PAC points to ‘uncoordinated’ local growth plans

15 May 14
The government’s programmes to promote local economic growth have lacked clarity and coordination, and their achievements in job creation have fallen below expectations, the Public Accounts Committee has said.

By Richard Johnstone | 16 May 2014

The government’s programmes to promote local economic growth have lacked clarity and coordination, and their achievements in job creation have fallen below expectations, the Public Accounts Committee has said.

UK still stuck in recession

Examining the schemes introduced by the Department for Business, Innovation and Skills and the Department for Communities and Local Government, MPs highlighted the ministries had also not spent the money available as quickly as expected.

They now face a challenge to successfully spend the funds available by the end of 2014/15 across schemes including the Regional Growth Fund, the Growing Places Fund and the programme of City Deals.

For example, under the Regional Growth Fund, the largest of the schemes, the departments need to spend £1.4bn to meet funding targets in 2014/15, compared to the £1.2bn spent in the first three years.
MPs called on the government to undertake ‘well-informed evaluation’ of the host of projects ahead of the introduction of the
Local Growth Fund from next April, which will replace some of these projects.

Committee chair Margaret Hodge said this scheme, which will localise around £2bn of government funding to Local Enterprise Partnerships, must learn lessons from those schemes introduced since 2010.

‘The departments have not managed the local growth initiatives as a coordinated programme with a common strategy, objectives or plan,’ she said. ‘We welcome the recent creation by the departments of a single growth directorate and a programme board which are now overseeing progress across initiatives. But we remain concerned that the departments are not yet using the new oversight arrangements effectively to decide which initiatives to invest in to provide the best value for money.

‘Looking to the future, the new Local Growth Fund from 2015 is an opportunity to improve the strategic oversight of funding to support local economic growth. The departments need to learn lessons from the current programme and adopt a more coordinated and strategic approach when introducing the new growth deals next year, including setting out the basis for how the programme will be monitored and evaluated.’

In particular, the government must introduce binding milestones for distributing funds and move quickly to claw back money not being spent – or spent disproportionately on administration – and redistribute it to better performers, the committee said.

In the schemes introduced to date, the number of jobs created had fallen below target, with the results for the Enterprise Zones initiative and the Growing Places ‘particularly underwhelming’, Hodge said.

There have been 4,649 jobs created through Enterprise Zones and 419 as a result of the Growing Places Fund, she said, both significantly short of expectations.

‘The departments also agreed that there is a risk of double-counting, with the same jobs scored more than once to different initiatives.’

But local growth minister Kris Hopkins said challenged the PAC's conclusions.

‘The Regional Growth Fund is working – over £1.2bn has been paid to projects and companies across England – helping businesses create thousands of jobs up and down the country. We’ve sped up the process - companies get the money when they need it and after all the necessary checks have been carried out. Anything else would be irresponsible and a waste of taxpayers’ money,' he said.

‘Local enterprise partnerships and enterprise zones are proving their worth. Designed and run locally, in contrast to the distant and unwieldy Regional Development Agencies, they are accountable through the elected council that co-chairs them.’

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