We were assured by the beleaguered Deputy Prime Minister that the Fund would produce a “snowball effect that creates hundreds of thousands of jobs”. Given his tendency to hyperbole, however, I think it’s worth looking a little more closely at his assertions as to what this fund will do to encourage economic growth in areas like Yorkshire.
In total, the announcement saw the Government make a commitment of £143m for Yorkshire firms, with 17,000 jobs saved or created in the region.
This figure included a loan of up to £36m for Sheffield Forgemasters, which will leave the good people of Sheffield pleased but nevertheless bemused, given the string of excuses and inaccurate statements emanating from Clegg himself and from Business Secretary Vince Cable with regard to the cancellation of the loan agreed by the previous Labour government.
Other companies in the region singled out for potential investment from the fund include BOC Ltd, Surgical Innovations Ltd and a string of local authorities and Leeds City Region (how that works remains to be seen, given that the fund’s stated objective is to aid the development of jobs in the private sector).
So £143m, then, for a Yorkshire economy which is suffering badly from the loss of jobs in the public sector and which faces a mammoth task in closing the gap with London and the south-east of England. To put this into context, the fully-funded loan agreed by Labour for Sheffield Forgemasters in 2010 was for £80m, which is well over 50 per cent of the total amount made available for the entire Yorkshire region by the coalition. I hear Conservative and Lib Dem supporters saying at this point that deficit reduction is the name of the game. But economic growth in the UK is stalling, with the rate for the past year standing at just 0.5 per cent. In the 12 months preceding that, growth was recorded at 2.6 per cent.
As an Opposition, we have always argued that it is damaging and short-sighted for the Government to base its deficit reduction strategy so heavily on spending cuts and tax rises. There is a role for growth in reducing deficits and cutting too deep, too fast damages growth itself, as we can plainly see.
In this context, £143m offers very little for Yorkshire, and when it is compared with what was previously on offer it is possible to see just how much of a confidence trick the Regional Growth Fund represents.
Regional Development Agencies were not perfect, but they did offer substantial sums for investment; in the final few years of their existence, they were investing £1.7bn per annum in the regions.
Compare that to the £1.4bn offered over three years by the Regional Growth Fund and it becomes obvious that the latter represents a two-thirds cut by the coalition in regional investment.
The Government may issue warm words about investing in the development of long-term, sustainable economic activity in areas like Yorkshire, with all that means by way of job creation, but it is doing very little to back its words with the resources necessary to really make a difference.
Making a difference involves, of course, developing the UK’s manufacturing base, particularly in areas like ours which have been reduced in recent years to an increasing dependency on public sector jobs.
But if the Regional Growth Fund is severely limited in achieving these aims because of its inadequate funding, at £1.4bn, then it is also hampered by the unnecessarily convoluted approach to the due diligence process insisted upon by the Department for Business, Innovation and Skills.
The net impact is that just five of the 50 successful bids from Round 1 of the fund have managed to secure the monies promised them by the Government.
The Regional Development Fund so far has delivered very little – 119 further bids were given the green light last week, with 23 of those coming from Yorkshire.
Given the poor performance of the Government so far in delivering the goods, it is only reasonable to assume that it will be a very long time before we actually see anything significant and worthwhile arising from this so-called flagship initiative.
Yes, the funding announced by Clegg for business and industry is welcome. Of course it is. But it doesn’t go far enough.
The Government is delivering too little, too late and is proving itself utterly inadequate when it comes to inspiring confidence in its ability to kickstart growth in the economy.
Angela Smith is Labour MP for Penistone & Stocksbridge.