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Plans to let regions set development spending

Diane Coyle
Monday 10 June 1996 23:02 BST
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Up to pounds 11bn could be available for regional economic regeneration under a Labour government, according to a report launched yesterday by the party's regional policy commission.

New development agencies directed by elected regional assemblies should take over this amount of existing funding from central government, the report, chaired by former EU commissioner Bruce Millan, recommends.

The report also suggests allowing regions to issue bonds to raise funds for investment in economic development. ``There are many regionally-based financial institutions, including local authority pension funds, which would be likely to welcome the opportunity to add their own region's bonds to their portfolio of investments,'' it concludes.

The bond issues could be kept small as an initial experiment, it suggests. Germany, Spain and Italy already have regional government bonds, as well as the US and Canada.

``I hope what we suggest here would create more dynamism in the regions,'' Mr Millan said. He was at pains to stress that his commission had not called for new money, but rather the regionalising of old money so that locally-elected politicians could set the priorities.

The commission, which worked independently of the Labour Party, refrains from suggesting that most of the existing array of regional bodies such as Training and Enterprise Councils and Business Links be abolished or rationalised.

However, the report does favour ``thinning out'' local government quangos and making the remainder more accountable to local politicians. First for the chop would be English Partnerships, created in 1994 and mainly involved in brokering inward investment deals. English Partnerships' pounds 280m in assets and pounds 225m annual budget should be transferred to set up the Regional Development Agencies, the report recommends.

The Labour Party has already made a commitment to allowing capital receipts from council houses sales to be reinvested in housing.

John Prescott, page 13

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