A year ago, in Yorkshire, David Cameron vowed to ‘rebalance’ the economy away from the South East. Political Editor Jonathan Reed examines whether he is living up to his pledges
On 28 May, 2010, the Prime Minister travelled to Shipley to make his first speech on the economy since entering Number Ten and pledged to help Yorkshire thrive despite spending cuts. So what did he promise – and what has his Government done since?
What he said: “Today our economy is heavily reliant on just a few industries and a few regions – particularly London and the South East. This really matters. An economy with such a narrow foundation for growth is fundamentally unstable and wasteful – because we are not making use of the talent out there in all parts of our United Kingdom. We are determined that should change.”
What happened: After early focus on cutting spending, the Government was criticised for lacking a plan for economic growth. Businesses say there is little sign of rebalancing yet. Spending on regional economic development has been severely cut and an £80m loan to Sheffield Forgemasters – to become a world-leader in a growth industry, civil nuclear – was axed. However South Yorkshire’s Advanced Manufacturing Park is part of the first of six Technology Innovation Centres, on which the Government is spending £200m, and Leeds and Sheffield will host Enterprise Zones.
What he said: “It doesn’t mean ignoring London but it does mean having a plan to breathe economic life into the towns and cities outside the M25.”
What happened: Special treatment for regions outside London includes a £1.4 billion three-year Regional Growth Fund, a National Insurance holiday for the first 10 employees taken on by new firms, although take-up has been lower than hoped, a pledge to create 21 Enterprise Zones, where firms will get business rate discounts and the establishment of Local Enterprise Partnerships (LEPs), but they have precious little money. Cuts in corporation tax, easing of red tape for small firms and fast-track planning aim to help firms across the country.
What he said: “An early task will be to reform and refocus regional support and the RDAs. And Yorkshire is a priority.”
What happened: The abolition of Yorkshire Forward and creation of smaller LEPs has been chaotic. On the day Mr Cameron was speaking, Business Secretary Vince Cable said Yorkshire Forward would be able to continue in “pretty much the same form” – only for its abolition to be announced weeks later. Spending on regional economic development has been slashed. Ministers insist Labour was wasteful, but LEPs will be judged by how many private sector jobs they create and will have little public money.
What he said: “I will be assigning Ministers and senior MPs to some of our biggest cities, with responsibility to work with local communities to help drive forward economic development by making sure blockages in Whitehall are dealt with.”
What happened: Nothing. Downing Street insists it will still happen, but if it was so important why not do it already?
What he said: “We will give our biggest cities the opportunity to elect executive mayors, powerful local politicians who know the area, who have real clout to drive projects through.”
What happened: The Government is pressing ahead with plans to hold referendums in 12 English cities – including Leeds, Bradford, Sheffield and Wakefield – in May. However there is anger from MPs and councillors over moves to turn council leaders into Shadow Mayors before the referendum.
What he said: “A new general power of competence will make it easier for [councils] to set up banks, develop property, run new services and own assets. And we’ll also give them the power to get together with local businesses to form their own Local Enterprise Partnerships.”
What happened: The general power of competence is included in the Localism Bill. Yorkshire has three LEPs, but it is unclear how much influence they will have.
What he said: “Let’s make Humberside lead the world in carbon capture and storage.”
What happened: The Government says it is fully committed to CCS but there is uncertainty after ditching Labour plans to part-fund four new schemes with a levy on domestic fuel bills. The money will come from Government coffers instead.
There are hopes that at least two of the projects will be located in this region, but with no further details about how much is available or the mechanism for providing it, fears are growing within the industry of a potential funding gap.
After months of doubt, the Government eventually agreed to go ahead with Labour’s £60m fund for turning ports into offshore wind turbine manufacturing centres, and Siemens is looking to locate a factory in Hull.
TURBULENT TIMES: COALITION UPS AND DOWNS for YORKSHIRE
May 2010 – Prime Minister pledges to help regions survive spending cuts as Vince Cable says Yorkshire will get “preferential treatment” and Yorkshire Forward can remain “pretty much in the same form”.
June 2010 – £80m loan to Sheffield Forgemasters axed.
Government says all RDAs will be abolished and replaced by Local Enterprise Partnerships.
Chancellor pledges National Insurance holiday for new firms and Regional Growth Fund.
Oct 2010 – Leeds and Sheffield City Regions among first round of LEPs approved by Ministers.
Nov 2010 – Leaked letter reveals Business Minister Mark Prisk warned Mr Cable the LEP policy risks failing in “large parts of England”. Business Secretary admits getting rid of the RDAs and bringing in LEPs “has perhaps been a little Maoist and chaotic”.
March 2011 – Enterprise Zones announced for Leeds and Sheffield City Regions.
April 2011 – Many bidders disappointed as first winners from Regional Growth Fund announced.
May 2011 – LEPs finally pledged £5m for start-up costs.