“The desire to cut too far and too fast has caused growth to be revised down and the unemployment forecast to rise, all while Government is holding back support for businesses looking for investment which will help regions to create jobs and ease reliance on the public sector.
“There are more losers than winners with today’s announcement.
Labour would have added an additional £200m to the funding today through a repeat of the bankers bonus tax, a quick but effective way of supporting growth and creating jobs. Vince Cable will have to explain why hundreds of viable projects for growth won’t go ahead across the country.
“The Tory-led Government need to rethink their growth strategy and invest in our regions, and get a grip on the scale of the challenge facing the country today. We cannot afford their wasted year to turn into two.”