Cameron to unveil £1 billion boost for regions as Cabinet comes to Yorkshire

Amid concern about the impact cuts in public spending will have on Yorkshire, the Prime Minister will hold a Cabinet meeting this morning before fielding questions from an audience of Yorkshire Post readers as he seeks to ease fears that slashing budgets will widen the north-south divide.

Mr Cameron is expected to explain how the Government's Regional Growth Fund will work. It is seen as a key plank of a concerted Government drive to boost the private sector in areas like Yorkshire which are highly dependent on the public sector.

Ministers have revealed the fund will be worth about 1bn and is expected to bring in private investment in infrastructure projects to stimulate growth.

Businesses and communities will be urged to come forward with projects and will be able to bid for money from the fund to develop their idea.

Today's visit comes amid concern over a raft of transport schemes in the region that have been put on hold, an 80m loan to Sheffield Forgemasters that has been cut, and a study last week which claimed 146,000 jobs in Yorkshire and the Humber could be at risk from cuts.

Businesses and transport bosses are also concerned by Transport Secretary Philip Hammond's announcement last week that work to map out a possible high-speed rail link to Leeds should be put "on hold".

And given the pressure on public spending, the visit – which will include a number of Ministers fanning out across the region – is also likely to prompt questions over its cost. When Labour carried out a similar exercise in Leeds, it cost more than 200,000, including 137,719 in policing costs alone.

When Labour first introduced regional Cabinet meetings, Tory MPs were quick to criticise. George Osborne, now Chancellor, said an away day "is not going to solve Britain's economic problems", while Mark Hoban, now Financial Secretary, branded it a "scandalous" waste of taxpayers' money.

The Regional Growth Fund is expect to run for two years from next April, and is part of a package of measures to help areas hardest hit by public spending cuts.

Firms set up in regions outside London, the South-East and east of England will also get tax breaks for their first 10 employees, and local economic partnerships – run jointly by councils and businesses – will replace regional development agencies such as Yorkshire Forward.

Council leaders in Yorkshire and the Humber gave the fund a cautious welcome but said they wanted to find out exactly how it would operate.

Writing in the Yorkshire Post today, Deputy Prime Minister Nick Clegg says: "We must avoid the kind of North-South divide that has made past recessions so much worse. And, if we've learnt anything from the last two years, it's that London doesn't hold all the answers. As a Sheffield MP, representing one of the world's oldest industrial cities, I know that manufacturing and industry must be at the heart of future growth."

He adds: "It was wrong for Labour to promise money they knew didn't exist as a pre-election stunt.

"We'll only make pledges we can afford, like our Regional Growth Fund, which will provide opportunities to businesses here in the North."