Old industry, new jobs?

They’re like those London buses of legend, pre-Mayor, these coalition ‘rebalancing’ initiatives. You wait ten months for one to come along and no sooner has George Osborne announced the first tranche of new enterprise zones, much to the surprise of certain local enterprise partnerships whose job it is to choose where they will go, than the results of the first round of bidding for the Regional Growth Fund (RGF) arrive, too.

Let’s start with the positives. The round 1 winners, taken together, give some limited and much-awaited substance to coalition claims that it wants to encourage economic rebalancing spatially, between the London super-region and the rest, and sectorally, between services and manufacturing, within the private sector, and between public and private sector employment.

Of the 45 provisional successes named in the government’s announcement, 35 are in the three northern regions or the west midlands, in areas where public sector expansion during the boom years helped mask sluggish or even negative private sector job growth.

As anticipated, the principal beneficiaries (85% of awardees) are individual firms, which perhaps explains the rumours that have been doing the rounds about difficulties with state aid regulations. The due diligence process that each provisional winner must now go through could be interesting on that score. Quite how the 127,000 jobs that £450m of public funding is ostensibly set to create or safeguard will be verified might be worth watching, too.

A handful of public authorities have slipped through the net; the winners’ list includes a couple of local authorities and a college, and local authorities are named partners in two other initiatives. A few intermediary agencies – in finance, sustainability and community development – have also found favour, along with a couple of newspaper groups and a cricket club.

Basically, though, RGF appears to mark a return to old style industrial policy in which manufacturing firms trade grants for jobs. The coalition’s determined move away from regeneration, which continues to gather pace as local authority expenditure cuts begin to bite, is reflected in the fact that just four companies engaged in commercial or residential property development and management are named beneficiaries.

What is revealing is the extent to which the winners’ list is dominated by global corporates. It doesn’t take much web-surfing to appreciate that many beneficiaries are, in fact, subsidiaries of US, Japanese, Korean and European conglomerates. Also striking, and worrying, is the presence of a substantial minority of winners whose business is security, weaponry and war, including one whose parent company describes it USP as ‘networkcentric warfare and force interoperability’.

The RGF winners thus far are not, of course, a representative slice of UK manufacturing. Successful firms, and particularly high growth SMEs, tend to busy themselves chasing business, not public sector support. Nonetheless it would be nice to think that the current, bigger, and possible final bidding round will manage to bring forth a few more independent ‘gazelles’, preferably peaceful, in place of the corporate Goliaths.


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Tom Bell
Tom Bell
13 years ago

Alan, thanks for sharing; interesting and thought provoking.

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