St Modwen’s bid for £22m from the Regional Growth Fund to support its £1bn Longbridge regeneration project has been rejected amid criticism that the government scheme has failed the property industry.
A revised application was shortlisted by the Department for Business, Innovation and Skills in the second round of applications. But a written statement from new business minister Michael Fallon has confirmed that negotiations have failed.
St Modwen chief executive Bill Oliver said the parties had been unable to agree terms, with civil servants insisting on being able to claw back the money up to 20 years later if long-term targets were not met.
“The conditions attached make it a loan, not a grant,” said Oliver.
Without long-term development and investment guarantees from St Modwen, the government feared the £22m investment could end up constituting state aid.
The money would have funded essential infrastructure improvements to support the long-term transformation of the former MG Rover plant at Longbridge, Birmingham. St Modwen will now have to seek alternative sources of public funding.
The rejection came as a Public Accounts Committee report found that only £60m of the £1.4bn programme had so far reached front-line projects.
Committee chair Margaret Hodge MP said: “Given the dire state of the economy, it is nothing short of scandalous that so few projects funded by the Regional Growth Fund have actually got off the ground.”
