£125 million of funding for the North East put at risk by Coalition’s failing regional policy
Blog / January 9, 2012 / Comment now
Millions of pounds that has been earmarked for regional development projects in the North East has been put at risk by the inaction of government Ministers. The unallocated funds are part of the European Regional Development Fund (ERDF), which exists to boost growth and jobs regionally, particularly in disadvantaged areas. The potential loss to the North East highlights the disastrous consequences of the decision to abolish the Regional Development Agency One North East which previously managed the process.
The North East economy has already been plunged into a regional recession according to economists at IPPR North due to Coalition spending cuts and rising unemployment. Over 32,000 public sector jobs have been axed and unemployment stands at over 11%. The private sector-led recovery that was promised by David Cameron has also not materialised with the Northern TUC showing declining employment in the private sector since the Coalition took power in May 2010. It is now clear the extent to which Ministers have failed to act with any sense of urgency in response to the growing decline of the North East economy.
Not only has there been a complete vacuum in regional policy under the Coalition, Ministers seem to be overseeing a ‘managed decline’ in a region where the Conservatives and Liberal Democrats have next to no elected representatives. European Commissioners have raised real concerns that up to £125 million of ERDF funding could be jeopardised as a result of the dither and delay of government Ministers. As the rules stand, if this money is not allocated in time, two thirds would automatically be lost to central Treasury funds. This is not just a problem being faced by the North East, with 41% of ERDF funding for England still unallocated.
Labour made significant progress supporting weaker regional economies such as the North East and developed flagship policies and investment structures. One North East, set up by Labour, ensured that infrastructure was built to attract and support new businesses, high-tech industries and other emerging markets. In an area which was dominated by coal mining and fell into economic decline under the last Tory administration, investment in infrastructure was well overdue in order boost economic activity.
However, One North East was one of the first causalities of the Coalition cuts. Its replacement by much weaker and unfunded Local Enterprise Partnerships has made achieving jobs and growth in the region much harder. The failure of the new regime to even ensure the efficient allocation of EDRF funding is beggar’s belief. Business Minister Mark Prisk all but accepted the failure of government’s new regional policies when he was forced to write to local decision makers to urge them to make use of national matched funding opportunities given the slow progress on allocating the funds in the past year. In addition to this, overall funding for regional development has been cut by upwards of two-thirds.
The current structure of having multiple Local Enterprise Partnerships and a single National Regional Growth Fund effectively means that there is no regional policy at all. If the North East region is to stand any chance of meeting the current economic challenges through creating jobs and growth this has to change. Labour understood the difficulties facing the northern regions and made good progress during 13 years in government. This is now being unravelled by the reckless reforms and spending cuts of this Coalition. Labour’s five point plan would also help boost regional growth now with a one year National Insurance tax break for small firms taking on extra workers and bringing forward long-term investment projects.
