Much coverage this morning for the Commons Public Accounts Committee's criticisms of the Regional Growth Fund: 'It's slow to spend money and some of the jobs 'created' come at a high cost per job'. Time for a re-post of something from earlier this year, written in response to similar criticism from the National Audit Office:
"Reporting of the NAO report on the Regional Growth Fund has highlighted the fact that the 'scheme may cost up to £200,000 per job'. A senior labour MP tells the BBC that they find these figures 'shocking'.
But before we get carried away, it's worth noting two things. First, the
average cost per job isn't that different from similar schemes with
comparable objectives (NAO is very clear on this). Second, before
concluding that the £200k per job maximum is 'shocking' we might
usefully look back at the maximum cost per job achieved by the RDAs.
Upon quickly flicking through the PWC report (vol 2) I see that EEDA's
innovation capital project was estimated to cost 213k per job (table
40); EMDA's tourism marketing managed an impressive £1m per job (table
71); the LDAs Centre for Fashion Enterprise cost £259k per job while its
pre-commercial fund cost £217k per job (table 101).
As I have explained before, I take all of these figures with a pinch of salt.
But it's simply not helpful to compare the maximum from the RGF to the
average from other programmes and reach any conclusion about the
effectiveness of the RGF. I am sympathetic with the NAO argument that
one might question why policy doesn't pick the highest value for money
projects - but this argument would appear to apply as much to RDAs as it
does to RGF.
I am not a massive fan of the RGF. I have always argued that RGF should
have (1) had money ring-fenced for skills and focused on people; (2)
handed money to LAs (or LEPs) to do with it what they want; (3) spent
the rest on projects that delivered highest value for money. I continue
to think that this would be a better set up for the fund. But I don't
buy the argument that these figures tell us that RGF is somehow worse
Of course it depresses me that governments invest in schemes that represent bad value for money - but that's politics for you."