Cable in a tangle over funding cuts

A FURIOUS row blew up yesterday over government plans to make Greater Manchester councils pay for a new body to win investment and jobs — as they are hit by 28 per cent budget cuts.

Labour MPs turned their fire on Business Secretary Vince Cable after he confirmed that local enterprise partnerships (LEPs) — the replacement for regional development agencies (RDAs) — would receive no funding.

MPs warned the decision would undermine efforts to win private-sector jobs and replace fast-disappearing public-sector posts.

The news comes only days after councils were told to brace themselves for budget cuts of 28 per cent over the next four years, threatening services from elderly care to leisure centres and libraries.

Appearing before the all-party business select committee, Mr Cable said LEPs should bid for money from the £500 million regional growth fund, adding: “They will not have large offices and staff — those days have gone.

“If local authorities consider local enterprise partnerships to be a useful vehicle, they may well wish to contribute. We are not allocating government funding to get them off the ground.”

But Adrian Bailey, the committee’s Labour chairman, attacked what he called “a very confused process” that will result in the RDAs wound down by March, 2012.

He told Mr Cable: “You can’t just make an application to the regional growth fund on the back of an envelope..”

The Liberal Democrat Business Secretary also faced criticism over the revelation that RDAs will require £1.4 billion of funding beyond March, 2012, because of their complex liabilities.

Mr Cable told the MPs that no assessment had yet been made of whether liabilities — redundancy bills, pension obligations and ongoing contracts — were greater than each quango’s assets.

Asked if local communities would retain assets — or if there would be a “Treasury land grab” — Dr Cable replied: “We have not got a detailed blueprint about how this process will happen.”

The £1.4bn bill for winding up RDAs exactly matches the pot set aside for the much-hyped regional growth fund, over the three years from 2011 to 2014.

However, Mr Cable did guarantee that the cost of the liabilities would be met separately, rather than being “dumped” on the growth fund.

The Business Secretary is due to publish a white paper on regional growth tomorrow, as well as announcing which LEPs will go forward.

It is anticipated Greater Manchester will get the go-ahead.