West Midlands residents should welcome government funding for Birmingham, according to business minister Pat McFadden.
The Wolverhampton MP defended the way government cash is shared, as he received a grilling in the House of Commons.
Mr McFadden (Lab Wolverhampton South East) was giving evidence to an inquiry into regional development agencies, the government quangos which spend hundreds of millions each year to support regional economies.
Advantage West Midlands, which serves five million people in Birmingham, the Black Country, Worcestershire, Herefordshire, Shropshire, Staffordshire and Warwickshire, has been accused of neglecting the shires and pouring funding into inner cities.
Mr McFadden insisted successful cities benefited regions.
He said: “If cities are advancing, does that mean the rest are losing? I think that’s an odd way of looking at it. The region benefits when the city drives forward. I don’t see this debate as a zero-sum game.”
Mr McFadden has a high-profile role in the Department for Business, Enterprise and Regulatory Reform, as second-in-command to business secretary Lord Mandelson.
But he received a grilling from MPs including Peter Luff (Con Mid Worcestershire) and Julie Kirkbride (Con Bromsgrove) as he gave evidence to the Business and Enterprise Committee.
Chairman Mr Luff warned regional development agencies were being paid to “co-ordinate” other official bodies instead of allowing them to get on with their work.
He said: “It is another thing to liaise with highly-paid civil servants talking to each other.”
Ms Kirkbride complained the agencies were created to help local economies but had become huge bureaucracies. “Now they have just become anything the government wants,” she said.
Mr McFadden said the agencies were co-ordinating government loans to small businesses designed to help them get through the credit crunch, based on measures which helped the West Midlands economy after the collapse of Rover. He said: “The West Midlands has come back and said ‘look, we have been through that experience, we know how that works, we’d like to do that again’. It is going to be about £25million throughout the regional development agencies.”
The cash would be available for short term loans for firms unable to get credit from banks, but not to bail out companies which were unprofitable, he said.