How Nick Clegg's growth fund makes jobs – at £200,000 a time

 

Just 2,400 jobs have been created so far by a £1.4bn scheme that Nick Clegg predicted would lead to hundreds of thousands of new posts in the country's unemployment blackspots, a damning report by MPs disclosed last night.

Condemning the performance of the Regional Growth Fund as "scandalous", the Commons Public Accounts Committee (PAC) protested that only £60m had reached businesses, with a further £240m "parked" with councils and banks over which ministers have little control.

The PAC's withering assessment of the Deputy Prime Minister's job-creation scheme, which was launched in April 2011, came as Vince Cable, the Business Secretary, today sets out the Government's business strategy over coming years, singling out the industries that it will champion in the drive to boost the economy.

The Regional Growth Fund is aimed at creating, or safeguarding, jobs in areas heavily reliant on the public sector and particularly vulnerable to the squeeze on public spending. Ministers set a target of delivering 36,800 jobs during the lifetime of the scheme, but Mr Clegg forecast last year that it would provide a "snowball effect that creates hundreds of thousands of jobs".

But the PAC found that just 2,442 new jobs had been generated and a further 2,762 existing posts had been protected, while only a fraction of cash earmarked for the scheme had reached employers to date. It cast doubt on whether the departments set adequate value-for-money checks on cash handed out, noting that in some cases it cost more than £200,000 to create a job under the fund.

It was also critical that the Departments of Business and Communities, which oversees the fund, had been slow to allocate staff to processing applications for money.

Margaret Hodge, its chairman, said: "Given the dire state of the economy, it is scandalous that so few projects funded by the Regional Growth Fund have got off the ground." She added: "It is unclear what is being done to make sure that money is not wasted but spent on creating real jobs."

The Government last night responded that the PAC's figures were out of date, adding that the fund had already "unlocked" 200,000 jobs, while more than two-thirds of projects have started.

Michael Fallon, the new Business minister, said: "The fund is delivering at the pace that companies can expand and create new jobs. To rush companies into expanding before they are ready would be unsustainable and would put public money at risk."

Dr Cable will today argue that there are lessons to drawn for business from the country's sporting success at the Olympics. "Our athletes achieved what they did because of their years of commitment and planning," he will say. "We need to take the same approach: a clear, ambitious vision, the courage to take decisions that bear fruit decades later."

The Business Secretary said the Government intended to build a "strategic partnership with key sectors", citing aerospace, automotives, life sciences, the creative industries and professional and business services.

Meanwhile, Labour claimed yesterday that Dr Cable's strategy was not supported by David Cameron or George Osborne – and that Mr Fallon, who was sent by the Prime Minister to the department in last week's reshuffle, was really in charge.

Clegg's commitment

What he said... Ministers set a target of delivering 36,800 jobs during the lifetime of the scheme

[The fund will create] "a huge snowball effect which ... creates hundreds of thousands of jobs"

Two tranches of money totalling £1.4bn were made available last year for bids from potential employers. They are assessed by a panel headed by the former Deputy Prime Minister Lord Heseltine.

Nick Clegg predicted the private sector would stump up £6 for every £1 provided from the Regional Growth Fund from the public purse. He estimated that more than 325,000 jobs would be created or protected.

...and what's happened: The scheme has got off to a sluggish start, according to the report, with just £60m reaching the front line so far and another £470m "parked" in other bodies. Only one-third of offers of funding have been finalised.

Just over 5,000 jobs have been generated or safeguarded so far, with some new jobs estimated to have cost the taxpayer £200,000 to create.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Ashdown Group: Front-End UI Application Developer

£30000 - £40000 per annum + Benefits: Ashdown Group: Front-End UI Application ...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...