Spending Review: £400m added to Regional Growth Fund
The government will add £500m to the planned Regional Growth Fund designed to stimulate private sector projects, topping up the pot to £1.5bn over the next three years.
Chancellor George Osborne began detailing cuts to individual departments’ budgets today, saying overall cuts would be 19% rather than the anticipated 25%.
He said that the Department for Business Innovation and Skills would be crucial to stimulating areas of the country that are over-reliant on public sector spending.
As part of this, Osborne said he would top up the Regional Growth Fund, which is to be allocated by Lord Heseltine (pictured), by an extra £500bn.
The chancellor said infrastructure, science, and green projects would be prioritised, with the science budget being protected at £4.6bn.
He also said the Crossrail project for a new underground line across London would go ahead, and that a National Infrastructure Plan would be published next week, detailing how a £30bn transport budget would be spent. Of this, £14bn will be spent on new rail maintenance projects.
Making a speech to the House of Commons, he said the last government’s £55bn Building Schools for the Future programme had been axed because it was “hopelessly committed.”
However, Osborne did pledge an extra £15.8bn for refurbishing the schools most in need.
- Heseltine panel to allocate £1bn Regional Growth Fund
- Emergency Budget: Growth fund to guarantee Brum’s New Street
- Spending Review: Osborne overhauls council spending powers
- Spending Review: Osborne confirms funding for Crossrail
- Spending Review: Osborne reveals 60% cut to schools projects
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The extension of the Regional Growth Fund is a welcome one, and was a key ask in our submission for the Comprehensive Spending Review. But expectations of what the fund will do, albeit enlarged, must be kept firmly in check.
For example, when I asked Chris Grayling about the lack of labour demand being a barrier to work in some cities recently, he offered the Regional Growth Fund as the solution for these areas. However, at £1.4bn over three years, the fund equates to the budgets of the RDAs in this fiscal year alone. So it is unlikely to be able to significantly turn around the fortunes of cities that will be hit hard by public sector job losses. As such it is unlikely to deliver on the Government’s goal to rebalance the economy gegraphically.
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