Jessie Joe Jacobs, Labour’s candidate for Tees Valley mayor in May’s election, is backing calls for a proposed £1 billion investment fund for start-ups to be spent in the area to address an historic economic imbalance.
The North-East gets just 1% of equity investment compared to the 66% spent in the South-East.
And London gets a whopping 23 times the figure spent in the North-East from the government Future Fund for start-ups.
Labour have called for a massive £1bn to be invested in 100,000 start-ups across the country in the next five years.
Shadow business secretary Ed Milliband wants the investment strategically focusing on new businesses outside the South-East – to incentivise innovation, create high-quality jobs and boost the economic recovery across the country.
And Jacobs says that plan fits with her own vision for a future Teesside that creates new businesses and jobs in manufacturing, high-tech, digital and green energy.
“We must back our local businesses to get our economy moving again, they are our risk takers, innovators and wealth creators,” she said.
“We have seen some exciting start-ups over the last few years in beauty, digital, tech, fashion, food and the renewables sector but we still lag behind swathes of the UK when it comes to business start-up.
“I want to change this and see those people with an idea, get on, and get the support they need to flourish and succeed. By backing those entrepreneurs, we will see our economy grow again and see thousands of new jobs created.
“This is why this we need strategic investment from central government to support those start-ups and to back innovation and energy in the Tees Valley.
“A decade of Tory austerity and cuts to regions like this have created a massive disparity in investment and opportunity and put obstacles in the way of bright young businesses and people in the Tees Valley.
“Decades of investment centred on the M25 have created an economic black hole sucking jobs, funding and firms away from regions like this.
“It is time to change that. It is time to back our people and target investment in the Tees. It is time to fund a future for all of us.”
The funding for start-up loans would prioritise new businesses in places that have experienced low levels of finance. Start-ups in the North-East have been particularly underfunded, with figures from the British Business Bank showing:
• In 2019, new businesses in the North-East received just 1 per cent of equity investment in the UK while London received 66 per cent of investment.
• The latest figures show just 3 per cent of the UK’s ‘high growth’ businesses were based in the North-East, the lowest share in England.
• In 2020, only 3.4 per cent of equity investment deals were made with North-East businesses compared to 47 per cent in London.
• London received 23 times more funding from the government than the North-East did to support start-up businesses through the ‘Future Fund’, with the average award for a business around £200,000 less than the average award for a business in London or the South-East.
Labour’s proposals would target funding at the North-East and other under-funded regions and focus on businesses with high-growth potential, with the aim that they will succeed, last and create wealth and jobs in the area.
The announcement follows fresh calls from Labour for the government to provide greater support for existing businesses, including extending the 100% business rates relief for hospitality, retail and leisure businesses, and the reduced rate of VAT for the tourism, hospitality and culture sectors.
The party has also set out plans to give businesses greater flexibility to repay debt taken on during the pandemic, including through student loan style arrangements.