Middlesbrough South and East Cleveland Labour MP, Tom Blenkinsop, said today (November 8th 2010) that an admission by Business Minister, Vince Cable, that cash earmarked for the North East Regional Growth Fund could be diverted to help new start up companies in London and the South East could be “a kiss of death” for new Local Economic Partnerships such as the one covering the Tees Valley.

At a small business meeting in London last week, Cable admitted that cash earmarked for Regional Growth Fund, designed to plug the regeneration funding gap in areas like the North East following the winding up of Regional Development Agencies could be accessed by another new government body, Capital for Enterprise, which has been set up to boost investment in start up companies seen as offering high growth potential. Capital for Enterprise has a nationwide remit and Cable accepted that this could mean southern businesses using cash designed for the North.

Tom said: “This is makes a total mockery of this Government’s regional growth policy and could mean the kiss of death for Local Enterprise Partnerships in the North East. Everything new we hear about LEPs points to the fact that they are little more than bodies of straw. They have no legal powers, no real local autonomy and have been told that any cash for them has to come from what will be an under resourced Regional Growth Fund and they will have to fight for their cash against other costly regional housing and transport projects. Now we hear that these funds are also open to southern companies. By their very nature ‘high growth’ companies are more likely to be located in the south or in Greater London than in places like Teesside and are more likely to be biased towards financial services than manufacturing. I am sure such companies will be queuing up for some state aid, and they will be there with developed business plans. The rebranding of the RDA’s into LEP’s is structurally unsound and could have devastating consequences for the economic growth in the North East.”