NAO Report highlights real doubts over Regional Growth Fund - Umunna

11 May 2012

Chuka UmunnaChuka Umunna MP, Labour’s Shadow Business Secretary, commenting on the National Audit Office report on the Regional Growth Fund, said:

“At a time when families and businesses across Britain are suffering under a recession made in Downing Street, it speaks volumes that the Government’s flagship growth policy the Regional Growth Fund has come in for such criticism today from the National Audit Office.

“While Nick Clegg said the Fund would lead to half a million jobs, the report forecasts that it will create only up to 41,000 jobs, and many of them would have been created in any event without the RGF. The Deputy Prime Minister also said that the Fund would help rebalance the economy, yet the report says it is still unclear whether it has contributed to regional rebalancing.

“The report makes it clear that job creation under the Regional Development Agencies, which Labour put in place and which were hastily abolished without a transition plan by the Tory-led Government, was better value for money than under the RGF. Under Labour’s Future Jobs Fund, which Tory-led Government criticised and abolished, each job created cost £6,500 but under the RGF the cost is £33,000 and in some cases as high as £106,000 per net additional job.
“The scale of incompetence and confusion in the implementation of the RGF is simply staggering. As the report points out, it is astonishing that no administrative resources were allocated to it and that specialists were not used to evaluate bids. In this context, it is no wonder that the RGF has been beset by delays, with many winning bidders waiting for more than a year for their money.
“Today’s report also highlights real doubts which are emerging over the RGF’s haphazard bidding process, with projects apparently being selected only because they were in areas which had not yet received support.”