Government to set up regional growth fund

Plans have been announced to establish a growth fund worth £1 billion to support business and economic development in those English regions likely to be hit by public spending cuts.

The fund is due to operate as from next year until 2013 in an effort to smooth the transition to private-sector led growth.

It will play a part in replacing the nine English Regional Development Agencies which are to be phased out by March 2012. A number of RDA roles will be transferred to smaller local enterprise partnerships.

Making the announcement, Nick Clegg, the Deputy Prime Minister, said: "While we sort out the nation's finances we can also help to foster a thriving and more balanced economy so that no region or community gets left behind.

"The Regional Growth Fund will create the conditions for growth and enterprise in the regions by stimulating investment and create sustainable private sector jobs.

In a joint letter sent to councils and business leaders, Business Secretary, Vince Cable and Communities Secretary, Eric Pickles have asked them to consider forming new local enterprise partnerships that can provide strategic leadership in their local areas and create the right environment for business success. 

Vince Cable said: "We are determined to rebalance the economy towards the private sector, so it's important we create a more effective structure to drive economic growth and development across the country.

"We want a structure that reflects the genuine interests and commitment of enterprise, local councils and other stakeholders like universities and colleges. Local enterprise partnerships will provide that vision and then take on the task of renewing local economies and tackling local barriers to growth."

Local enterprise partnerships will tackle issues including planning and housing, local transport and infrastructure, employment, enterprise and supporting business start-ups.

The statement, however, made clear that some roles currently carried out by the RDAs will be switched to Whitehall, such as inward investment, sector leadership, business support, innovation and access to finance.

Further details of the Regional Growth Fund, and the creation of LEPs, will be set out in the forthcoming White Paper on local and regional growth.

Responding to the announcement, David Frost, the director general of the British Chambers of Commerce (BCC), said: "Whatever new structures emerge, it is clear that local business leaders need to play a central role in defining every area's economic future.

"Given the long-standing economic challenges that face so many parts of the country, business must be assured that private sector growth, job creation, and balanced local economies are LEPs' overriding priorities."

But Mr Frost warned: "While business will wait to see detailed plans on the proposed Regional Growth Fund, what's clear from the outset is that the Fund will have significantly less resources to support business growth than previous arrangements.

"While business has been fully supportive of the government's drive to reduce the UK's deficit, we believe that investment in the business environment must remain a key priority - especially in those areas of the country that have not seen significant private-sector growth."