Kevin Meagher explains why even now the Regional Growth Fund money is finally starting to be allocated, everything is far from rosy in their implementation.
This week’s announcement of the successful recipients of Regional Growth Fund (RGF) money will give a boost to moribund local economies struggling against a backdrop of flatlining growth and massive public spending cuts which are biting hard locally.
One hundred and nineteen projects across the country (with a further ten being considered) will share £950 million from the second round of bidding which the government claims will create or secure 200,000 jobs and lever-in an additional £6 billion in private investment.
However this announcement has taken its time in coming. Bidders have waited five months while their projects sat in ‘dry dock’ undergoing due diligence checks by BIS officials.
This wait has been compounded by the government’s rash decision to scrap England’s eight regional development agencies (RDAs) at the same time.
However this week’s offers are only “conditional” with the promise of yet further diligence tests to come before any money is actually released.
Complaining about the delays, James Ramsbotham, chief executive of the North East Chamber of Commerce, said that money from the first round of RGF funding – announced back in April – was only just starting to filter through:
“When you look at the first tranche, which was announced much earlier this year, until the beginning of last month not a penny had been paid,”
“The delays are hugely important. With the length of time it is taking for decisions to be made and for money to come through it is going to be a long time yet before we see any benefits.”
Had RDAs still been in place, it is doubtful this process would have taken anything like as long. Whether the Tories liked the concept of regional decision-making or not, it was reckless to remove the bodies that were already in place leading the effort to boost local economies and with long experience in overseeing projects of this kind.
Nevertheless, the latest instalment of RGF funding is welcome, although it represents half-measures for many of the companies and projects in desperate need of help. Literally, it turns out, in the case of Sheffield Forgemasters, the manufacturer that famously saw an £80 million loan guarantee given by the last Labour government rescinded by the coalition, resulting in Nick Clegg, a local Sheffield MP, becoming a pariah in the city he represents.
On Monday the deputy prime minister was happy to pose (with the obligatory hard hat) at the company’s headquarters announcing a deal that will see Forgemasters awarded with a loan guarantee of up to £36 million so they can expand into the civil nuclear industry – although, again, there are further hoops before the company sees a penny.
Graham Honeyman, chief executive of Sheffield Forgemasters said there was still “much work to be done” in establishing the size of the loan and the number of new jobs it will create.
They are lucky, three quarters of bidders received nothing from the heavily oversubscribed round. As yet, the government has not announced whether there will be further bidding rounds, although the acute need for further investment in regional growth projects – especially in areas heavily reliant on the public sector – is all too apparent.
Despite David Cameron telling ministers to “roll up their sleeves” in order to fast-track projects to boost growth, a mixture of pointless institutional tinkering, Whitehall’s lethargy, a lack of policy direction, spending cuts and weak growth means that Ministers dare not rest on their laurels. A third round of RGF funding should be a priority.
If not, Nick Clegg and other coalition ministers will need their hard hats when they meet the voters.
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• Why is Cameron repeating his job creation lies? – Alex Hern, October 19th 2011
• Cable should concentrate on promoting growth not Goa – Kevin Meagher, August 26th 2011
• Huge demand for Regional Growth Fund shows desperate need for business credit – Kevin Meagher, August 3rd 2011
• Round two for the Regional Growth Fund – but is the cupboard now bare? – Kevin Meagher, July 2nd 2011
• Coalition’s regional growth fund sweetener leaves a bitter taste – Kevin Meagher, April 12th 2011