Business leaders have accused the Government of merely ‘paying lip-service’ to regional devolution after George Osborne failed to commit cash to plans to shake up regional funding.
Decision-makers in Birmingham had hoped the Chancellor’s Spending Review would throw weight behind former deputy prime minister Lord Heseltine’s idea to allow local enterprise partnerships (LEPs) to bid for more than £50 billion over four years from a ‘single pot’ to create growth.
However, the Chancellor revealed that only £2 billion a year for the next five years would go into the Single Local Growth Fund – meaning the 31 LEPs will be bidding for a fraction of what had been expected.
Birmingham Chamber of Commerce Group president Steve Brittan said the Government had not truly backed Lord Heseltine’s plans, despite previous commitments that it would.
He said: “This does lead us to believe that the government is reluctant to commit fully to devolved powers in the UK and are just paying lip-service to the idea.
“The sum of £2 billion per year will not be sufficient to make a serious impact. £2 billion per year over 39 LEPs will amount to £51.3 million per year – not sufficient for major projects. This will not make up for the cuts which will disproportionately affect local authorities in the Midlands.”
Birmingham City Council leader Sir Albert Bore said that while securing the single pot was an important step forward, he was disappointed by the figure.
He said: “The pot announced for 2015 to 2016 is a mere £2 billion, which equates to £10 billion over the five years.
“This is a huge disappointment for all those who have worked hard to argue the case for the changes Lord Heseltine has proposed and a failure of political leadership on the part of the Government.
“Birmingham and the other core cities will continue to work closely with the Government and the opposition to find ways in which our cities can make a greater contribution to national growth.”
The Post reported last week that the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) planned to make an M42 business corridor near the airport its first major single pot-funded project.
The region’s LEP has been at the heart of the push to devolve Whitehall funding, with Lord Heseltine’s Greater Birmingham Project helping to convince national government. The Government has committed to 81 of 89 recommendations – but Lord Heseltine recently warned the Chancellor it would be a “slap in the face” for the regions if large-scale devolution of funds did not take place.
However, GBSLEP chairman Andy Street said the Government had made progress towards decentralisation, and believed the figure could be closer to £15 billion in time.
He told the Post: “If you put the fund in the context of the numbers that the papers have been running I can see why there would be disappointment
“But what the Chancellor has done is to start off a different way of doing things, and has not backed away from that despite all the pressure from other departments.
“We have always said there would be other sources of funding and the Chancellor has talked about £300 billion in infrastructure, and we want our share of that.”
While PwC’s head of local government, Andy Ford, said the size of the single funding pot “will be a major disappointment”, others have said it could be a first step towards genuine decentralisation.
Prof John Bryson of the University of Birmingham, co-author of Lord Heseltine’s report No Stone Unturned, said: “The £2 billion announced today for a local growth fund is a start. It’s more than token politics but it’s only really a starting point and we very much hope future funding rounds will raise this to around £3 billion to £4 billion.”
Richard Halstead, Midlands region director of manufacturers’ body the EEF, said he was pleased progress had been made on the single pot.
He said: “Starting off with a small single pot is the right move. A phased approach gives LEPs the opportunity to demonstrate their value in important areas like transport before more taxpayers money is devolved.”
However, Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “We found that LEPs are to bid for £2 billion from a Single Local Growth Fund and more details will be announced at a later date but this won’t go far among 39 LEPs.”
Despite the disappointment on the single pot, business leaders have welcomed several measures announced by the Chancellor – the green light for HS2 and the commitment to boosting capital spending, including £50 billion in 2015.
The Chancellor also committed £3 billion towards affordable housing and there will be more than £300 billion for infrastructure including roads, railways, bridges, broadband, science and schools by 2020.