Jobs cash'should betargetedon strongnot weak'

Jonathan Reed Political Editor

A 1BN fund to boost regional economies should mainly be targeted at areas of Yorkshire which boomed during the past decade rather than rescuing “struggling” cities, according to a controversial report today.

The Government’s Regional Growth Fund will reap greater benefits by focusing on creating jobs in areas with “stronger economies” like Leeds than those with “struggling economies” like Hull, says research institute Centre for Cities.

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Throwing money at attempts to create private sector jobs in Barnsley – a city heavily dependent on public sector jobs – “is unlikely to result in sustainable private sector job creation”, it adds.

The report says struggling cities should not be neglected and still need Government support but calls for the fund, a key plank of the coalition’s drive to help tackle the north-south divide, to focus on creating private sector jobs rather than helping cities hit by job cuts.

Unsurprisingly the report – which also dismisses Government claims a manufacturing renaissance will provide new jobs – has drawn mixed reactions from opposite ends of the region as cities seek to wean themselves off their reliance on the public sector.

“If the Government is trying to maximise private sector jobs growth then it is important to recognise that the evidence suggests that sustainable private sector job creation is more likely to occur in stronger economies such as Leeds than it is in struggling economies such as Hull,” says the report.

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“Struggling cities already suffer from weak demand for labour. Subsidising further expansion in areas of weak demand, for example through the building of office space, is a poor use of limited public money.”

It insists that struggling cities still need “intensive government support” but adds: “The Regional Growth Fund should primarily be used to support jobs growth in areas where job creation can be sustained.”

Hull and Humber Chambers of Commerce policy executive Richard Kendall said: “I can understand why they’re making that argument but I think you’ve got to look at what the future potential is.

“You’re not going to look at massive growth in the banking sector in the next few years as far as I can tell, but you are going to see a big growth in renewable energy and around ports.”

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But Leeds, York and North Yorkshire Chambers of Commerce policy director Ian Williams said: “Investment should be focused on where it’s going to make the greatest impact. Tackling some of the underlying issues that many of our poorer performing economies across the country face would take far more than the money allocated in the Regional Growth Fund.”

The Government has been consulting on how the fund should be spent. Unveiled in Yorkshire by Deputy Prime Minister Nick Clegg in June, it is part of a package of measures specifically aimed at helping regions which have large numbers of public sector jobs when an estimated 600,000 posts are axed because of spending cuts.

The success of the Government’s economic policy relies on creating more private sector jobs to help the economy recover from recession, and the 1bn over two years is designed to assist that. However, it is considerably less than has been pumped into regional development agencies and today’s report warns it must be well spent.

Centre for Cities also says most of the money would be best spent on a handful of significant projects likely to boost local economies, such as transport links – a key demand for business – and physical regeneration projects, rather than spreading it too thinly on less effective projects.

Comment: Page 12.