Huge demand for Regional Growth Fund shows desperate need for business credit

THE latest round of the government’s Regional Growth Fund (RGF) was deluged with regeneration bids worth three times the funding actually on offer, the department of business has confirmed.

Altogether 492 bids, asking for £3.3 billion of funding were submitted to ministers, although just £950 million was availble in the RGF’s pot. These bids will now be whittled down by a panel chaired by Lord Michael Heseltine before being signed off by a ministerial committee chaired by deputy prime minister, Nick Clegg.

The scale of demand for the limited money on offer is staggering, confirming that many parts of the country are desperately struggling to find leverage to kickstart moribund economies. Last week’s dismal quarterly growth figure of just 0.2% disguises the fact that many parts of Britain are actually grappling with negative growth.

Although welcome, the RGF pot amounts to just a third of what Labour’s regional development agencies would have spent over the same period.

Commenting on the latest round of bids, Lord Heseltine said:

 “We knew from the road shows there was going to be a huge amount of interest in the second round of the Regional Growth Fund, and we have been overwhelmed by the volume of bids submitted.

“There is clearly a hunger for public support which will allow new and exciting projects to deliver jobs and growth in their local communities to get off the ground, and I’m pleased to see so many people wanting to be a part of this.”

 Yet despite being “overwhelmed” by the “hunger” for investment, the government has not pledged any extra money to the fund, despite its multiplier effect – which is expected to draw in private sector investment equivalent to five times the public outlay.

Given the government’s stated desire to diversify our economy away from an over-reliance on financial services and to stimulate private sector growth in areas dominated by the public sector, ministers must now tell us if they will fund subsequent bidding rounds of the fund.

To leave unsuccessful bidders high and dry would mean many parts of the country continue to languish in the economic slow lane and confirm suspicions that the RGF was simply a tactical ruse to offset criticism about the scrapping of regional development agencies.