December 5, 2012 8:35 pm

£58bn funding plan delights regions

Regional leaders welcomed plans to give them more power over up to £58bn of skills, transport and housing funding in line with recommendations from Lord Heseltine, former deputy prime minister.

But with full details not available until next year and funds not transferred until 2015 some warned that Whitehall inertia could stymie progress.

The chancellor said in his Autumn Statement that local enterprise partnerships – public and private sector bodies set up to foster economic growth – would receive £10m to write strategic plans and be able to bid for national spending on growth-related areas.

However, John Longworth, director-general of the British Chambers of Commerce, said the “radical step” could be “scuppered by Whitehall”.

Steve Brittan, president of the Birmingham chamber of commerce, was critical of slow progress on big infrastructure projects such as HS2, the high speed rail link between London, Birmingham and the north.

“Projects like HS2 are not accelerating quickly enough and too many projects, like those funded through the regional growth funds [a government facility], are being bogged down in red tape and Whitehall inertia.”

Paul Carter, leader of Kent county council, said: “It’s vital we banish Whitehall red tape and free up much-needed funding from its central government silos.”

The 39 partnerships will each be able to nominate an infrastructure project to receive cheap lending from the government, of up to £1.5bn in total.

Unions welcomed the chancellor’s decision to drop plans for regional pay, which would have hit earnings and consumer spending in poorer areas.

Kevin Rowan, TUC secretary in the northeast, where one worker in four is employed by the public sector, said: “This would have undermined regional recovery even further.”

Cities such as York, Cambridge and Salford are to receive money for superfast broadband networks.

Several roads, including the A1 through North Yorkshire to Newcastle, are to be widened. Mick Henry, the Labour leader of Gateshead council, said congestion had held back the economy.

Ross Smith, the policy director at the North East Chamber of Commerce, said the £378m upgrade was “the first budget announcement from the coalition government that business in the north east can really get behind”.

Regional universities will hope to benefit from £600m of new science spending.

But Gordon Marsden, the shadow business minister, said the government was “tinkering around the edges”.

He said: “There was nothing to address the critical issue in the regions; sluggish and variable economic growth.”

Additional reporting by James Pickford

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