“The figures now are that 200,000 new jobs have been created through the Regional Growth Fund.”
Matthew Hancock, 11 September 2012
“As the National Audit Office found in May, the Regional Growth Fund is good value for money, delivering approximately £6 of private sector investment for every £1 of public money.”
Michael Fallon, 11 September 2012
The typically outspoken Labour chair of the public accounts committee called it “scandalous”.
The government’s Regional Growth Fund promised to kickstart private sector jobs and growth in English regions most dependent on public sector employment and likely to suffer most from the cuts.
The first two rounds of the investment programme would deliver around 330,000 jobs, according to the Department of Business, Innovation and Skills (BIS).
Two years after the launch just £60m of the £1.4bn funding available has made it into the hands of the business projects who bid for government money, according to Margaret Hodge. And, she said, fewer than 6,000 jobs have been created or safeguarded so far.
But is that just opposition spin?
How many new jobs?
This figure of 200,000 jobs is one that has surfaced several times today as the government scrambled to defend the Regional Growth Fund.
Newly appointed business and education minister, Matthew Hancock, saying: “The figures now are that 200,000 new jobs have been created through the Regional Growth Fund and that is a figure we should support and celebrate.”
The new business and enterprise minister, fellow Conservative Michael Fallon, chose his words more carefully than Mr Hancock when he said jobs “have been unlocked”. How do you “unlock” a job?
A spokesman for the Department of Business, Innovation and Skills explained that this is the preferred jargon for the maximum number of jobs created by the scheme or “safeguarded” (where added investment secures existing posts that might otherwise have been lost).
That prediction still stands at 330,000, and the government says about two-thirds of projects have begun, bringing us to around 200,000 jobs.
But the National Audit Office (NAO) has said only 20 per cent of jobs will be created directly by government money.
The rest will come from an expected boost to the local supply chain or investment from intermediaries like banks, and the NAO warns: “Verifying the precise number of indirect jobs that have been delivered will however be difficult”.
The figure also counts all jobs equally, no matter how long they last.
The NAO used the more usual figure of full-time equivalent posts and calculated how many posts would last for the duration of the project. That boiled the predicted jobs tally down from 330,000 to 117,000.
And crucially, not all these jobs will actually be “new”, according to the auditors. Some might have been created anyway even if the government had not pledged the extra cash, and helping some firms might hurt the prospect of their local rivals.
Taking this into account, the NAO said there will only be around 41,000 more net full-time long-term jobs in the private sector than would have been created without the Regional Growth Fund.
There’s also the question of timing. Most of these jobs have yet to materialise, and are likely to take years to do so.
Back in May BIS told the public accounts committee only 2,442 new jobs had been delivered in projects with final offers of funding agreed, and another 2,762 existing jobs had been safeguarded.
BIS told us today that the latest updated figures are 3,128 created and 7,117 protected. But that count is based on 100 of the 150 or so projects that have begun and is likely to be an underestimate.
Value for money?
Contrary to what Mr Fallon said today, the NAO made a number of conclusions about the scheme’s value for money, none of them employing the word “good”.
Specifically, the auditors found that it cost £33,000 on average to create one truly “new” job, but more than 90 per cent of them could have been delivered for about £26,000 each.
In other words, the department could have spent about £400,000 less for 90 per cent of the results, because a small number of projects offered extremely poor value for money, some costing more than £200,000 per job.
It’s true that the NAO did say think every £1 of taxpayers’ money would attract £6 of investment from the private sector. But Mr Fallon fails to quote the next line in the report: “Our analysis indicated that there was no strong relationship between the ratio of private-to-public investment and the direct cost to the Fund of creating and safeguarding jobs.”
In other words, while there is evidence of private sector investment being stimulated thanks to the scheme, the ratio doesn’t translate into extra jobs and isn’t of itself evidence of “good value for money”.
The NAO concluded that the department had set the bar too low when defining which bids were cost-effective, and concluded that “value for money was not optimised”.
Mr Hancock earns himself a “Fiction” rating after just a week in office, which may be a FactCheck record. These 200,000 jobs are entirely notional, they are not “new”, and they certainly haven’t been created yet.
Presumably the new minister understands this as well as anyone else, since he actually sat on the public accounts committee and approved the contents of the report before heading for the front benches.
Mr Fallon was more careful on that specific point but we think his spin on what the National Audit Office really said about the Regional Growth Fund also puts him in the red.
We ought to point out in the interests of fairness that, if BIS’s figures are correct, the scheme is beginning to create real jobs, albeit in much smaller numbers than is being trumpeted, and there has been progress over the four months since the public accounts committee published its report.
By Patrick Worrall