Call to target cash at the North

16 Nov 06
Public cash to support regional economic development should be targeted at northern cities, a leading think-tank has claimed, despite new research indicating that the UK's North-South divide is eroding

17 November 2006

Public cash to support regional economic development should be targeted at northern cities, a leading think-tank has claimed, despite new research indicating that the UK's North-South divide is eroding.

The Institute for Public Policy Research urged the government on November 16 to target £8bn used to support hundreds of small business programmes annually. It also called for a reduction in the number of programmes.

The think-tank said that while such funding helped to establish 25,000 new enterprises in 2005/06, 'many of Britain's deprived urban areas are still falling behind on business and job creation'.

Nationally, there are 306 VAT-registered enterprises per 10,000 people in the UK. However, the IPPR's Centre for Cities unit reported that South Tyneside has just 128 enterprises per 10,000 people. Other cities also struggle to establish local employers, including Middlesbrough (133), St Helens (177), Kingston upon Hull (183) and Liverpool (185).

Apart from Northern Ireland, every region of the UK saw a drop or no change in the total number of new businesses created last year, despite regional funding programmes across the UK.

Centre for Cities director Dermot Finch said: 'The government has been trying to deliver a universal service for every UK business, in every area and in almost every sector. It has been doing too much with too little. It's time it did fewer things, better. It should target its resources at deprived urban areas that can take on more jobs and investment.'

However, a study published by the Work Foundation on November 13 indicates that the UK's traditional North-South divide is closing.

The annual UK competitiveness index, compiled by the foundation and research specialist Dr Robert Huggins, shows that in 2004/05 competitiveness decreased within the 'big three' regions – London, the Southeast and the East of England. 'By contrast, the other nine regions have all witnessed significant boosts to their competitiveness between 2005 and 2006,' it says.

The traditionally least competitive regions – Northern Ireland, Yorkshire, Wales and the Northeast – made the biggest improvements. But the 'big three' still outperformed the rest of the UK in productivity terms.

'The government's devolution and regional development policies may at last be bearing fruit,' Huggins claimed.

PFnov2006

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