Instead of building acres of empty business parks the North-East should invest in new enterprises and help established companies grow, one of the region’s most successful businessmen has demanded.
Jeremy Middleton is a member of the region’s Local Enterprise Partnership which has £500m of European cash to spend. Instead of using the money to finance infrastructure and “traditional business parks” he wants at least £90m to go toward setting up a pioneering loan scheme.
“If we had a self-generating fund like this there would be no need for ongoing public finance,” explained the boss of Middleton Enterprises, a Newcastle-based commercial and residential property investment company. “It is a chance to finish the job of reducing our dependency on the public sector and give a significant competitive advantage to the North-East.”
His fund would, at least initially, need the help of public money to get off the ground. Under European rules any project making use of EU cash needs to be matched pound-for-pound from other sources, in most cases by local authorities.
Once established a loan fund, which would give regional firms access to investment when banks are still reluctant to lend, would be self-financing. Money and profits repaid to the fund would be reinvested in new ventures.
Middleton — whose own company has supported nine North-East firms and start-ups in the past five years — sees the fund as a chance to break free from this council cash cycle and a way of “backing businesses, not buildings”. It is a chance, he explains, to finish the job of reducing the traditional dependency on public finance and would give the North-East a significant competitive advantage.
The Local Enterprise Partnership is made up of local business bosses and the leaders of seven local councils. Middleton heads the group’s private sector investment panel. Its relationship with elected members has not always been comfortable.
“The private sector will build offices if it needs them,” said Middleton. “We just don’t need more business parks, and we face a situation where the ones that exist are, in many places, standing empty. “It’s always attractive and enjoyable to cut a ribbon on a new site, but we don’t have the businesses to go in them.”
He was confident, however, the enterprise partnership would agree to back some form of loan scheme. “We desperately need to be the market leader in venture capitalism outside of London,” added Middleton. “This is the only way we will succeed.”
The suggestion has already received a lukewarm response from one partnership member. Nick Forbes is leader of Newcastle City Council. “If you ask a venture capitalist whether this money should go to venture capitalists, of course they will say yes,” he commented.
“These European funds are an opportunity to increase our investment in social and physical infrastructure, but it is always important to have a broad range of projects that reflect the diversity of our economic needs in the region.”
