The Deputy Prime Minister said the Regional Growth Fund – first announced in the Budget last week – would help ensure “no region or community gets left behind”.

Little detail was given about how the fund will be allocated apart from the principle that private firms, acting alone or with the public sector, will be eligible for the cash if schemes will attract investment and promote jobs and growth.

The Government is also to consult on further measures to help get private sector investment into economies “over dependent” on public sector jobs.

Among measures to be included in a Green Paper on business finance are Liberal Democrat proposals for the creation of regional stock exchanges to encourage investment in small businesses.

In a related move, councils and business leaders were asked by ministers to produce proposals for joint efforts to boost local economies.

Local Enterprise Partnerships are being sought to replace Regional Development Agencies – which the Government confirmed it will scrap.

Business Secretary Vince Cable and Communities Secretary Eric Pickles wrote to local authorities and business leaders inviting ideas for joint working.