National Audit office reports on Regional Growth Fund
14 May 2012
A National Audit Office (NAO) report on the Regional Growth Fund, a government fund to support private sector jobs and growth in places that rely on the public sector, finds that while the initial £1.4bn investment could result in some 41,000 more full-time-equivalent private sector jobs, there was scope to have generated more jobs relative to the amount of grant awarded.
In a statement the NAO said that if the Fund delivers the expected 41,000 extra jobs, then the average cost per job would be £33,000, which would be broadly similar to the average cost of jobs under past programmes with comparable objectives. The Fund has not optimised value for money because a significant proportion of the £1.4 billion was allocated to projects that offer relatively few jobs for the money invested, the statement continued.
The expected cost per job varies considerably between projects, from under £4,000 per job to over £200,000 per job. The NAO report concludes that applying tighter controls over the value for money offered by individual bids and then allocating funding across more bidding rounds could have created thousands more jobs from the same resources.
Amyas Morse, head of the National Audit Office, said "The Regional Growth Fund, which was set up to support growth and jobs in areas that rely on the public sector, could result in 41,000 additional jobs. However, some of the funding was allocated to projects that offered relatively few jobs for the money invested. To achieve better value for money from the further £1 billion now available, the government should develop more challenging targets for the number of jobs projects should generate relative to their cost."
CBI director for business environment, Rhian Kelly said: “The [Regional Growth Fund] can act as a catalyst for much-needed jobs and growth in those areas of the country most affected by the difficult economic conditions. While the NAO’s report shows that broadly the programme is working, it is essential that the taxpayer gets value for money, especially when public finances are so tight. There are some projects where the public cost may have been too high and these lessons will need to be learnt for the third round of funding bids.”
The report can be downloaded here.