Government policy 'will make the region poorer'
Coalition policies will widen the gap between the richest and poorest regions in the UK, according to a report published by the Work Foundation think-tank.
The group argues new local enterprise partnerships (LEPs), set up by the Government as successors to regional development agencies (RDAs), are ineffective.
Devon and Cornwall have among the lowest wages in the UK – a point underlined by years of generous EU hand-outs to boost the economy.
Labour's regional policy targeted at the Westcountry included the Exeter-based South West Regional Development Agency, which pumped almost £1 billion into the seven-county-wide region in more than a decade. Abolished in May, it was effectively replaced by two LEPs – one for Cornwall and the Isles of Scilly, and another in Devon and Somerset – but they have only this week been granted significant funding for running costs.
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A cluster of firms in Devon and Cornwall have been given money through the £2.4 billion Regional Growth Fund, though the cash is a fraction of what was available under RDAs.
Newquay has one of 24 Government "enterprise zones", which offers benefits to firms setting up there, including tax breaks.
Work Foundation report author Lizzie Crowley said: "While the Government has committed itself to rebalancing the UK economy, their hands-off approach is set to have quite the opposite effect.
"Current policies are likely to exacerbate regional economic differences via a 'winner takes all' approach, with poorer areas left to further decline.
"Doing nothing about deprived communities is not an option. The resulting economic decline is likely to bring about serious social and economic costs for individuals, local areas and national government.
"On the one hand, we need measures that allow more people to benefit from those areas that are more successful.
"But at the same time, we need targeted measures to ensure that struggling areas are not left without any support."
According to the report, policies such as Business Rates Retention, which allows councils to keep a proportion of the levy instead of handing it over to the Treasury, will contribute to the increasing divide.
The Government admits the policy will benefit wealthier authorities but insists poorer councils will receive top-up payments.
The report urges the Government to give greater funding and powers to LEPs.
Ben Bradshaw, Labour MP for Exeter and former South West Minister, said: "This report should come as no surprise to anyone in the Westcountry. Every aspect of this Government's policy appears geared to widening the gap between wealthy London and the South East and the rest of us."
A Department for Business, Innovation and Skills spokesman said: "The Government's top priority is to achieve strong and sustainable growth that is more evenly balanced across the country and between regions."