After decades during which governments of both parties spent billions on attracting foreign investment, the Business Secretary, Vince Cable, has declared that Britain can no longer afford to "splay out" grants and subsidies to attract companies to locate in the UK.It is not entirely clear what Mr Cable means, and the website of the Department for Business offers little assistance in interpretation. But the whole point of those grants and subsidies to attract companies to locate in the UK was to steer the companies to locate in areas of economic disadvantage. The subsidies were available for Nissan to locate and expand in Sunderland - they were not available to companies seeking to locate in South-East England. Scotland in particular paid out many millions (not conspicuously successfully) to attract foreign direct investment, notably in the field of electronics.
Mr Cable said: "Having very substantial amounts of money which we are splaying out in grants and subsidies to companies, we cannot do that. There is a budgetary problem which we inherited. The second reason is that it is actually very bad policy."
Instead, said Mr Cable, the coalition would concentrate on setting competitive business tax rates, cutting regulation, training workers and looking after the broader economy.
But whether Mr Cable means to abandon entirely the system of regional development assistance remains open to question. If that is indeed his intention, then the regions may have something to say about it.