Regional Growth Fund

The launch of the third round of regional growth funding highlighted as many ongoing problems with this process of government intervention as it excited new opportunities for supporting growth in the private sector. It is fair credit to the key businesses in the north east and the Local Enterprise Partnerships that this area has attracted a significant proportion of earlier successful RGF bids. This does provide some optimism that the north east can and will benefit from some growth in key priority sectors, many related to low Carbon manufacturing and engineering.

Concerns remain around the administrative processes associated with RGF; around 40 per cent of successful round one bidders have still not progressed to the operational phase of RGF projects. While there is always a lag between the initial strategic investment processes and actual employment, the RGF is the government's main driver of economic growth in regions most affected by public spending cuts and there could be some room for criticism that the urgency given to reducing public sector jobs isn't matched by the same urgency to support private sector growth.

There are a couple of relatively acute issues here. Take offshore wind as a particular example. While NaREC continues to develop as a global leader in research and development in the sector, building excellent, cutting-edge facilities in Blyth, there is a risk that broader industrial and economic development, including publicly-funded investment, doesn't keep pace with industry. As well as excellent testing facilities, this emerging industry also needs a skilled workforce and a good deal of land - neither of which exist in infinite quantities in the region.

The 'new' localist landscape lends itself to a more market-driven, bottom-up approach to economic development. There is no longer a regional economic strategy - or any national industrial strategy - which helps to shape and inform major investment plans and process, in both the public or the private sector. While government would argue this provides a stronger business dynamic, it also increases the risk that the market will find other industrial solutions, other investment opportunities to take a different path to quicker profits, perhaps.

Offshore wind remains a new industry; as such there are inherent risks that do pose real barriers for potential private sector investment. It is a sector where the pace of change is happening very quickly as wind turbines move from small inland models to giant offshore turbines, the scale increasing to potential 160m diameter turbines generating 7MegaWatts of power. Public sector investment, in facilities like NaREC, can help to de-risk the early developments and encourage private sector entrants to the area.

It is important, however, that public policy is joined up, that RGF programmes encourage development in these key priority sectors and that skills investment, transport infrastructure spending and energy policy all align to complement each other for what is a once-in-a-few lifetimes opportunity to build a new industrial economic base in the north east.

Kevin Rowan

Regional Secretary

Northern TUC