Regional Investment: Competition sharpens up the bidding
There are misgivings about the new regional aid policy, says Trevor Bates
REGIONAL investment agencies are playing for big stakes these days if judged by Northern Development's success in capturing Samsung's new electronics complex for Teesside.
The public-private partnership has secured not only direct investment of £600 million and 3,500 on-site jobs but also the prospect of a supply-chain spending of £300 million in the Northern economy within five years leading to an influx of yet more companies - and jobs.
It happened, believes Dr John Bridge, only because the North East had a comprehensive package of incentives to offer. "We had all our ducks in a row," says the chief executive of Northern Development.
Inward investment has been a major factor in recharging the region's economy but the quantity and quality of the overseas manufacturing companies that have settled there has largely been dependent on state subsidies.
The argument for retaining regional selective assistance in hard-pressed industrial areas - an issue on which the Treasury and the DTI appear to be in conflict - is a strong one, says Bridge. "It is clear to me that if the U.K. wants to attract investment from the Far East it has to be able to offer a grant regime as competitive as those in France, Germany and Spain. If there had not been £58 million on the table from the DTI we would have been foolish to think we could have attracted Samsung."
The task of promoting sustained recovery in the North and Midlands is now being influenced by a new set of investment-related imperatives. Tougher competition is coming from mainland Europe and nearer home from shire areas. Contraction of agriculture and the closure of military bases have left the West Country and areas like Lincolnshire, Shropshire and Kent with employment problems - but with large, marketable sites.
Two other important factors have emerged that will influence regional performance. One is the Government's restructured regional aid programme, which lays greater emphasis on the bidding process and private finance to get projects off the ground; the other the arrival of English Partnerships, the new regeneration agency.
Next year £100 million of the £1.4 billion Single Regeneration Budget will be allocated on a competitive basis and the Government is sifting through 469 bids from 10 regions before announcing the winners in January.
The budget which became operational in April concentrates 20 programmes from five Government departments into a single funding source. It is safe to assume that bidding will come more into play as completed projects free up more of the budget - a prospect that disturbs city and shire alike.
Alan Clarke, head of economic development for Newcastle upon Tyne, says the new bidding policy has introduced a new element of uncertainty into urban planning, making implementation more difficult.
"You are forced into a number of strategies which offer a whole range of different choices. You have to try to secure funding from the different pots of money available. It helps sharpen up the quality of your brochures and video presentations but it makes life a lot more complicated." The county of Shropshire, where 10,000 agriculture-related jobs have been lost in the past decade, has put forward three bids worth £1.6 million to help fund business start-up structures, but people like Brian James, of Shropshire Tec, are concerned that SRB funds will inevitably be targeted more at urban areas.
"The bidding guidance issued to all economic development agencies at no point states the word 'rural' yet without SRB money Shropshire as a county will have no business start-up provision, support for small, early-stage businesses will be minimal and long term measures to improve skills levels will not be able to go ahead."
Despite misgivings about some aspects of the Government's regional policy, the U.K.'s pitch for overseas investment is "incredibly strong," says Andrew Fraser, chief executive of the Invest in Britain Bureau. "The fact that we are committed to open trade and the de-regulation of business is an immensely powerful advantage."
