Insider Media Limited

Businesses and organisations will be encouraged to submit ‘programme bids’ to the second round of the £1.4bn Regional Growth Fund (RGF), the chief secretary to the Treasury has told Insider. Danny Alexander said that bids could take the form of a loan fund for small companies in the region as the minimum bidding threshold of £1m was often unsuitable. Alexander’s comments come as the Derbyshire and Nottinghamshire Chamber of Commerce revealed its disappointment with the region’s allocation of just one investment.

Speaking to Insider, Alexander revealed that the next round of bids for the remaining £1bn RGF cash could take the form of a loan fund for small companies in the region. He said that the minimum bidding threshold of £1m was often unsuitable and so funds for specific geographical areas could help to benefit more businesses.

“Programme bids are one new area that we’re interested in for the second round of the fund,” he said. “That might be a fund to help small businesses in a certain geographical area. If people come forward with those sorts of bids, we’ll be keen to look at them.

“The minimum threshold is often not at the level smaller companies want. But by looking at programme bids I think areas can really support growth among small businesses. Lord Heseltine and Sir Ian Wrigglesworth (chairman and deputy chairman of the fund’s approval panel respectively) will be encouraging those kinds of bids in the second round.”

His comments follow the government’s announcement yesterday that 50 successful applicants had secured cash from the first round RGF bidding process.

Of the 50 successful bids, which totalled £450m, the East Midlands received just one successful bid. More than 60 were submitted by companies and organisations across the region.

The Derbyshire and Nottinghamshire Chamber of Commerce expressed its disappointment, with chief executive George Cowcher revealing he had expected the two counties to receive “at least four” successful bids.

Nottingham-based company, Molecular Profiles, won funding from the £1.4bn pot.

Cowcher said: “Whilst this is fantastic news for chamber member Molecular Profiles, a high-growth company in Nottingham, to only have one successful bid for RGF cash is hugely disappointing given that 38 bids worth more than £112m were submitted to government from Derbyshire and Nottinghamshire.

“We were expecting at least four successful bids across the two counties, so this news has come as a blow. What we need now is clarity on why the bids have failed, as what we don’t know is whether they were weak bids or if they were wide of the mark, especially given that the original guidance from government in relation to bidding for RGF cash was so vague.”

Bidding for cash from the second and final round of the RGF has now begun, and will remain open to organisations across the country until 1 July.

Cowcher said: “Bidding for a second round of funding comes to an end soon and careful attention must now be paid to all future bids from Derbyshire and Nottinghamshire to ensure that the two counties don’t miss out a second time.”

The Department for Business, Innovation and Skills said more than 100,000 new jobs would be created and safeguarded from the £450m first round of investments.

Alexander admitted that the government would assess every second round bid on its individual merit, but would prioritise those in areas likely to be affected by the government’s spending cuts.

He said: “People have to understand that the funds are limited and the whole point of the RGF is to make the very best use of the public money we have available. There were a number of factors involved in the decision-making, including the quality of bids and private sector job creation possibilities.

“But it was also taken into account the extent to which the applications could stimulate private sector growth in areas that are likely to be affected by cuts made in the public sector. It’s right that we prioritise bids like that.

“What we are trying to do is to get the very best value we possibly can from the public money we do have. That’s what we’ll be looking for in the second round.”