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Danny Alexander, the chief secretary to the Treasury, has dismissed speculation that the £1.4bn Regional Growth Fund will rule out bids from the south in favour of northern and Midlands-based applications. But in an exclusive interview with Insider, he did admit areas with a heavy public sector presence will be heavily supported.

He also cooled talk that more money will be added to the fund and spoke passionately in support of the government's apprenticeship drive.

Talking of the Regional Growth Fund, he told Insider: "I think the Regional Growth Fund is a very significant initiative – we have set aside £1.4bn over the next three years. We are evaluating the bids which have come through at the moment. It has encouraged initiative."

Following criticism from many within the business community that the fund will be too small, he said: "Of course, one wants to put more money into it. It will be significant and will make a real significance in parts of the economy which will be affected by public sector cuts.

"The biggest single problem we have in the country is our budget deficit and getting to grips with that. We have set out our budget plans and we are going to move on with what we have presented."

Alexander also responded to speculation that bids from the south will be less likely to succeed than others.

He said: "We are more likely to support economic growth particularly in areas where there might be the greatest impact due to public sector spending cuts. There are parts of the South West and the South East with economic problems so no parts of the country will be excluded."