THE Government talks about creating an industrial strategy with “clear, ambitious vision”.
At the same time, it has been inviting bids for projects through its Regional Growth Fund.
On the one hand, it seems to be saying ‘we will lead the way’; on the other appears to be saying ‘you tell us what you want’.
Meanwhile, it is handing hundreds of millions of pounds of taxpayers’ money to healthy businesses with strong balance sheets.
Are there some contradictions here?
In the search for some clarity, I raised these matters with the Department for Business Innovation and Skills.
First, I asked how the Regional Growth Fund fits in with the industrial strategy, as announced by Business Secretary Vince Cable last month. “The Government’s industrial strategy is about looking to the future, setting out a long-term approach to how Government supports business and making sure we do everything we can to deliver it,” said a spokesman.
“The Regional Growth Fund is aligned to the industrial strategy by supporting local priorities, creating jobs and unlocking private sector investment for the long term.
“We would, of course, expect the Regional Growth Fund to overlap with key sectors in the industrial strategy including automotive, aerospace, energy and life sciences.
“This is the Government’s commitment to growth in action to encourage investment and exports to lead to a more balanced economy.”
Second, I asked how the Government can justify giving taxpayers’ money to profitable private companies?
“These are the businesses that are creating jobs and investment over the long term, it’s supporting those sectors that can expand,” said the spokesman. “That’s unlocking private investment within the region.”
And resentment too, if you happen to be a rival of one of the firms being handed some of your tax contributions.
Third, is the Government confident that none of the companies are involved in tax avoidance?
“I don’t know myself,” said the spokesman. “At the moment we are supporting those companies that can provide jobs and private sector investment.”
That’s reassuring. Tax avoidance is not illegal and I’m not suggesting that any of the recipients are tax avoiders, but it highlights another potential issue with the scheme.
Perhaps I’m worrying too much about the Regional Growth Fund. After all, Deputy Prime Minister Nick Clegg said it “is good value for taxpayers’ money”, claiming that the latest round of £1bn will bring in £6bn private sector investment.
“I have seen for myself the real difference this makes on the ground,” he said.
That should set your mind at rest that this is not just another example of those in power handing out your hard-earned money to the chosen few.
n LLOYDS Banking Group came out last night to say that it has no plans to overhaul its pay policy for senior staff in the foreseeable future.
The state-backed bank’s statement countered a press report it might actually ditch annual bonuses for executives.
“We keep our remuneration plans under review at all times but have no current plans to change our structures and do not expect to do so in the foreseeable future,” a spokeswoman said.
The Financial Times had reported that Lloyds was examining whether to scrap annual bonuses for executives and extend the timeframe of longer-term incentives to up to 10 years.
Lloyds chief executive Antonio Horta-Osorio has called for a radical change within the banking industry, saying it must break with the culture of the past in order to restore the trust of customers.
In a speech last month, Mr Horta-Osorio said Lloyds was committed to ensuring pay is increasingly linked to the long-term performance of the bank.
Lloyds’ top-earning executive was paid £2.8m in 2011 and Mr Horta-Osorio could receive almost 10 million shares under this year’s incentive plan.
Hold on. Step back a minute. Why are they being paid bonuses at all? I know this concept will be really hard for our friends in financial services to get their heads around, but why not just take a salary?
Most of us seem to get by without bonuses every year.
On a deeper level, it is not really their money to take.
It is our money that we entrust to them to manage properly on our behalf, not for them to lavish notional profits on themselves.
Cue outcry from the financial lobby and its threats to move to Singapore or Switzerland or wherever at the first sign of any meaningful reform on their pay.