20 June 2003
MPs have slammed the Department of Trade and Industry for failing to boost regeneration initiatives in deprived areas, despite throwing cash at problems in the form of grants.
Commenting in the wake of a National Audit Office report on the issue, the Commons' influential Public Accounts Committee said the DTI's schemes for using grants to generate jobs in areas of high unemployment 'do not come out with flying colours'.
The NAO study, published on June 17, assesses two regional grant schemes: Regional Selective Assistance and Enterprise Grants. Auditors estimated that around £314m had been spent on the initiatives between 1999 and 2002.
Both schemes are used to help support regeneration plans in 'assisted areas' of deprivation - often places in the middle of industrial restructuring. The government aims either to create or safeguard around 100,000 jobs through the grants, which are paid to companies.
Although auditors found that both grants had a 'measurable effect' in reducing unemployment, they claim that up to half of the jobs created would have been realised anyway. Other jobs created under the schemes had the knock-on effect of displacing jobs elsewhere, the report says, while the administration costs for companies involved were often around 10% of the grants received.
PAC chair Edward Leigh said: 'There is no way of telling whether the use of grants to create the extra jobs in any way represents value for money.'
'Where assessment has been possible, in the area of generating improved productivity, the schemes have been assessed as relatively poor,' he added.
A spokesman for the DTI said the department was currently looking at the effectiveness of its regional assistance schemes 'to make them more effective'.
A new system of grants is expected to emerge.
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