John Healey announces £150m fund for northern firms in an effort to boost growth
The Chancellor will set out the plans in a major speech on Monday, amid concerns surrounding rising government borrowing costs
The Chancellor is set to announce a £150 million fund for fast-growing firms in the North as part of plans to boost the economy through an “active” state.
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John Healey will set out the plans in a major speech on Monday, in which he is expected to outline an “optimistic story” about Britain’s economic future.
The announcement comes as Prime Minister Andy Burnham seeks to promote a more positive outlook on the state of the economy compared with his predecessor.
However, it comes against a difficult backdrop ahead of Mr Healey’s first Budget on October 28.
Rising Government borrowing costs are among the concerns facing the Chancellor, alongside the potential inflationary impact of the war in Iran and its effect on his fiscal headroom.
Mr Healey will outline plans to spread the benefits of economic growth more widely across the UK, using public investment to attract private capital.
Read more: Economic growth must extend beyond UK’s biggest cities, says John Healey
The British Business Bank will pledge up to £150 million to a new fund aimed at supporting “the most innovative and fast-growing firms”, the Chancellor will say.
The fund will use money already set aside for the Government-owned bank and provide investments of between £5 million and £15 million.
It will support university spin-outs and other innovative companies across the North of England, helping them to develop and grow.
The Treasury hopes the additional funding will attract further private investment, as part of Mr Healey’s vision of an “active state” working with private businesses to create opportunities.
Mr Healey is also expected to give the British Business Bank and National Wealth Fund greater responsibility for supporting investment and innovation across the UK.
The National Wealth Fund has agreed strategic partnerships with mayoral authorities in Liverpool City Region, South Yorkshire and the North East, as well as the Cardiff Capital Region.
The Treasury said local leaders will also have greater access to the fund’s capital to develop infrastructure projects.
Speaking at a manufacturing site, the Chancellor is expected to say: “The Prime Minister laid out a clear diagnosis of what has gone wrong in the past. The solution is a fundamental shift that starts with putting power in the right places.
“The next chapter of Britain’s growth story will be written in more places.”
He will add that No 10 North was set up as “a strong, strategic centre wired to enable local leaders and their ambitions” by “removing obstacles” and red tape.
“I want to see wealth creation in this country. I want to see businesses make a profit,” the Chancellor will say.
“And to create the conditions for that we need an active, accountable state at all levels to remove blockages and create the conditions for more investment.”
Economists have warned Mr Healey may need to raise taxes or cut departmental spending to protect the fiscal buffer built up by his predecessor Rachel Reeves at her last Budget.
The Conservatives have criticised the expected announcement, describing the trail of Mr Healey’s speech as a “policy-light word salad”.
Shadow chancellor Andrew Griffith said: “It will do little to comfort hard-working families and businesses across the country who are worried about more tax rises or the fact that government borrowing rates are near a 28-year high.
“Commitments to reduce red tape are welcome but given this Government’s track record with its Employment Rights Act and other anti-business measures, people will rightly question their sincerity.
“We are facing serious threats from Russia and Iran on our doorstep, as well as threats to the Falkland Islands. Yet the Chancellor, the man who resigned over defence spending, seemingly does not want to mention our Armed Forces or how we will reach 3% of GDP on defence.”