The Regional Growth Fund: Another Damaging Report
The government's flagship Regional Growth Fund (RGF) was designed to boost growth and jobs in the English regions and help rebalance the economy away from public sector jobs, with the Department of Business, Innovation and Skills (BIS) claiming that the first two rounds of the RGF would deliver round 330,000 jobs.
But two years in, just £60 million of the £1.4 billion of funds available has actually reached the projects which won funding, with fewer than 6,000 jobs having been created or safeguarded so far, according to a new report (read here) by the House of Commons Public Accounts Committee (PAC).
That's very much at odds with the claim made by skills minister Matthew Hancock of 200,000 "new jobs" having been created through the RGF so far. Hancock has only been in the job a couple of weeks and either doesn't seem entirely clued in or was in spinning over-drive.
(Interestingly, Mr Hancock possibly knows that the "200,000 jobs" claim is actually notional - after all he did sit on the PAC until a few weeks ago so may well have OKed the report that has just been released which criticises government policy in this area).
Another new minister, business and enterprise minister Michael Fallon, spoke in more measured tones of jobs being "unlocked" (i.e. created or "safeguarded"). The government's prediction on that still remains at a final figure of 330,000.
Yet the National Audit Office has undertaken a more detailed analysis looking at full-time equivalent jobs and worked out how many would last for the length of the RGF support. It put that figure at just 117,000. What's more, the NAO has stated that just 20% of jobs will actually be created directly by government money, with the rest coming via supply chain effects or investments via intermediaries, with the final jobs figure very difficult to verify.
Factor in the point that some of these jobs would have been created anyway (a 'deadweight effect') and the NAO reckons only 41,000 net full-time long-term jobs will be created by the RGF in the private sector - and in most cases at some point in the future.
As readers of this blog may remember, the NAO had earlier slammed the operation of the RGF, noting that "value for money was not optimised".
Back in May BIS told the public accounts committee that only 2,442 new jobs had been delivered in RGF-backed projects, with another 2,762 jobs safeguarded. Last week BIS updated this to 3,128 created and 7,117 protected.
Meanwhile the PAC said it was "highly disappointed" that so few RGF schemes had been signed off and so few jobs created. Echoing earlier criticism of the RGF, the PAC criticised the Government for failing to put in place enough staff to process bids and contracts speedily and raised concerns over the ability of government to monitor how successful the fund is overall.
It also noted that some £470 million of funding awarded has been "parked" in organisations like banks and local authorities that ministers have little control over.
None of this is to deny that some good projects are being backed by the RGF, including here in the West Midlands. But we've now had a series of reports laying bare the failings of the RGF. Such failings in policy should come as no surprise to readers of this blog, as I have repeatedly pointed out weaknesses in the new policy regime (see here for example).
Firstly, I've stressed that the RGF is small, representing a big cut in funding for economic development as compared with what went through the RDAs. As a result a large number of worthwhile projects have anyway been turned away.
Secondly, the RGF it is doled out in a top down, centrist way from London in stark contrast to the old RDA spending where decisions were made near the ground in the regions.
Thirdly, the RGF has been painfully slow in getting due diligence done on projects once approved, which means that the money takes ages to actually get out into the real economy.
So much for any urgency in the government's 'growth strategy'.
Professor David Bailey works at Coventry University Business School