One of Britain’s leading economists has backed calls for a regional investment bank to fund infrastructure and housing projects across Yorkshire and the north of England.
Vicky Pryce, the former joint-head of the Government’s Economic Service and now managing director of City firm FTI Consulting, said a proposal to create a British Investment Bank with a regional arm and region-specific funds was “a very, very good one”.
Labour has been calling for the creation of a British Investment Bank for some time, arguing it could operate in a similar fashion to the new Green Investment Bank – which opened its doors earlier this week – and lend money to specific infrastructure projects to help them get off the ground.
Earlier this year the idea of a regional investment bank was floated by the IPPR North, and the proposal has been included as one of the key recommendations in this week’s Northern Economic Futures Commission report.
The report states: “We support the creation of a British Investment Bank, capitalised with £40bn nationally, but we recommend a regional allocation of funds made according to a formula that combines population with economic potential.
“This would ring-fence funding for the north of England.”
Speaking at yesterday’s IPPR North conference, Ms Pryce gave her full backing to the proposal, highlighting figures which show businesses in the North are less likely to ask a high-street bank for a loan than their Southern counterparts.
“The recommendation is a very very good one,” she said. “Any Business Investment Bank would only be successful if it is regional.
“The reason why firms (in the north of England) do not feel confident about going and asking for cash is because they no longer have original managers who understand their issues and are prepared to go with a firm – because everything is about headquarters.
“It makes sense that there should be something more regional. The British Investment Bank should have a regional off-shoot which is run differently, and which takes into account what the regions actually need.”
Ms Pryce said the move should be coupled with greater freedoms for councils to undertake more capital projects such as housing and infrastructure schemes.
“Local authorities should be given special dispensation to be more involved with infrastructure and housing investment,” she said. “What a number of us have been asking for is more infrastructure spending and more housing.
“The interesting thing about that sort of spending is that it is very regional.
“Infrastructure benefits regions disproportionately. Money goes to construction firms and firms that operate in localities.”