Is Plan A(usterity) the best way forward?
Last week, the National Audit Office (NAO) published a report which found that private sector jobs created under the £1.4 billion Regional Growth Fund cost between £4,000 and £200,000 per job. For the whole UK, they estimate that the Fund will create around 41,000 net new jobs, with around 8,600 of those being located in the West Midlands.
The current unemployment rate for the West Midlands is around 9 per cent which is - when converted to something meaningful - is the lives of about 240,000 people.
Or, in other words, whilst welcome, these 8,600 new jobs might shave next to nothing off the total unemployment for the region.
What is sad about these meagre returns is that the Fund is specifically targeted at areas of the country like the Midlands and the North where there has been a heavy dependence on public sector jobs. This is important because the Office of Budget Responsibility have estimated that 710,000 public sector jobs will be lost between 2011 and 2017.
At this point you might be wondering about how all the of Office of Budget Responsibility people fit into one office or what the government does with the financially irresponsible: are they put in the corner of the office with a hat on?
What you cannot argue with, though, is that the gloss underlying the Coalition claims that the private sector will - on its own - lead us out of from Plan A(usterity) has certainly worn off.
Back to those pesky statistics. Sorry. Mark Hart and his colleagues at Aston University did a fascinating analysis of job creation by the private sector over the period 1998-2010. They looked at the official ONS business dataset. What they found is that in the boom times (1998-2008) that 2.67 million jobs were created annually. However, these were gross jobs. And like other stuff sold in big packets with bright lettering offering a BOGOF, you should always check the label. Once you take off jobs lost, about 170,000 net jobs were created by the private sector each year over the period 1998-2008.
Over the period 2009-2010, Mark Hart estimates that 2.28m jobs were created by the private sector each year. However, 2.5m jobs were lost. So, around 270,000 net jobs were lost, on average, by the private sector in 2009 and 2010.
Such statistics might make you want to abandon Plan A and want to go back to PlanAWM (Advantage West Midlands). However, the West Midlands region did not improve economically over AWM's tenure as 'manager'. The West Midlands remained in mid-table obscurity (despite billions being spent) whilst the successful (London and the South East) got all the trophies and the North East propped up the league.
The answers are not easy. Nor is there just one simple thing that can be done to improve the fixture and fittings of the West Midlands. And I don't think that there are any quick fixes. Least of all do I think that the government is on its own going to solve our economic problems. But I do think that there are some things that the government can do.
Here then is my simple ABC plan for the government. Point A is that it has to remain Austere. Sorry, but if we don't want to end up like the Greeks who have to go to the equivalent of wonga.com for their money, the government needs to stick to its overall budget.
Point B stands for Building. By that I mean infrastructure. This means that stuff like redeveloping the mines of Mordor (better known as New Street Station) gets a big tick. So, too, does HS2.
Finally, Point C is to Cutting red tape. Politicians need to wean themselves off making laws because they can do it. What they would be better doing is simplifying existing laws.