THE Government’s strategy to deliver economic growth to the North-East will fail without an urgent rethink, business leaders have warned.

The Tees Valley Unlimited (TVU) organisation raises the alarm over worrying weaknesses in flagship ‘Local Growth Deals’, to be unveiled by ministers within months.

And it warns that key growth initiatives already being pursued may have to be abandoned, unless extra funds are pumped into the £2bn-a-year scheme.

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Linda Edworthy, the organisation’s director of strategy and policy, said: “This doesn’t feel like a big push for growth, beyond the money that is there for transport and skills.

“We have a long term strategy, but the funds don’t seem to be there to deliver that strategy. We shouldn’t be penalised for having innovative and creative ideas.”

Ms Edworthy said the TVU projects at risk included:

  •  Business growth hubs – clusters of firms, often based around subsidised office space, or infrastructure.
  •  Capital schemes – such as ‘open access’ technology centres, bringing together colleges, universities and businesses.
  • Bringing derelict sites back into use for business use – including in ‘Enterprise Zones’, another flagship Government policy.
  • More ambitious skills programmes – for which Tees Valley Unlimited is now seeking funds from the European Union.

The comments come just days after devolution minister Greg Clark hailed the looming Local Growth Deals as “very exciting”, with huge potential.

Bids must be submitted by the end of March for a slice of the £2bn annual pot, set up after Lord Heseltine’s report calling for a radical handing down of funds from Whitehall.

TVU is among 39 ‘local enterprise partnerships’ (LEPs) – bodies made up of business and political leaders – currently drawing up detailed applications.

To add to the embarrassment for ministers, they have repeatedly pointed to TVU as among the best LEPs in the country – and Mr Clark is Middlesbrough born.

The growth deals were born out of the landmark ‘No Stone Unturned’ study, by Lord Heseltine, which argued for far more dramatic devolution of spending.

The former Tory Cabinet minister wanted LEPs to bid for huge spending pots – worth £17.5bn-a-year across England – and control over infrastructure funds and job-creation schemes.

But that blueprint was rejected by the Treasury, which means LEPs are mainly bidding for funds for transport (£1.2bn), further education (£330m) and skills (£170m).

Ms Edworthy added: “There is a real risk that revenue funding for projects such as Business Growth Hubs will not be available.

“These activities are funded through to June 2015 - and we will utilise EU funds to continue them - but we will need some match funds on top of what the local area will put in.

“We will be launching these activities to business shortly, but we need to be able to assure business that it is not a short term initiative that will disappear again.”

Ms Edworthy concluded: “The Government says the right things, but the proof will be in the decisions. How much scope will we really have to transform our economies?”

But, speaking to The Northern Echo this week, Mr Clark hailed the growth deals, saying: “I think this is a really exciting time – we are on the cusp of a big breakthrough.”