Squeeze on industrial intervention and universities
The two main areas of cuts in the Business Department, to be announced later today, will be universities and industrial intervention.
I am expecting that funding for universities will be cut by around 3%.
And I also hear that there will be deep reductions in the budgets of the Regional Development Agencies for South East England and Eastern England – which may well be seen as the first step on the road to closure of these two agencies, whose aim is to provide support for business that is not available from the private sector.
In addition, a substantial saving is likely to be forced on the UK Strategic Investment Fund, a £750m fund that was the vehicle for French-style industrial intervention by the previous business secretary, Peter Mandelson.
The gross cut in spending at the Business Department will be £900m. But it will also receive £200m of new funding to support apprenticeships, so the net saving will £700 – or just over 3% of its £22bn annual budget.
One area regarded as strategically important for the UK’s long term economic prospects, support for science, will be largely protected.
And there will also be protection of funding for further education and adult learning.
In other words, the new business secretary, Vince Cable, will be able to argue that the government is doing what it can to provide relevant vocational skills to those most vulnerable to becoming semi-permanently unemployed at this time of weakness in the British economy.
Also, the Regional Development Agencies in regions where the private sector is smaller and weaker than in the South – notably the North West, North East, Yorkshire and the West Midlands – will not be forced to make the kind of savings being forced on the South East and Eastern RDAs.
As for the squeeze on the UK Strategic Investment Fund, support for green technologies, such as tidal power, will be sustained.
Even so, most university vice chancellors already complain that they have inadequate funding, and will argue that the long-term competitiveness of the British economy will be put at risk by the 3% squeeze – especially since they’ll fear that they’ll be forced to take even bigger cuts later in the year.
Also, there will be squeals of anguish from those companies deprived of funding by the cuts in industrial intervention.
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