June 29, 2010 / 1:19 PM / 8 years ago

Coalition scraps "bloated regional quangos"

LONDON (Reuters) - The government said on Tuesday it was allocating 1 billion pounds over two years to a regional growth fund, less than half amount spent now on nine local development agencies the coalition has pledged to scrap.

Private firms and public partnerships will be able to bid for money from the fund, which will operate from April 2011.

“The Regional Growth Fund will create the conditions for growth and enterprise in the regions by stimulating investment and create sustainable private sector jobs,” said Deputy Prime Minister Nick Clegg.

“Alongside our commitment to waive some employment taxes for new businesses starting up in targeted regions of the country, this fund can make a real difference to companies during difficult times,” he added.

The Conservative-Liberal Democrat coalition will publish proposals later this year for scrapping England’s nine regional development agencies (RDAs) and for their replacement by smaller “local enterprise partnerships” bringing together local councils and businesses.

The two coalition partners have long wanted to abolish the RDAs, established by the ousted Labour government in 1998, saying they duplicated work done elsewhere and were too expensive.

The government’s programme to cut Britain’s record budget deficit has added urgency to the coalition plans.

Business Secretary Vince Cable has said although the RDAs had created jobs, each one cost 60,000 pounds. Communities Secretary Eric Pickles said the RDAs were “bloated regional quangos.”

“The solution needs to be local,” Pickles added. “We know that when councils and local business work hand in hand they can drive economic growth together and places can be transformed.”

But the RDAs argue that every pound they spend produces as much 6.40 pounds of long-term benefits for the local economy.

And some regional politicians fear the demise of the agencies could hit their localities hard if their funding is not fully replaced.

In the current financial year, they have a budget of around 1.5 billion pounds, down from 2.3 billion pounds last year.

It was not immediately clear whether the replacement local enterprise agencies would have access to any other money beyond the two-year 1 billion growth fund.

Editing by Steve Addison

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