Tuesday, November 8, 2011
REGIONAL GROWTH FUND AND ITS EFFECT ON THE NORTH WALES ECONOMY
Last week, the UK government announced that it would be looking to award £950 million to boost the economy through the second round of its Regional Growth Fund.
This is a £1.4 billion fund that aims to stimulate private sector investment by providing support for projects that offer significant potential for long-term economic growth and the creation of additional sustainable private sector jobs.
Sounds fantastic for the economy but the bad news for Wales is that the Regional Growth Fund is based in England only and, as a result of devolution, the Welsh Government will need to find its own funding for such economic development levers What is more worrying though is that increased spending across the border on economic development may well have a knock on effect on North Wales.
Certainly, the neighbouring area of the North West of England is one of those regions that has benefited with funding of £227m awarded to 39 projects, some of which are going directly to private businesses and others that are supporting key new infrastructure projects.
For example, Burnley Council's bid for £8.8m will reinstate 500 metres of rail track that, in turn, will halve the train travel time between Burnley and Manchester. It will also help to regenerate a collection of former mill buildings along the Leeds-Liverpool canal. That will certainly help the area become more attractive to potential investors.
In addition, Energy Coast West Cumbria has been awarded £5.5m to help firms maximise opportunities in nuclear and renewable-energy supply chains, a move that could have serious implications for Anglesey’s bid to become one of the key centres for the energy sector in the UK.
In the private sector, one of the companies that has individually benefited from the fund is Cheshire-based Bentley, which received a £3m grant to support the development of a new engine plant, safeguarding more than 200 jobs.
So, whilst the North West of England has access to funding for projects that will create over 47,000 jobs, what is happening here in Wales? As many businesses are no doubt aware, the last Welsh Assembly Government decided to abolish grants to businesses, replacing it with the Economic Renewal Programme (ERP).
Yet, according to data released last month, only 16 firms have been helped by the ERP in the first six months of 2011. But what about the billions of European funding available to the poorest parts of Wales, including Anglesey, Conwy, Gwynedd and Denbighshire?
Despite the Welsh Government having already committed over £1.5 billion to 236 projects since 2007, only 256 jobs have been created in Anglesey, only 46 new businesses created in Conwy and only 254 participants have gone on to further learning through European funded training schemes in Gwynedd.
That is a woeful performance and there are real worries that the effect of the Regional Growth Fund along with those enterprise zones already established in the North West of England, will place North Wales at a serious disadvantage at a time when support for private firms is critical.
But this should not be surprising, as the private sector has been largely excluded from direct participation in European funding schemes in Wales, with the vast majority of projects going to Welsh Government or local authorities. In contrast, there is now an emphasis on greater partnership between the public and private sectors in England, with council and business groups coming together to bid for projects, as they did for enterprise zones.
That is something that has been sadly missing in Wales over the last decade and I fear that the billions of European funding that could, and should have made a real difference, as the Regional Growth Fund will do in the North West of England, will have little effect on the transformation of the North Wales economy.