Private sector companies won’t be able to fill the financial gap caused by savage cuts to regeneration budgets, the Local Government Association has warned.

The LGA has responded to the government’s white paper on local growth, published yesterday, by saying that private sector partners will not be able  to make up for a fall in funding for regeneration of more than two-thirds.

Councillor David Sparks, vice chairman of the LGA, said: “The removal of the regional development agencies budget and its replacement by the regional growth fund has resulted in a more than two-thirds reduction in the resources available for local authorities to regenerate their communities.”

He added: “Councils are now having to look for other partners to take the place of RDAs in regenerating their areas. Those partners will not come with the same kind of money. We must therefore make sure that councils are supported so they can make the most out of the new mechanisms available to them to boost local economic growth.”

Sparks said it was encouraging that the government was allowing councils to keep money raised locally and re-invest it in projects, and that it supported the government’s approval yesterday of 24 local enterprise partnerships.

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