30 January 2004
Thirty years of government grants to disadvantaged areas of England have had 'little real impact' on their economic performance, according to senior backbench MPs.
The Public Accounts Committee says the regional grants programme, operated by the Department of Trade and Industry, has achieved just half a percentage point increase in employment in the assisted areas over four years.
The key aim of the scheme is to create and safeguard jobs in low-performing regional economies by helping the companies that invest in them.
Around £100m is handed out each year in grants, but the money has done nothing to close the gap between the best and worst performing regions in England, the MPs say.
Their report, published on January 29, is damning. 'When the committee last took evidence on regional grants in 1988, unemployment in the least advantaged region was over three times the level of the most advantaged region. Fourteen years and £1.4bn later, that ratio remains unchanged.'
The committee says the system needs overhauling and much more help should be given to firms in the services sector, where most economic growth occurs: 90% of grants go to manufacturing.
The report also calls for a much clearer definition of what the scheme is intended to achieve and how those objectives will be met.
'The budget for regional grants and its allocation to the regions has not been based on any clear assessment of the contribution that these grants could make to the achievement of the department's regional aims.'
PAC chair Edward Leigh, said: 'The DTI needs to think harder about how these schemes fit in with its wider work.'