£500m fund to ‘kickstart development’

By politics.co.uk staff

Half a billion pounds of funding for infrastructure and housing projects are being allocated by ministers.

The investment from the Growing Places Fund is being criticised as a watered-down version of the £1.4 billion annual funding received under Labour's regional development agencies (RDAs).

But chief secretary to the Treasury Danny Alexander, who announced the policy in his speech to the Liberal Democrat autumn conference, has insisted the money will help boost Britain's struggling economy.

"The purpose of the fund is to provide resources to help people who are perhaps wanting to build houses in their local area but they need a link road built, or the land needs to be decontaminated, or flood defences need to be put in place," he said on BBC1's The Andrew Marr Show yesterday.

"We're making available half a billion pounds of public money to pay for that up front, so the developer can get on and invest millions of pounds more in building houses and employing people, in getting Britain building again.

Mr Alexander had previously suggested that funding could be 'recycled' in future so that other projects could be financed once the initial development is complete.

He confirmed that yesterday, explaining: "When the development is built and sold, they can repay us the money and it can be used again towards another such development."

One project in South Gloucestershire costing £6 million for a link road is attracting £300 million of private investment, creating 3,000 jobs and providing 2,200 homes.

"Just think what we will be able to do with £500 million," Mr Alexander said in September.

"Unlocking local growth by freeing businesses to grow, creating jobs, and freeing councils to build housing. Liberal Democrats in government, on your side."

Labour said the move showed ministers were starting to realise their decision to scrap RDAs was a mistake.

"The government failed to produce any real transition plan," shadow business secretary Chuka Umunna said.

"Now, perhaps, they are realising the error of their ways."

Shadow communities and local government secretary Hilary Benn added: "Given this Conservative-led government's history of failure to get money to businesses that need it through the other schemes they’ve announced and reannounced, they should make sure that this time the money speedily gets to the local authorities, businesses and entrepreneurs who will be at the heart of the economic recovery the country desperately needs."