Regional Growth Fund

Debate between Oliver Colvile and Simon Danczuk

Tuesday 1st November 2011 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

The points I wish to make relate very much to the process surrounding how the regional growth fund works. The hon. Member for Wirral West (Esther McVey) talked about the need to spend money better, but the regional growth fund is spending it badly. All the evidence suggests that improvements can be made, particularly to the process. It cannot be right that only five or six firms out of 45 successful bidders have received money from the first round.

At last week’s Business, Innovation and Skills questions, the Secretary of State said that such an outcome was acceptable and that it was all part of the process, but the truth is that it is not acceptable. The lifeblood of any business is cash flow, and slowness in making awards will jeopardise the economic growth that the fund is trying to achieve. There are therefore real concerns about how the process is working and about its slowness. At the rate we are going, not all the awards will have been made to the businesses concerned by the end of this Parliament.

It cannot be right that the Department has issued nearly 30 press releases about the regional growth fund but has managed to allocate only five or six awards since the fund was set up. It also cannot be right that successful businesses have to hire consultancy firms to carry out the due diligence that is expected, as my hon. Friend the Member for Sedgefield (Phil Wilson) said. Under the previous structure of regional development agencies, that due diligence would already have been done, which would have resulted in a much quicker process.

There are questions about transparency. We are unsure how decisions are made about successful and unsuccessful bids. It has been pointed out to me that LEPs, which were the creation of this Government, are not being fully involved in the decision-making process. For example, the LEP covering Sheffield was not aware that Sheffield Forgemasters was to receive the funding that it did. As has been said, there are also reports in today’s newspapers that one of the business men who sits on the fund’s advisory panel owns shares in one of the businesses that will benefit from the second round.

My final point relates to the £1.4 billion being made available over three years, which is just a third of what the previous Government put into regional development.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I hear what the hon. Gentleman says, and there are two issues. First, we have had a great deal of discussion about how money should be going into business in the north-east and the north-west, but the south-west is also important. Secondly, the country is incredibly short of money, and we should surely be using this money for catalyst work and to build our skills base.

[Simon Danczuk]

I would not disagree, but my point is that the regional growth fund is not working effectively, although it might look attractive. We may have a limited amount of money, but it needs to be spent well, wisely and effectively. The measure of the regional growth fund, particularly given the amount being made available, was whether it would create private sector jobs to replace the jobs lost in the public sector. All the indications are that that is not occurring; indeed, we know that for a fact because unemployment—particularly youth unemployment—is going up. As a mechanism and policy, therefore, the regional growth fund is failing.