LABOUR has called for £1bn to be invested in 100,000 start-ups across the country in the next five years, strategically focusing on new businesses outside London and the South-East.

The funding for start-up loans would prioritise new businesses in places that have experienced low levels of finance.

They party said start-ups in the North-East have been particularly underfunded, with figures from the British Business Bank showing:

l In 2019, new businesses in the North-East received just one per cent of equity investment in the UK while London received 66 per cent of investment.

l Just three per cent of the UK’s ‘high growth’ businesses were based in the North-East.

l In 2020, only 3.4 per cent of equity investment deals were made with North-East businesses compared to 47 per cent in London.

l London received 23 times more funding from the Government than the North-East did to support start-up businesses through the ‘Future Fund’, with the average award for a business around £200,000 less than the average award for a business in London or the South-East.

Labour’s proposals would target funding at the North-East and other under-funded regions and focus on businesses with high-growth potential, with the aim that they will succeed, last and create wealth and jobs in the area.

Jessie Joe Jacobs – Labour’s candidate for Tees Valley Mayor in May’s election – is backing the calls for funding, to address an historic economic imbalance.

She said: “We must back our local businesses to get our economy moving again, they are our risk takers, innovators and wealth creators.

“We have seen some exciting start-ups over the last few years in beauty, digital, tech, fashion, food and the renewables sector but we still lag behind swathes of the UK when it comes to business start up.

“I want to change this and see those people with an idea, get on, and get the support they need to flourish and succeed. By backing those entrepreneurs, we will see our economy grow again and see thousands of new jobs created.

“This is why this we need strategic investment from central government to support those start-ups and to back innovation and energy in the Tees Valley. A decade of Tory austerity and cuts to regions like this have created a massive disparity in investment and opportunity and put obstacles in the way of bright young businesses and people in the Tees Valley.

“Decades of investment centred on the M25 have created an economic black hole sucking jobs, funding and firms away from regions like this.

“It is time to change that. It is time to back our people and target investment in the Tees. It is time to fund a future for all of us.”

The announcement follows fresh calls from Labour for the Government to provide greater support for existing businesses, including extending the 100 per cent business rates relief for hospitality, retail and leisure businesses, and the reduced rate of VAT for the tourism, hospitality and culture sectors.

The Party has also set out plans to give businesses greater flexibility to repay debt taken on during the pandemic, including through student loan style arrangements.

Shadow Business Secretary Ed Miliband said: “The pandemic has not only seriously affected existing businesses, it has stifled business creation. As well as supporting businesses to survive the crisis and beyond, Labour is determined we tackle the deep inequalities in our country by investing in new businesses in the North-East.

“We saw after the last recession that small businesses are a crucial engine of economic recovery, yet startling regional imbalances in the finance available to help them start up and scale up means we risk just going back to business as usual after this crisis is over, with recovery being held back in some parts of our country.

“With unemployment rising, vacancies stalling and long-standing weaknesses with investment in Yorkshire, the North and Midlands, now is the time for Government to act in the Budget to help support a new generation of entrepreneurs.”