PM's homes plan will cost region £20m

MORE than £20million is to be plundered from the East of England's development budget to pay for the Prime Minister's pledge to boost the housing market.

Graham Dines

MORE than £20million is to be plundered from the East of England's development budget to pay for the Prime Minister's pledge to boost the housing market.

Gordon Brown's big announcement earlier this week, designed as part of the re-launch package aimed at re-invigorating his under-fire leadership, has come at the expense of policies to support businesses combat the credit crunch.

The mystery of how the Government could afford the £1billion Homeowners Package - including a one-year holiday on stamp duty for all homes costing up to £175,000 - was solved yesterday when regional development agencies (RDAs) throughout England sent a protest letter to the Government pointing out the impact of reducing their budgets.

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Just days after two Government ministers joined forces with the East of England Development Agency (EEDA) to announce a £10m business support package for the region - targeted at start-up businesses and companies in the biotch and life-sciences, manufacturing, and low carbon sector - the axe has fallen on the region's budget, which also helps support the tourism industry.

RDA budgets nationally for capital expenditure will be cut by £25m in the next financial year and by £275m in 2010/11. The East of England's budget reduction is expected to be £1.5m next year and £20m the following year.

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Richard Ellis, chairman of EEDA, has written to his members expressing “huge disappointment” at the cuts.

The Government's decision will also make it more difficult to raise match funding for projects from the European Union and private companies in the UK.

“You will be aware by now of government plans to support first time buyers gain a foothold in our difficult housing market,” the letter reads. “While, of course, this is to be welcomed, it has become apparent in the last 48 hours that this £300 million support package is to be drawn from regional development agency budgets for the financial years 2009/10 and 2010/11.

“We fully appreciate that the Government has to make tough decisions. However, we cannot escape the fact that this unexpected funding cut is a huge disappointment - not just to EEDA, but also for the region as a whole.

“Whilst additional support for homebuyers and homeowners is important, it is unfortunate that this should be at the expense of programmes to support businesses and employers manage tough economic conditions.

“These budget reductions are the latest in a series of cutbacks to our budget in the last year. The comprehensive spending review took five per cent of our annual budget going forward.”

Mr Ellis said: “In stark terms, the overall effect of all these cutbacks on EEDA's budget will be around 30% by the end of 2011. I am particularly concerned about the likely impact on our ability to leverage additional European and other public and private funding to support the economy in the East of England.”

EEDA says it is too early to say which of their planned programmes and projects will be affected by this news.

Mr Ellis said: “We are now revisiting our new Corporate Plan, which we expected to launch next week, to revise our projections and the results we committed to deliver in light of the likely impact of these cutbacks.”

Junior treasury minister Angela Eagle said at the business support launch last week: “The East of England is being affected by global uncertainty but our regional economies are much stronger now after years of investment and growth.

“So here in the East of England we are determined the Government, along with regional and local agencies such as EEDA, will all work together to ensure that businesses and households get the support they need.”

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