Though Cowards Flinch

Regular readers will know that I’m taking a keen interest in the Regional Growth Fund, directly overseen by Nick Clegg as chairman of  the funding decision panel.  

The Regional Growth Fund acts as a very partial and very poor replacement to the regeneration expenditure of the now defunct Regional Development Agencies.  Round 1 of the scheme attracted 450 bids worth around £2.8bn, against a total of £250 -£350m actually available, meaning a huge waste of energy in putting together complex bids for maybe 80% of applicants.

My view is that the criteria for round 1 of the fund display an astonishing lack of understanding about local economic development, mixed with a blatant ideoligical slant towards the supposed additional effectiveness of the private sector, to create a scheme which is full of deadweight and a huge waste of public money and energy.

But things are going from bad to worse under Clegg’s apparent non-direction.

Original expectations were that the announcement about who would be funded would come in mid-late March, but it now appears that the announcements may not be made before 14th April, the day ‘purdah’ begins for the local elections.  This will put the announcement back into early May at the soonest.

However, the second round of the fund is due to open on 12th April, and bidders have been told that if they are unsuccessful in round 1 then they can bid for round 2.  A delay in announcing round 1 results will mean that unsuccessful applicants have less time to prepare round 2 bids against an already tight timetable, and this is bound to lead to accusations of unfairness.

The reasons for the delay are unclear, but it seems likely that there is behind-the-scenes wrangling about state aid issues with private sector bids that have come from ‘non-assisted’ areas for the purposes of the European Commission (‘assisted areas’ are those deemed by the Commission to be deprived enough to warrant some direct investment into the private sector without the principles of open competition being compromised).

This wrangling relates back to the fact that the inital guidance for bidders was not clear enough on this score, and this in turn relates to the fact that the Regional Growth Fund is supposed to be under the joint direction of DCLG (Tory ministers) and BIS (given to Vince Cable as part of the Coalition deal).  I suspect that the poor guidance emanates from mixed lines of accountability and reporting, and the high speed at which it was issued in the Autumn and applicants expected to respond - all the more ironic now given the delay in decision making.

Put simply, the mucky compromise around who runs the Growth Fund is being shown up for what it is – administative efficiency severely damaged by short term political interests, including the desire to let clegg have his day in the sun announcing thousands of jobs created (however false these claims are).

Whatever the real reasons for the delay, the outcome is that the £250  -£350m that has already been committed by government to the round 1 scheme are still tied up, at exactly the time they should be out there making the economy tick (albeit that the criteria for the scheme were misguided and the money will not be spent as effectively as it should be).

In general, this latest debacle fits the emerging picture of a government quickly losing control of an increasingly hostile civil service administration, of ministers floundering, and of Clegg at the centre of the vortex of incompetence.