The Government’s flagship growth fund will create less than half as many new jobs in Yorkshire as the North East and North West, according to figures released amid mounting criticism of Whitehall’s regional policy.
The Government’s most senior civil servant has told MPs that Yorkshire submitted fewer high-quality bids to the Regional Growth Fund in its first stages than other parts of the North and so will receive fewer benefits as a result from the £1.4bn now being distributed.
The fund was set up two years ago to support private sector growth in parts of the country deemed over-reliant on the shrinking public sector.
Private firms are invited to bid for portions of the money for specific schemes that would create jobs.
But despite the region’s above-average unemployment rate and high number of public sector jobs, Yorkshire will not receive even half the benefits of the North East or North West from the first rounds of the scheme.
Auditors’ figures suggest 6,300 private sector jobs will be created in Yorkshire as a result of the first tranche of RGF money – compared with more than 13,000 in the North West and more than 14,000 in the North East.
A further £1bn has been allocated by the Treasury to bidding future rounds.
At a hearing of Parliament’s Public Accounts Committee, Greater Grimsby MP Austin Mitchell highlighted glaring “regional differences” in the numbers of jobs being created by the fund.
“It seems like a rush job,” the Labour backbencher said.
“Why are there such regional differences? Yorkshire got only 6,300 jobs ... That compares with the North West, where unemployment is lower, getting 13,200.
“In the South West, where unemployment is lower again, it’s roughly the same. Why did Yorkshire do so badly?”
The Government’s new head of the civil service, Sir Bob Kerslake – a former chief executive of Sheffield Council – told the committee that while the fund is designed to support private sector growth in the areas of greatest need, its panel could only approve bids if they deliver value for money.
“The fund was consciously geared towards those areas that have the highest public sector jobs dependency, and with the biggest challenges economically,” he said.
“But the extent to which you could get money into those areas obviously was related to the bids that you had, and the quality of those bids.
“So where (the funding) landed is where we had good quality bids in the areas where there was the highest need. And clearly in the North West, more of the bids were ready to be approved.
“This fund had a geographic intention. But if the projects weren’t there, then clearly they couldn’t be approved.”
Put to Sir Bob that he was suggesting Yorkshire had not submitted sufficient high-quality bids, the civil servant said: “The outcome would suggest that there were proportionally more bids in the North West than Yorkshire and the Humber
“The only conclusion that can be reached is that there were fewer bids that could be approved by the fund.”
Yorkshire’s relatively poor showing in the fund’s first tranches will come as a severe blow as the region strives to pull itself out of recession, amidst a background of continuing cuts to the public sector.
Mr Mitchell said: “This was meant to compensate for a loss of public sector jobs. But 6,300 jobs in Yorkshire is far, far less than the public sector jobs we were losing in the same period.
“We are an area that’s dependant on public spending, and public sector jobs.”
The fund has come in for criticism over recent months due to ongoing delays in awarding funds to the companies behind successful bids, and concerns over the number of real jobs being created for the money spent.
Last week a National Audit Office report found that in some cases, more than £200,000 of public money was being spent creating a single job.
Mr Mitchell described the figure as “astonishing”.
But Sir Bob told MPs that such incidences were rare, and that where the cost-per-job was particularly high there were usually other benefits to be gained from investing in the project.
“With the ones at the higher end, the reason some of them continued were because of either benefits that were related not particularly to jobs – for example, research and development – or because it was an area where there was a particular vulnerability in terms of jobs, or because the view was that we could negotiate – and indeed did negotiate – down costs,” he said.