By Daniel Hunter
Businesses in Greater Birmingham and beyond will look for assurances in the Chancellor's spending review next week that the Single Pot of money suggested by Lord Heseltine will be substantial.
Otherwise, says Birmingham Chamber of Commerce Group (BCCG), local authorities may not be able to determine their own economic future or prioritise their needs.
With most government departments already expecting budget cuts, the BCCG calls for these funds to be redirected into Lord Heseltine's "Single Pot", one of the 89 suggestions contained in the former Deputy Prime Minister's report "No Stone Unturned".
This would mean Local Enterprise Partnerships (LEPs) would bid for funds for budgets such as infrastructure and skills, rather than receive them automatically from Whitehall.
Chancellor George Osborne has previously announced that that he had accepted this recommendation. However, current Treasury sources suggest that the size of the single pot will be £2bn over four years, equating to £50m per LEP, rather than the £70bn as proposed by Lord Heseltine.
"The Chamber would like to see clarification from the government in the spending review of its position on the single pot. Local communities must be allowed to determine their own economic future and prioritise their own needs, rather than have them defined by Whitehall," Steve Brittan, the Chamber's president, said.
"A single pot fund closer to the £70 billion, as suggested by Lord Heseltine, would be more adequate to fulfil this goal. However, simply cutting other budgets such as transport to build the single pot may in fact lead to net losses, so local areas will need assurances that the fund will be substantial."
Businesses in Greater Birmingham also want a re-prioritisation of governmental spending towards infrastructure projects to generate stimulus in the short to medium term.
This echoes a poll conducted at national level by the British Chambers of Commerce which found that on average, businesses wanted to see a 3:1 split between current (like public sector pay) and capital spending, compared to the actual ratio of 13:1.
"This year's spending review has the potential to be a pivotal moment for the British economy. Capital spending projects such as house building will stimulate a wide section of the economy," Mr Brittan said.
"Transport projects like HS2 will also form a crucial element of this. In order for growth to come from the private sector, transport must be responsive to the needs of business. It is important that budgets for capital spending are maintained alongside the single pot."
The BCCG also said that the proposed funding for the Business Bank would need to be expanded to be effective.
The business bank programme, as announced by Business Secretary Vince Cable contains a £1 billion pledge to help SMEs receive more effective access to finance. This is due to be operational in 2014 - the UK is currently the only G8 country without an investment vehicle of this kind.
In a recent meeting with a Shadow BIS Minister hosted by the Birmingham Chamber, Birmingham businesses agreed that the business bank should have some form of regional focus. Small businesses often highlight issues with access to finance in the Birmingham Chamber's Quarterly Economic Survey (QES).
"Effective access to finance has been a consistent issue for SMEs. The business bank programme is welcomed by businesses in the region as a way of fixing this. However, the fund needs to be expanded to a scale far larger than that which is proposed in order for the programme to be worthwhile. Bringing forward the time scale of this project will also be welcomed," Mr Brittan said.
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