Wednesday, 25 May 2011

Regional Growth Fund round one cannot be used as a measure of a LEPs success

Yesterday I notice a number of articles / twitter comments which suggest that business has no confidence in LEPs and blames the LEP for its areas failure to secure Regional Growth Fund (RGF) e.g. http://www.insidermedia.com/insider/midlands/52809-emda-revival-through-communicate-east-midlands/

There seem to be a few issues around this fund which I will try to clear up.

BIS states:

The objective of the RGF is to stimulate private sector investment by providing support for projects that offer significant potential for long term economic growth and the creation of additional sustainable private sector jobs.

The fund aims particularly to help support those areas and communities that are currently dependent on the public sector to make the transition to private sector led growth and prosperity.

So it is about jobs and growth BUT with a focus on areas that have been disproportionately hit by the public sector cuts.  The north of England was always going to do better from the RGF than the South.  The fund is competitive and was never intended to be equally spread through the regions.  The fund was also heavily oversubscribed; 464 bids were received with a combined total value of £2.78 bn (twice the value of the total fund). In fact it was so over subscribed that the amount of funding invested in the first round was nearly twice as much as the government had originally suggested (£450m to support 50 project).

Bids have to be from Private sector companies or public/private partnerships – note it is private sector led.

No LEP was in a position to bid for the RGF first round (contract had to be with a legal entity).  The RGF round one closed on the 21st January, the first LEP Boards were not recognised until the 28th January http://www.bis.gov.uk/policies/economic-development/leps/lep-contact-details

First round success has been reported by LEP area http://www.theyworkforyou.com/wrans/?id=2011-05-19a.54051.h as well as a full list of winners http://www.bis.gov.uk/policies/economic-development/regional-growth-fund/regional-growth-fund-round-1-analysis (subject to due diligence) however the LEPs themselves are very unlikely to have been involved in any of the bids.  

The first round of the RGF cannot be used as an indicator of the success of a LEP.  

LEPs (as a public private partnership) will be eligible to bid for RGF round two.  HOWEVER it is very difficult to compare LEP areas, not only are they different in terms of demography / geography they will not have comparable priorities.  

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