Clegg launches £1bn regional growth fund

The Deputy Prime Minister said the Regional Growth Fund - first announced in the Budget last week - would help ensure "no region or community gets left behind".

He set out the scale of the two-year help package as the Cabinet met in Bradford on an away day designed to show the coalition's support for hard-hit economies outside London.

It is in addition to tax breaks being offered to new firms in regions most heavily dependent on public sector employment in an effort to ease the blow of austerity measures.

Private firms, acting alone or with the public sector, will be eligible for the cash if they can show schemes will bring in investment and promote sustainable jobs and growth.

Mr Clegg said: "While we sort out the nation's finances we can also help to foster a thriving and more balanced economy so that no region or community gets left behind.

"The Regional Growth Fund will create the conditions for growth and enterprise in the regions by stimulating investment and create sustainable private sector jobs.

"Alongside our commitment to waive some employment taxes for new businesses starting up in targeted regions of the country, this fund can make a real difference to companies during difficult times."

Prime Minister David Cameron has decided to continue the practice of his Labour predecessor, Gordon Brown, of holding Cabinet meetings in regional centres.

Ministers gathered at Bradford Bulls' Grattan Stadium after a series of visits in Yorkshire related to their areas of responsibility.

The Government is also to consult on further measures to help get private sector investment into economies "over dependent" on public sector jobs.

Among measures to be included in a Green Paper on business finance are Liberal Democrat proposals for the creation of regional stock exchanges to encourage investment in small businesses.

In a related move, councils and business leaders were asked by ministers to produce proposals for joint efforts to boost local economies.

Local Enterprise Partnerships are being sought to replace Regional Development Agencies - which the Government is to scrap.

Business Secretary Vince Cable and Communities Secretary Eric Pickles wrote to local authorities and business leaders inviting ideas for joint working.

Mr Pickles said it was vital to replace the "bloated" RDAs (regional development agencies).

"If you want to rebuild a fragile national economy you don't strangle business with red tape and let bloated regional quangos make all the decisions," he said.

"Urgent action is needed to rebuild and rebalance local economies so that new businesses and economic opportunities spread across the country.

"The solution needs to be local. We know that when councils and local business work hand in hand they can drive economic growth together and places can be transformed. Local enterprise partnerships are central to this vision which is why we are asking them what they need.

"By giving up central control we will put democratic accountability back into the local economy making it responsive to the needs of local business and local people."

Mr Clegg later hosted a meeting with local business leaders at the Mumtaz restaurant in Bradford.

The restaurant, which originally opened in 1979 in a 4m by 3m space, has catered for numerous celebrities and politicians over the years, including Mr Cameron, who is quoted on the website as saying: "The best curry I've ever had in Britain."

It now has a second restaurant in Leeds and sells a range of merchandise, including food products, Halal baby food, clothes and gifts.

Mr Clegg, who arrived at the restaurant with Chancellor George Osborne, was met by owner Mumtaz Khan and given a tour of the business.

The Deputy Prime Minister was shown around the kitchens where he stirred a curry dish and told staff: "It looks delicious."

He then joined Mr Osborne, Mr Cable and Mr Pickles for the private meeting with members of the business community.

Shadow business secretary Pat McFadden said the abolition of RDAs was the result of a "turf war" between Mr Cable's and Mr Pickles' Whitehall departments.

"CLG (Communities and Local Government) want to take an axe to RDAs because of cuts in their own budget," he said.

"Vince Cable shouldn't be going along with this. If his department is to be a department for growth it makes no sense to abolish the means for delivering growth."

CBI deputy director-general John Cridland said: "We have to get private sector growth going in every region of the UK.

"For the CBI, the issue is not about structure, but about getting effective local bodies where business has at least 50% of the equity and a strong voice at the table.

"There is a real job to be done, and if hard-earned taxpayers' money is to be spent, we need to see the new partnerships pursuing a practical, business-like agenda.

"This should cover all issues that directly affect growth, with planning, transport and skills at the top of the list."