Tory-led Government has failed on growth and jobs for the North East

Chuka UmunnaChuka Umunna MP, Labour’s Shadow Business Secretary, said the Tory-led Government is crushing business confidence, holding back growth and stalling job creation in the North East in a Parliamentary debate on Government support for business today.

New revelations today show the scale of the Government's inertia on the Regional Growth Fund.

Seven months since the RGF round one winners were announced, due diligence has only been completed for nine of the 50 winning bids across the UK. Until this process is completed, successful bidders are not able to receive any funds. Vince Cable’s Business Department has itself said that the process should only take two to six weeks.

Iain Wright, Labour’s Shadow Business Minister and MP for Hartlepool said:

“The Tory-led Government has failed to get growth and job creation going. The chaos and confusion which has beset its flagship growth policy, the Regional Growth Fund, has made it harder for north east businesses.

“But Labour has a better way. As part of Labour’s five point plan for jobs, over 58,000 small businesses in the North East could be eligible for a tax break if they take on extra workers. This would help small businesses to grow and create jobs in the local area. In addition, we are also calling for a £2 billion tax on bank bonuses to fund up to 5,500 jobs for young people in the region.”

Chuka Umunna said:

"The evidence is clear – the Government’s strategy is not working because to reduce your borrowing you need growth and they choked it off by cutting spending and raising taxes too far and too fast long before the Eurozone crisis became the problem it now is. The question is: how bad does it have to get for the Business Secretary and his Government to change course?"

Chuka Umunna said on the Regional Growth Fund's failings:

“These are difficult and challenging times for businesses and people in this country.  They deserve better from a Government which says we are all in it together but which, time and again, shows no understanding of the concept.

“This is no way to run a department and it is no way to grow our economy. The Secretary of State and his department are not doing enough to get our economy growing. What little they are doing, they are doing badly.”

Ends

Editor's notes:

1. The debate, called by the Opposition, calls on the government to deliver an effective plan for growth, supporting businesses and job creation - Labour’s five point plan for jobs and growth - to give confidence and enable small firms to take on new staff.

2. The government has failed to get growth and job creation going in the regions, with the chaos and confusion which has beset its flagship growth policy, the Regional Growth Fund (RGF), he will say. Instead of action and urgency, Ministers’ approach has been mired by inertia.

3. Due diligence for the firm’s bid highlighted by Chuka Umunna has still not been completed and has been delayed until December. Because the company is distributing monies to smaller firms, as a result between 3,000 and 4,000 new businesses are being deprived of money, putting more than 11,000 jobs at risk.

4. When the Business Secretary gave evidence to the BIS Select Committee earlier this month, he was accompanied by BIS Permanent Secretary Martin Donnelly who told the committee that due diligence on successful bids would take “between two and six weeks” adding “it is not a long process in itself”. More than 30 weeks have now passed since the first round winners were announced.

BIS Committee oral evidence, 9 November 2011

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmbis/uc1632-i/uc163201.htm

BIS officials, speaking to the Local Government Chronicle in August said the allocation of funds would be complete “in the autumn” http://www.lgcplus.com/briefings/services/economic-development/one-growth-fund-project-given-green-light/5034210.article

5. The £1.4bn Regional Growth Fund represents a two thirds cut in the regional investment delivered compared with Labour’s plan, and the first round of the RGF was oversubscribed by six to one.

Only 50 projects nationwide were given financial support from the £450m first round, from the 464 project bids that totalled £2.78bn, producing more losers than winners.

6. Labour’s five point plan for jobs and growth in the North East can be found at labournorth.com/plan