I’m sure The Times won’t mind us re-producing their news story today, given they used info gotten from Liberal Conspiracy without attribution.

Robert Lea Industrial Editor
Last updated November 1 2011 12:01AM

Companies have warned the Government that they could leave Britain, with the loss of hundreds of jobs, unless they receive millions of pounds from Nick Clegg’s £1.4 billion Regional Growth Fund (RGF).

The Deputy Prime Minister publicised plans yesterday for the fund, which he said would create or save 325,000 jobs at nearly 200 companies, as part of a move to “jump start” the economy.

While the fund was derided by Labour as “too little, too late”, an investigation by The Times of winning bids showed that some companies appeared to have exerted emotional pressure on the Government. Grants have also been made to local councils in politically marginal areas and to companies who are significant backers of the Conservative Party.

According to bidding documents seen by The Times, CQME, a Chinese technology company, indicated that it would make its British subsidiary, Holroyd Precision, in Rochdale, the base for its European headquarters. It indicated, however, that if it were not to receive £2.8 million of government support, it would halt its planned expansion in Britain.

The bidding documents state: “Without RGF support it is a certainty that CQME will either move to Holland or Germany . . . with the resultant slow loss of employment in the UK.”

A second company, Bridon International, said that it had identified two viable locations for a new facility: one in Newcastle and another in Gelsenkirchen in Germany. Bridon’s bidding documentation for £2.2 million of support states: “The final decision regarding the location of the proposed facility has not yet been taken and will be significantly influenced by the availability of grant support from the UK Government.”

Mr Clegg, announcing a second tranche of £950 million of funding, on top of the £450 million granted this year, said that the fund would unlock private sector investment in which for every £1 of government grant, companies would put up £6.

The Government estimates that the £1.4 billion will create or maintain more than 65,000 jobs, which in turn will help to create or maintain another 260,000 jobs indirectly in companies’ supply chains.

It had been thought that funds would be aimed at specific businesses in deprived areas or manufacturing regions that had fallen on difficult times.

However, the latest funding decisions show that large amounts are bound for a number of local councils. They include £40 million for Derby City Council, once a Liberal Democrat stronghold, now split three ways with a Lib Dem-supported Conservative leader. It had been lobbying loudly for backing for an enterprise zone to offset the job losses in the city, including those at the Bombardier train plant.

There is also funding for Tory-led Southampton City Council, which has clashed with local trade unions.

Burnley Council is to receive £9 million to improve rail journey times to Manchester after a campaign by Gordon Birtwistle, its Lib Dem MP.

Among other companies winning funding is JCB, whose owners, the multimillionaire Bamford family, are among the Conservative Party’s biggest donors and who have also given money to David Cameron’s constituency party.

It is thought that some Labour MPs could raise questions over winning bidders at a parliamentary adjournment debate scheduled for today

Labour was scathing about the operation so far. Six months ago 45 projects were told that they would be receiving £450 million. To date only four have received their money. Ed Miliband said that the fund was “too little, too late”. Chuka Umunna, his new business spokesman, said it showed that the Government was “out of touch”.

Gordon Marsden, the Shadow Minister for Regional Growth, said that the operation of the fund had been “mired in chaos and confusion”. He added: “If they have managed to deliver the money for just four companies in the last six months, how long will it take to deliver on the 119 projects they announced today?”

John Longworth, director-general of the British Chambers of Commerce, said that the Government must move faster. “The speed at which this funding is delivered will be fundamental to the success of the Regional Growth Fund.”

Neil Bentley, deputy director-general of the CBI, said that the Government must go farther: “Despite its size, this fund does not have the capacity to plug the finance gap. The Government needs to look at other funding options to help these firms grow.”

Reader comments

1. Liberal Conspiracy

   Times reports on RGF mess, with libcon info http://t.co/4UnGOag7

2. sunny hundal

   Here is that Times report today on the 'growth fund' mess, with info from @bickerrecord we will publish in more detail http://t.co/Jyf36fHn

3. Tim Easton

   Here is that Times report today on the 'growth fund' mess, with info from @bickerrecord we will publish in more detail http://t.co/Jyf36fHn

4. PutneyDebates

   via @sunny_hundal Among companies winning funding is JCB, whose owners are among Conservative Party’s biggest donors http://t.co/wqdwgv7z

5. PutneyDebates

   via @sunny_hundal … also funding for Tory-led Southampton City Council, which has clashed with local trade unions. http://t.co/wKx9n50Q

6. Andy Birss

   Con Libs corrupt movement of our money to back up their political friends http://t.co/D19NH57m

7. Exclusive: How firms are ‘blackmailing’ the govt growth fund | Liberal Conspiracy

   [...] The Times also revealed that grants had been made to local councils in politically marginal areas and to companies who are [...]

8. » Return of a desperate urban policy? - MULE

   [...] its £10m bid. The fund has however been a source of considerable controversy, not least due to the lack of progress in the actual distribution of money but also because of the opaque nature both of its process and [...]