Two-year pot to replace £1.4bn annually spent on Regional Development Agencies

Deputy prime minister Nick Clegg today announced the setting up of a £1bn, two-year regional growth fund in part to support capital projects in the regions.

The money will replace the £1.4bn currently spent each year supporting the Regional Development Agencies, and as such represents a dramatic cut in funding.

Both councils and private businesses will be able to bid for cash from the funding, which will support initiatives that bring in private investment and create private-sector jobs.

However only organisations in the midlands and the north will be able to bid for the regional growth fund, which will also not be available in Wales and Scotland.

Instead of Regional Development Agencies, the government is calling for councils and business to set up joint Local Enterprise Partnerships to provide economic leadership in each local authority area.

Communities secretary Eric Pickles and business secretary Vince Cable today wrote to councils asking them to consider setting them up.

LEPs will take charge of planning, housing, local infrastructure and employment decisions. RDA functions around inward investment and other higher level decisions will now be taken nationally.

Nick Clegg said: “While we sort out the nation’s finances we can also help to foster a thriving and more balanced economy so that no region or community gets left behind.

“The Regional Growth Fund will create the conditions for growth and enterprise in the regions by stimulating investment and create sustainable private sector jobs.

Pickles said: “If you want to rebuild a fragile national economy you don’t strangle business with red tape and let bloated regional quangos make all the decisions. The solution needs to be local - we know that when councils and local business work hand in hand they can drive economic growth together and places can be transformed. Local enterprise partnerships are central to this vision which is why we are asking them what they need.”

Full details of the Regional Growth Fund, including who will be eligible to apply, and the criteria and process for assessing bids, will be set out in the forthcoming White Paper on local and regional growth.

Legislation to abolish the RDAs was announced in the Queen’s speech and is expected to be introduced to Parliament in the autumn.

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