February 12, 2021 @ 14:42 by Richard Dawson
The Government has given start-up businesses in the South five times as much funding as in the North and Midlands, according to analysis released by the Labour Party this week (February 10).
In the North East, the average grant for up-and-coming businesses in the region was far lower than that offered to those in London and the South East – in some cases by hundreds of thousands of pounds.
In total, start-ups in the South East and the capital were given more than £700 million, while that figure in the North, Yorkshire and Midlands combined was just £140 million.
The report argues that the figures are especially concerning given the comparative size of populations in different regions, stating: “The discrepancy is even starker when compared to the population, with 18 million people in the South East and London compared to a combined 28 million in the North, Yorkshire and Midlands.”
Since May last year, businesses have been able to apply to the Government’s new Future Fund scheme, designed to support pre-revenue, pre-profit innovative businesses impacted by the coronavirus pandemic.
When the scheme was first launched, Chancellor Rishi Sunak said: “The Future Fund will support firms across the UK to get through the pandemic by stimulating investment, so they can continue to break new ground in technology and innovation.”
However, the latest figures highlight startling regional inequalities, both in terms of the size of loans given and the number of businesses supported.
The Labour Party argues that the findings show the failure of the Government to help create the right conditions for innovation outside of the South during more than a decade in power.
Shadow Business Secretary Ed Miliband said: “While the Government talks about backing the North and Midlands, the reality is starkly different. Their interventions are making regional inequality worse not better.
“Ministers have already hurt hard-working entrepreneurs during this crisis by excluding them from support. Instead of hot air and rhetoric, it is time for ministers to deliver.”
Asked for a response to Labour’s analysis, a Government spokesperson said: “We have provided an unprecedented £280 billion of support for businesses affected by COVID-19 in every nation and region of the UK.
“The Future Fund uses a set of standard terms with published eligibility criteria, independent of ministers. This [is] a clear, efficient way to make funding available as widely and as possible, irrespective of location.
“In addition to the Future Fund, the British Business Bank has provided nearly half a billion pounds to high-growth firms outside of London.”
Words by Will Hardy