Exclusive: Cameron’s office aid scheme starts to unravel

David Cameron travelled to Leeds yesterday to launch the scheme, announcing plans to open 300 vacant and under-used Government workplaces to small firms and new enterprises in a bid to kick-start the economy.

The offices would be available for around a year, after which the Government aims to sell them.

However, property lawyers immediately raised doubts about whether such a scheme would be possible, as permission to change the lease agreements on each building would have to be secured.

Business leaders warned the initiative would put the Government in direct competition not only with private sector firms already running similar enterprises but also with publicly funded schemes currently operating, such as Innovation York or the “incubator” start-up units funded by the region’s universities and local councils.

Sources have also told the Yorkshire Post that there would even be considerable legal difficulties sub-letting the very building in which the launch event was held – formerly home to the Government Office for Yorkshire and the Humber – in Queen Street, Leeds.

According to the lease agreement, the Government is paying more than £540,000 to rent the building, large areas of which are not being used. Lawyers have suggested there would be little incentive for landlords to change the terms of their lease agreements unless they were financially rewarded.

Gareth Owen, of Barnsley & Rotherham Chamber of Commerce, said: “There will be some interest in this but it is hard to see that there will be much.

“On average, if a new business is going to go under, it tends to be after 12 to 18 months. That’s the real crunch time and it will be right at that crunch time you are asking them to leave.

“In Rotherham, thanks to the work of the council, there are four incubator sites with around a total of 150 units for new businesses, offering IT support, accountancy support, mentoring support.

“These are designed for two- to three-year flexible leases after which the firm is established and can move on – and statistically our business start-ups last longer than anywhere in the country outside London.”

During his speech to launch the project, Mr Cameron said: “This isn’t something we’d quite like to do – it’s something we’ve got to do because enterprise is critical to this country’s future.”

But later a spokesman for Downing Street could not confirm any agreements had been reached to allow the Government to let any of the 300 buildings it had shortlisted.

“There are a number of buildings that could potentially be used and the building in Leeds is one that could potentially be used,” he said. “With all of them we will need to bottom out the detail.”

“We are in the process of talking to landlords at the moment. The intention is that as much as possible of the property is given to start-up businesses.”

Rachel Reeves, Leeds West MP and Shadow Chief Secretary to the Treasury, said: “Time and time again this out-of-touch Government’s growth measures have failed to live up to their original hype and deliver for our small businesses.”