Clegg pins his faith in the banks to deliver regional growth funding

It’s been a busy week for the government’s zig-zagging efforts to promote growth in the English regions, reports Kevin Meagher.

It’s been a busy week for the government’s zig-zagging efforts to promote growth in the English regions. First Vince Cable announced that the Department of Business (BIS) would retain an office in six of the eight regions outside London; these had been earmarked for the chop in the great cull of quangos.

But they will be reprieved and rebranded as ‘Local BIS’, seemingly set to carry on much as they did before; one in the eye for communities secretary Eric Pickles, that bête noire of all things regional.

Welcoming the u-turn, Steve Radley, director of policy at the Engineering Employers’ Federation (EEF) described the bodies as:

“…an important line between departments and the regions.”

He added:

“Overall the government’s approach to regional policy has often seemed rushed and not properly thought through.”

Then came the news that chancellor George Osborne’s plan to boost regional employment by providing a national insurance holiday for new small companies has so far proved “a flop”, according the Financial Times:

“…with early applications falling far short of official expectations.”

Four hundred thousand companies were planned to be signed up over three years. However, just 1,500 companies have applied for the wage subsidy since the scheme was announced in last June’s Budget. The chancellor is apparently kicking his officials to “put a report on his desk” before next month’s Budget about how the scheme can be reformed.

Then we had the rumour that enterprise zones – that totemic Thatcherite micro policy – are also to make a comeback in next month’s Budget. Thirty years ago, these involved business rate exemptions and the relaxation of planning controls to regenerate deindustrialised areas.

However, so much for localism; as James Grierson, head of corporate real estate at DTZ said, enterprise zones:

“…were conceived as a way of bypassing local authorities and even emasculating them.”

Finally, and not to be outdone, deputy prime minister Nick Clegg, thinks he has convinced the banks to provide £1.3 billion of equity funding over three years to bolster the paltry funding on offer in the Regional Growth Fund – the much derided regional funding pot that is already hopelessly oversubscribed.

As the Financial Times observed yesterday:

“Banks say the policy is in line with their intention to back recovery in the regions, noting that the Lib Dems need a political ‘victory’ to provide cover from Labour attacks.”

If the fear of suffering dire electoral consequences is now forcing Lib Dem ministers to rethink and adopt a more concerted approach to the economic needs of the English regions, then that is to be welcomed.

But we have witnessed eight months of wasteful dilettante policy tinkering with Clegg, Cable, Pickles and Osborne tripping over each other with one flawed initiative after another, set against the backdrop of flatlining growth in the regions and massive cuts to public investment.

But it seems we are to be left hoping that Nick Clegg can rely on the munificence of the banks to deliver the goods; businesses and policy-makers in the regions will be forgiven if they don’t hold their breath.

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