Regional aid plans threatened by cuts

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The Independent Online
(First Edition)

REMOVING the goalposts on Dumers Lane playing field was to have cost Whitehall pounds 400, the first instalment in a pounds 5m development that was halted this month as ministers began to change the rules on regional development.

The former mill sportsground in Bury was to be the site for six new small and medium-sized factories built by English Estates, the Department of Trade and Industry's property developer, which bought the land earlier this year.

However, the Dumers Lane development, and others like it around Britain, looks set to fall victim to a round of public-spending cuts that will disappoint all local authorities trying to breathe life into the recession-hit country.

Detailed negotiations with Bury council agreed a scheme that both parties believed presented a peerless opportunity to attract new manufacturing enterprise to a part of the old cotton belt which has lost 8,000 jobs since 1989.

Planning permission was sought in August. Sources at English Estates claim that, at first, the DTI approved warmly; the Treasury was expected to rubber-stamp the scheme, they said. Instead, all factory building on Dumers Lane has been postponed at least, as the map of regional aid is redrawn. Two other developments in Bury, one in Oldham, one in Blackburn and four in the Greater Manchester borough of Tameside, have also been arrested.

All are 'assisted areas', which cover most of urban Britain north and west of a line from the Humber to the Tamar. Regional aid - government grants paid to fund expansion or attract inward investment - have already been reduced to pounds 245m this year from pounds 518m in 1984-85.

This autumn, the government faces further squeezes on regional budgets, from the overall level of public spending and the need to channel a greater share of English Estates spending to areas facing imminent employment catastrophes, including the north Nottinghamshire coalfield and the shipyard town of Barrow-in-Furness.

Political pressure is also increasing in the Tory heartlands of southern England for the effects of their recession to be reflected in new assisted area status.

'But regional aid is supposed to create a level playing field for areas in the north suffering long-term structural decline,' Simon Rycroft, Bury economic development officer, said. 'The South is suffering from cyclical problems. If we lose assisted area status, if English Estates pulls out for good from Dumers Lane, it will pull from under us a rug which has created 2,245 jobs since 1987 and safeguarded another 1,588.'

Brian Rigby, chairman of Labour-controlled Bury's economic development committee, said: 'Nowhere is safe. The indications are that the long-term aim of tackling structural economic problems in the North will be sacrificed for short-term political gain in the South and financial expediency.'

Bolton and Bury have lobbied to retain their status, citing a pounds 70m paper mill expansion at Ramsbotham as typical of the enterprise which grants can prime. On average, pounds 1,500 of government grant creates one job. Without English Estates to build new factories, Mr Rycroft lacks 'the most important inducement' to investment, especially from potential US and Japanese employers; and without a place on Whitehall's regional development map, Bury would no longer be eligible for EC regional development grants.

Tim Sainsbury, the DTI minister responsible for regional policy, last week said that the Government might go further than redraw the map. If Dumers Lane is skirted by the new borders, the goalposts might just as well stay.