Tory speaks up for small firms barred from Government fund

The Government's decision to impose a minimum 1m

value on bids to the 1.4bn Regional Growth Fund – which is designed to boost the private sector in regions of the country which are about to be hit by significant public sector job losses – means that smaller businesses are likely to miss out.

Ministers insist smaller companies can group together to submit bids, but there are concerns that will make the process

too complicated at a time when another funding stream – the

Grant for Business Investment – which gave smaller grants of 10,000 or more has also been axed. As Chancellor George Osborne yesterday defended the coalition's plan to revive regional economies and branded Labour spending on economic development as ineffective, the Skipton and Ripon Conservative MP Julian Smith appealed for

Ministers to give small firms a one-year break from new employment regulations. The former businessman said while bigger companies could cope with new rules, they could be cumbersome for small firms but

Business Minister Ed Davey warned of a new wave of European red tape which would have to be enforced. At the Treasury Select Committee yesterday, Mr Osborne denied Northern regions would suffer "inevitable collateral damage" from the spending cuts which are expected to lead to nearly 500,000 public sector job losses over the next four years. Ministers insist that more jobs will be created in the private sector.