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The Regional Growth Fund omnishambles

The Regional Growth Fund omnishambles

🕔13.May 2012

As regular readers will know, TCF has followed the Regional Growth Fund (RGF) story from the start with revelations and analysis posted both here and by Sunny at Liberal Conspiracy. 

From the first announcement in June 2010, the whole RGF thing smacked more of Cameronesque PR than real regeneration substance.  It was through TCF’s and Liberal Conspiracy’s diggings (Labour HQ never acknowledges that kind of thing, but the Guardian did) that Ed Miliband first turned the heat on Cameron’s basic governmental competence, when he used an October 2011 PMQs to ask how many businesses had yet been funded (answer: two at that stage, versus 22 press releases). 

This was the very first conscious use by Miliband of Labour’s now markedly successful ‘omnishambles’ narrative, which has largely replaced its (unsuccessful and incorrect) attempts to portray Cameron as Thatcher Mk II, rather than arrogant posh boy who sees basic governmental competence as beneath him.

The National Audit Office (NAO) today published its review of the first two rounds of the Regional Growth Fund (RGF).  It reeks of the omnishambles odour now hanging heavily from the government, and I hope Miliband will refer to it at the next PMQs.* 

Some of the more striking findings in the report** are follows:

1)  The incoming government abolished Regional Development Agencies (RDAs), deriding them as “ineffective and inefficient”.  The RDAs created jobs at an average cost of £28,000 each.  by contrast, each RGF job is estimated to cost £33,000 each (fig 7, p. 24)***

2) As of March 16th 2012, only a third of all applicants had received a final offer letter.  The report notes that the pace has improved since December 2011, as more staff have been brought to the task. Labour might well want to argue that it has improved only because they brought the dire situation to light in October (with my and Sunny’s help).

3) Similarly, in December 2011, the projected underspend on the £470m earmarked for the 2011-12 financial year was £366m, 77 % of the total.   Unfortunately, the departments supposedly running the fund had failed to agree any financial year rollover provisions with the Treasury, so stood to lose all of that money. 

They had in fact been able to reduce that underspend to £10m by March 2012, partly by piling in staff resources to do due diligence on outstanding bids – better late than never, I suppose – but also by “distributing some of the Fund via endowments managed by some of the programmes supported in the second bidding round” (para 3.15).  

As I set out here in my top 10 RGF tips, and in more detail here this simply adds another layer of decision making about who actually gets the money in the end; it is not actually genuine expenditure of the fund.

4)  “Work on agreeing terms and conditions with applicants progressed slowly. The Fund has no dedicated administration budget. Its small Secretariat struggled to manage the volume of work to conduct the appraisals for the second bidding round while also negotiating final project terms and conditions with companies offered funding in the first bidding round. Delays at this stage have a significant effect on the overall time taken to finalise offers, because due diligence cannot begin until the Secretariat and the bidder have agreed factors such as the precise activities that the Fund will support. The Secretariat was supported by up to 12 full-time-equivalent economists from other departments during the project appraisal phase, but all but one of these staff returned to their home departments, before the due diligence phase started.” (para 3.11)

Enough said.  It is clear that the government wildly underestimated what needed doing, apparently intent on learning absolutely nothing from the RDAs’ experience.  Vince Cable has already agreed to “making more administrative resources available“.  This will, of course, increase the cost per job above the £33,000 currently estimated by NAO.

I look forward to PMQs on Wednesday.

*You can tell how nervous the government is about it already,  from the fact that Vince Cable has been dragged out of hiding to defend it on the morning of its publication.  Note also that it now longer appears to be a joint Pickles/Cable department programme – Cable has been left as the human shield.

** It is beyond the remit of the report to cover the major expense of abolishing RDAs, only to find that creating jobs was cheaper through them.

 *** Oddly, the £33,000 per job figure doesn’t seem to follow from the £1.4bn expenditure divided by 41,000 jobs, which is actually £34,000 per job.  I can’t explain why.

Curated from Though Cowards Flinch, written by paulinlancs

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