You would think, then, that support for private sector job creation might have been prioritised by the Government in a difficult spending round. Not a bit of it. In a little noticed move, the Government has quietly announced the death of the Grants for Business Investment (GBI) scheme, which was geared precisely at supporting private sector job creation in assisted areas – those parts of the country the Government says it most wants to see new jobs created.
Over the past six years, GBI has distributed £482m in grants to just under 1800 firms supporting a total of around £3.9bn in investment and, according to the Government’s own figures, has created or preserved around 77,000 jobs.
Most of this money went to manufacturing firms. In my own region of the West Midlands, a broad group of small businesses – precisely the kind of firms the Government says it wants to help – received grants ranging from £80,000 to around £2million over the past five years.
In the Local Growth White Paper which announced the ending of the scheme the Government said, ‘RDA [Regional Development Agency] provided GBI will cease with the closure of the Agencies. BIS will consider large scale cases on an individual basis’. So no help for the small manufacturers or the medium sized firms which form such a crucial part of the manufacturing supply chain and boost exports.
We have heard a lot about the need to rebalance the economy since the election. Ministers have been clear that by that they mean rebalancing it away from a dependence on financial services and away from a reliance on the South East as the driver of the national economy.
The abolition of the GBI scheme runs directly in contradiction to those stated aims.
The scheme was only available in the assisted areas so it is the midlands and the north which will suffer from its abolition. And it was geared to helping manufacturing so while its abolition won’t affect financial services it will hurt precisely the sort of activity the Government says it wants to help.
Ministers will no doubt claim that their much vaunted Regional Growth Fund will compensate for all this but that is only around a third of the money currently being spent to support the regions and is in danger of being grossly oversubscribed.
The truth is that when it comes to rebalancing the economy there is a vast gulf between the stated aims of the Government and their actions. Since the election they have cut capital allowances for investment in manufacturing and now abolished Grants for Business Investment. You have to wonder, what has this Government got against making things?
Sir Richard Lambert, in his final speech as Director General of the CBI lambasted the Government for having no vision for the economy and putting politics above policy. Business knows Government rhetoric and policy are pulling in two different directions. If we’re serious as a country about supporting making things, we should not be cutting support for manufacturing as the Government is doing.
You’ll find below some information on the abolition of the GBI scheme, along with lists of businesses which received GBI funds in each region.