Budget: dependent regions to be targeted
A fund to support employment and growth in areas affected by reductions in public spending has been launched in today’s Budget.
The regional growth fund was launched alongside a scheme to reduce employer national insurance contributions (NICs) in targeted areas of England.
The measures are designed to help areas that rely heavily on public spending to make the transition to private sector growth and prosperity, with the government planning to cut public spending as part of a drive to reduce the structural budget deficit to zero over the next six years. The full details of the regional growth scheme will be announced shortly.
Employers in targeted areas will not have to pay the first £5,000 of employer NICs due in the first year of work for each of the first ten employees. The scheme is intended to start no later than September and will apply to any business set up from today that meets the criteria.
Forum of Private Business chief executive Phil Orford said: ‘Not only did the chancellor make all the right noises about supporting enterprise and smaller businesses, he backed it up with a number of crucial tax changes. What we need now are some guarantees on how the white paper on local economic growth Mr Osborne mentioned will focus on innovation and jobs in regions that are likely to be affected by public sector job cuts.’
The New Local Government Network welcomed the government’s commitment to supporting private sector enterprise and investment in regions that are particularly reliant on the public sector: 'These areas will face significant challenges as funding is reduced over the course of the next parliament,’ it said. ‘As part of this, we are glad to see that the government is committed to progressing a number of key local and regional transport projects, and to introducing a regional growth fund to facilitate capital projects.'
But the proposals on NICs have attracted criticism from councillors in the south and east of England who claim it will disadvantage those areas.
Andrew Finney, leader of Basingstoke and Deane Council and chair of the South East Diamonds for Investment and Growth, said: 'We appreciate the government’s desire to encourage growth outside the southeast, but this ill thought through tax on geography stacks the odds against the small businesses we’re depending on for recovery. We need the government to invest in success, not just tax it, or there’s a real risk the recovery will stall.'
John Lamb of Southend Council, chair of Regional Cities East, said the move was 'a slap in the face' for southern-based entrepreneurs. 'The greater southeast is the only part of the country to make a net contribution to the Treasury so this unjust tax will hit the very businesses this country depends on for economic growth. Where is this being fair?’
Budget documents also appeared to suggest more mixed messages over the future of regional development agencies. RDAs are to be abolished via a public bodies bill and replaced by local enterprise partnerships. But after insisting regions would have a say over whether their RDA should be saved in its 'programme for government' published in May, this time there was no such suggestion.
The Budget confirmed the establishment of Infrastructure UK to lead work within the Treasury to enable greater private sector investment in infrastructure and improve the government’s long-term planning and delivery. Government will publish a national infrastructure plan in the autumn that will set out its goals.
Chancellor George Osborne also announced approval for regional public transport schemes in Tyneside, South Yorkshire and Manchester.
The Campaign for Better Transport's executive director, Stephen Joseph, said: 'We’re pleased that the government is giving the go-ahead to improving good public transport in places like Sheffield and Manchester. But our own research suggests that the 25% cuts being called for from transport will mean that public transport services will suffer, and lead to vital road-safety and maintenance budgets also being squeezed.
'A lot of the hard choices will now have to take place in the spending review over the summer. The choices made in the review need to make sure we have “smarter cuts” that get rid of costly legacy road-building projects and make what we’ve got work better.'
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