A REVOLUTION in financial services to help new businesses flourish in the “neglected”

North was promised by the Liberal Democrats yesterday.

Nick Clegg’s party pledged to set up local enterprise funds to provide capital to companies in Britain’s industrial heartlands that were “too dependent on distant banks”.

And he announced a plan for “regional stock exchanges”

to allow investors to back local entrepreneurs forced to rely on expensive and risky loans from London.

Such exchanges used to exist in most cities and large towns – including Newcastle, Leeds and Sheffield – but they died out by the Seventies as the power of the City of London grew.

Mr Clegg said the package, Revitalising Britain’s Industrial Heartlands, would bring fairness, hope and renewal to the towns and cities that form the backbone of Britain.

He said: “There are nearly 100,000 square miles in Britain. For the last 30 years, Labour and Conservative governments have been obsessed with only one of them – the City of London.

“Our industrial heartlands have suffered years of neglect under the Tories and years of empty or broken promises under Labour.

“Only the Liberal Democrats have the vision and ambition to reverse this decline.”

The document revealed Mr Clegg’s pitch to Labour voters in the North at the coming General Election, where gains are badly needed to cancel out likely losses to the Tories in the South.

Among the Lib Dem target seats are Durham City (where a 3.7 per cent swing is required to overturn a Labour majority of 3,274), Blaydon (6.7 per cent, 5,632) and Newcastle North (8.5 per cent, 6,774).

Other pledges in the package include: ● A £3.5bn economic stimulus package to create “green jobs”, many in the North; ● Creating jobs in the North by moving government agencies out of London – although no destinations are identified; ● Bringing 250,000 empty homes back to life, a problem in many old industrial towns; ● A pupil premium to increase funding for poorer children, to bring down class sizes.

● 50,000 foundation degrees, combining study with workplace learning, to stem the drift of the most talented to the big cities.

But most attention is likely to focus on the financial shake-up, to tackle what Mr Clegg dubbed the “Government’s obsession with the City and financial services”.

Business Secretary Peter Mandelson has promised “less financial engineering and more real engineering”, but there has been little serious reform.

The Government has rejected calls for regional banks – similar to one set up in Essex – instead setting up a National Investment Corporation to attract private funds, with a target of £1bn over ten years.

Explaining the need for local enterprise funds, Mr Clegg said: “The old model of debt-financing has clearly not worked.

“Not only is it too dependent on distant banks, it’s also not sustainable – as the credit crunch showed.”