Businesses “deserve better” than the new Regional Growth Strategy

Tomorrow night sees the deadline for the first round of bidding to the new Regional Growth Fund, writes Kevin Meagher.

Tomorrow night sees the deadline for the first round of bidding to the new Regional Growth Fund – the £1.4 billion pot designed to kickstart private sector activity in the English regions as part of the government’s approach to stimulating growth.

An independent panel, chaired by Tory veteran Lord Heseltine, will assess bids from the new Local Enterprise Partnerships (LEPs), the fledgling bodies set up to drive economic growth in succession to the regional development agencies, which the Conservative-led government (with enthusiastic support from the Lib Dems) has decided to scrap.

Heseltine – who was recently at pains to avoid being described as the government’s growth czar – will then make recommendations to ministers on which bids should be approved following tomorrow’s midnight deadline.

As a former Conservative environment secretary, credited with leading the regeneration of parts of Merseyside in the 1980s, Heseltine must know that the RGF is a poor relation to the regional development agencies, both in scope and financial clout.

Unfortunately, his capacity for haughty bluster has not diminished with age, dismissing concerns that the budgetless LEPs are simply not equipped to the task as “yesterday’s language“. Last year (09/10), the nine RDAs had a combined annual budget of £2.2 billion. Even though that fell this year to around £1.5 billion, it still dwarfs the £1.4 billion RGF budget – which is to be spread over three years.

LEPs – the other half of the government’s regional growth equation – are similarly under-gunned. Only 28 LEPs have so far been agreed with the department of business – from 62 bids originally submitted last September.

This means there are still swathes of the country – covering millions of people – without the opportunity to even bid for the RGF’s limited funds during the first round of bidding. This sorry state of affairs will hardly come as a surprise.

As Left Foot Forward has chronicled, the government’s new regional economic policy has had a bumpy ride, to put it mildly, with business secretary Vince Cable conceding that scrapping the regional development agencies has been “Maoist and chaotic“.

Meanwhile his deputy, business minister Mark Prisk, conceded in a leaked letter back in November that LEPs were deemed to have:

“…a lack of a clear focus on economic growth.”

To heap farce onto tragedy, BIS has even had difficulty with the online application form for the RGF, simplifying it “following feedback” from confused would-be applicants. Dissonant voices have complained throughout that scrapping the regional development agencies amounts to an act of economic vandalism.

Former CBI director-general Richard Lambert described the policy as a “shambles”. And his predecessor, Lord Digby Jones, characteristically did not mince his words when he criticised the new LEPs as:

“Confused in objectives and constituency.”


Business, especially north of Watford deserves better than this.”

Yesterday that call was echoed by the new trade minister, Lord Green, who told the Financial Times that London and the south east should not end up “dominating” – powering ahead and leaving the rest of the country behind.

There was a need, he said, for:

“…some national orchestration of some kind … You’ve got to take care of the needs of the north and we ought to be able to do that.”

But by scrapping well-established RDAs and their multimillion pound budgets his ministerial colleagues are heading in exactly the opposite direction; exacerbating existing economic inequalities between London/the south east and the rest of the country by abolishing the bodies specifically designed to narrow the gap.

In a bid to appease critics, prime minister David Cameron recently announced that the new LEP chairs will be summoned to a conference this spring to:

“…prioritise action to stimulate growth at a regional level.”

But this is exactly the kind of detailed analysis work already carried out by the RDAs in their Regional Economic Strategies. Unfortunately, however, a lack of succession planning means few of these regional economic experts are set to transfer to the new LEPs.

Stung by criticism that LEPs are toothless imitations of RDAs, the prime minister earlier this month announced a new £4 million Capacity Fund:

“To help LEPs understand the real issues facing local businesses.”

But this fund is likely to be stretched over four years, meaning that £1 million a year divided equally among the 28 LEPs already agreed amounts to just £36,000 each. Of course the eventual number of LEPs may be double that number, exposing the Capacity Fund as a shrivelled fig leaf for a shrivelled policy.

As the economic outlook looks tentative through 2011 and as unemployment bites, the government’s dogmatic tinkering with regional growth policy risks blunting the tools desperately needed to help mitigate the effects of a sluggish recovery.

Instead, with their inadequate regional growth fund and weak local enterprise partnerships, they have decided to reach for a set of toenail clippers to mow a lawn.

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