Public vs. private. Who should deliver future Regional Growth Fund projects?
The Government has today announced the successful projects as part of Round 4 of the Regional Growth Fund. Across Rounds 1 to 3 the Fund has allocated £2.4bn which has leveraged £13bn from businesses, most of this would otherwise not have been invested.
For every £1 allocated by the Regional Growth Fund, around £5.50 is stimulated in private sector investment.
In the Spending Review announcement for 2015/16, the Government announced that an additional £300m per year would be allocated in both 2015/16 and 2016/17. In our Spending Review submission we called for the RGF to be continued along with it being kept out of the Single Local Growth Fund, both were accepted by Government and this is welcome. We would like to see future rounds restricted to business-led project bids, there are many reasons for this.
- As the chart above shows, the number of non-business led bids which receive funding has increased with each round of the Regional Growth Fund. The RGF was set up to spur private sector job growth and there are examples of local authority 'programme bids' struggling to then disburse funding effectively to businesses
- With the Single Local Growth Fund, LEPs will now have their own funding stream to strategically manage. Feedback from EEF's network suggests some local authorities are simply using LEPs to strategically offset funding losses in other areas
- The RGF was set up to stimulate the private sector to invest money that they otherwise would not. As we highlighted last week business investment over the past year has fallen quarter on quarter and are a third below where they were at the start of 2008
- There is also the intangible effect of the Regional Growth Fund. Recently we heard the story of a major motor manufacturer choosing a UK supplier due to their commitment to investment in R&D (despite this supplier being more costly on price). That R&D investment would not have gone ahead without the support of a successful Regional Growth Fund bid.
The bids announced today will undertake due diligence and will be completed by 2014. In the past we have heard from members of the difficulty in drawing down funds once due diligence has been completed, this is something we will be keeping a watchful eye on next year.