Is Clegg's Regional Growth Fund a sticking plaster?

Written by Ed Cox is Director of IPPR North on 17 January 2013 in Diary
Today the deputy prime minister has announced the Regional Growth Fund's fourth round - but is it simply a sticking plaster?


Nick Clegg is announcing today the fourth round of the Regional Growth Fund and placing an emphasis on ‘shovel-ready’ projects. The problem is – our shovels are too small.

The DPM claims that the first three rounds have created or safeguarded some 500,000 jobs and levered in a further £13bn into the national economy. But how many of those jobs and how much of that investment would have landed without that support? 

The £2.6bn pot, spread over five years, is also the same amount that the old Regional Development Agencies had at their disposal in a single year, at a time when growth and confidence were not in such short supply.

The biggest problem is that the Regional Growth Fund is symptomatic of economic centralisation. As a Whitehall-driven, spatially-blind ‘beauty contest’, regional businesses and their partners have to go cap in hand to London to plead for tiny slices of the economic development pie.

IPPR North analysis of government’s spending figures shows that in 2010/11, government spent £1050 per head of population in London compared to between £450 and £550 per person in the three northern regions. And whilst the London figures have increased by 25 per cent since 2005/6, in the rest of England they have flat-lined.

Disproportionate investment in London though, is not the main problem. It is the inability of English regions to determine their own path to growth in an increasingly competitive global economy. Regions simply don’t have the ‘shovels’ they require to get digging.

Ultimately, regional growth requires more spending power and greater autonomy. Michael Heseltine has argued for a Single Funding Pot totalling £49bn. This is a great idea but the problem is the beauty contest element which undermines it. English regions need the ability to raise more than the 12 per cent that they currently command.

Only yesterday the NAO criticised the current National Infrastructure Plan for a lack of clarity over value for money. Two thirds of all planned transport infrastructure spending involving public funds is in London and just 6% in the northern regions. This is partly because of the London Mayor and Transport for London. In this regard, the north needs ‘a Boris’ to speak with one voice about transport priorities a ‘Transport for the North’ with similar clout as its London equivalent.

Whitehall must let go of skills strategy - and the associated £3.8bn annual funding pot - to enable local associations of businesses, skills providers and other agencies to identify the future skills needs of the emerging local economy.

The UKTI’s inward investment strategy is driven by sector specialists who are yet to give sufficient regard to the economic development plans of the 39 different Local Enterprise Partnerships. We need a Northern Innovation Council to identify and advocate for a small number of innovation priorities on a global platform.

With greater control over skills and innovation, with the ability to drive a step change in infrastructure improvement and with greater fiscal autonomy, the Regional Growth Fund would be largely unnecessary. Far from hunting for shovel-ready projects, we’d have shovels ourselves.

Ed Cox is Director of IPPR North

Tags: Ed Cox, Nick Clegg, Regional Growth Fund

Share this page

Add new comment

More from Total Politics