Speech to the IPPR North Conference - Umunna

8 December 2011

Chuka UmunnaMinisters’ inaction is putting hundreds of millions of pounds of regional growth funding at risk – Umunna

Ministers are putting more than £1 billion of EU funding for regional growth at risk, Chuka Umunna MP, Labour’s Shadow Business Secretary will reveal in a speech today.

The Government has yet to put in place a mechanism for allocating European Regional Development Fund (ERDF) funding in the regions of England following the abolition of the Regional Development Agencies (RDAs), which used to handle the process.
 
According to the most recent Government figures, £1,160m – 41 per cent – of ERDF funding for the English regions is yet to be allocated. If this funding is not fully allocated in time before the end of 2013, two thirds will automatically revert to the Treasury’s coffers under the terms of the UK’s rebate. The ERDF is aimed at promoting jobs and growth, particularly in the UK’s most disadvantaged areas.
 
Speaking in Leeds at an IPPR North conference, Chuka Umunna will say that the failings on the ERDF are symptomatic of a lack of leadership and urgency from ministers on promoting growth, and a failure to adopt an active, intelligent approach to the role of government.
 
He will call on the Government to carry out a full regional impact assessment of its growth policies, looking at growth within regions as well as between them.
 
Chuka Umunna will also highlight the failings of the Government’s flagship growth scheme, the Regional Growth Fund (RGF). Eight months after the winners of the fund’s first round were announced and almost a year after bidding closed, only a quarter of the fifty successful bids have actually received their money.
 
Last week, the Government confirmed that they do not expect to complete the due diligence process for round one until the end of March 2012 – almost a year after the winners were initially unveiled.
 
This is despite the fact that Vince Cable’s Business Department itself said that the process of due diligence on bids should only take two to six weeks while the department has previously promised that the process would be complete “in the autumn”.
 
In his speech, Chuka Umunna MP will say:
 
“Despite the initial fanfare, it is impossible to understand the impact of the Regional Growth Fund on regional growth. More broadly, it is not clear that the Government has even the means to understand the full impact of its cuts and policy changes on growth between and within regions – from threats to higher education, the axing of Launch Aid, squeezes on local authority budgets, and so on.  
 
“So today I am calling on the Government to carry out a full impact assessment of its policies on regional growth – including the impact of replacing the RDA funding which existed before with the smaller RGF fund.
 
“And it is not just the RGF where there is a lack of urgency and ministerial complacency.  Ministers are putting more than £1bn of EU funding for regional growth at risk by failing to put in place a mechanism to allocate that money to the regions of England following the abolition of the RDAs.  If the money from the European Regional Development Fund is not allocated by 2013 and spent by 2015 then two thirds of the money simply reverts back to the central pot held by the Treasury.
 
“We have put forward a five point plan to get demand and growth back into our economy - including tax breaks for small businesses taking on extra workers, a temporary VAT cut – helping high streets in our cities, helping families that are struggling - and a tax on bank bonuses to fund 100,000 jobs for young people. This is a plan that we say should be implemented immediately.”