As regular readers will know, TCF has followed the Regional Growth Fund (RGF) story from the start with revelations and analysis posted both here and by Sunny at Liberal Conspiracy.
From the first announcement in June 2010, the whole RGF thing smacked more of Cameronesque PR than real regeneration substance. It was through TCF’s and Liberal Conspiracy’s diggings (Labour HQ never acknowledges that kind of thing, but the Guardian did) that Ed Miliband first turned the heat on Cameron’s basic governmental competence, when he used an October 2011 PMQs to ask how many businesses had yet been funded (answer: two at that stage, versus 22 press releases).
This was the very first conscious use by Miliband of Labour’s now markedly successful ‘omnishambles’ narrative, which has largely replaced its (unsuccessful and incorrect) attempts to portray Cameron as Thatcher Mk II, rather than arrogant posh boy who sees basic governmental competence as beneath him.
The National Audit Office (NAO) today published its review of the first two rounds of the Regional Growth Fund (RGF). It reeks of the omnishambles odour now hanging heavily from the government, and I hope Miliband will refer to it at the next PMQs.*
Some of the more striking findings in the report** are follows:
1) The incoming government abolished Regional Development Agencies (RDAs), deriding them as “ineffective and inefficient”. The RDAs created jobs at an average cost of £28,000 each. by contrast, each RGF job is estimated to cost £33,000 each (fig 7, p. 24)***
2) As of March 16th 2012, only a third of all applicants had received a final offer letter. The report notes that the pace has improved since December 2011, as more staff have been brought to the task. Labour might well want to argue that it has improved only because they brought the dire situation to light in October (with my and Sunny’s help).
3) Similarly, in December 2011, the projected underspend on the £470m earmarked for the 2011-12 financial year was £366m, 77 % of the total. Unfortunately, the departments supposedly running the fund had failed to agree any financial year rollover provisions with the Treasury, so stood to lose all of that money.
They had in fact been able to reduce that underspend to £10m by March 2012, partly by piling in staff resources to do due diligence on outstanding bids – better late than never, I suppose - but also by “distributing some of the Fund via endowments managed by some of the programmes supported in the second bidding round” (para 3.15).
As I set out here in my top 10 RGF tips, and in more detail here this simply adds another layer of decision making about who actually gets the money in the end; it is not actually genuine expenditure of the fund.
4) “Work on agreeing terms and conditions with applicants progressed slowly. The Fund has no dedicated administration budget. Its small Secretariat struggled to manage the volume of work to conduct the appraisals for the second bidding round while also negotiating final project terms and conditions with companies offered funding in the first bidding round. Delays at this stage have a significant effect on the overall time taken to finalise offers, because due diligence cannot begin until the Secretariat and the bidder have agreed factors such as the precise activities that the Fund will support. The Secretariat was supported by up to 12 full-time-equivalent economists from other departments during the project appraisal phase, but all but one of these staff returned to their home departments, before the due diligence phase started.” (para 3.11)
Enough said. It is clear that the government wildly underestimated what needed doing, apparently intent on learning absolutely nothing from the RDAs’ experience. Vince Cable has already agreed to “making more administrative resources available“. This will, of course, increase the cost per job above the £33,000 currently estimated by NAO.
I look forward to PMQs on Wednesday.
*You can tell how nervous the government is about it already, from the fact that Vince Cable has been dragged out of hiding to defend it on the morning of its publication. Note also that it now longer appears to be a joint Pickles/Cable department programme – Cable has been left as the human shield.
** It is beyond the remit of the report to cover the major expense of abolishing RDAs, only to find that creating jobs was cheaper through them.
*** Oddly, the £33,000 per job figure doesn’t seem to follow from the £1.4bn expenditure divided by 41,000 jobs, which is actually £34,000 per job. I can’t explain why.
Sunny thinks Ed Miliband should now:
[A]sk Cameron if he will call for a referendum on the EU itself to clarify whether the UK stays in or out.
He says this because:
[C]alling for a referendum would expose the fact Cameron doesn’t want to be out of the EU despite the crumbs he has thrown at his Eurosceptic MPs. It would put him in a bind and expose the farcical situation that Britain is in now.
I disagree with Sunny on this one.
I think raising the possibility of a referendum will make Miliband looks like he’s playing silly party politics.
Cameron will get all the favourable media exposure he wants over the next week or two on this, as he struts around, doing the British Bulldog. That image is all over the rightwing press this morning. By comparison, Miliband asking about a referendum will look like an annoying little chiwawa snapping petulantly at Cameron’s heels.
Instead, Miliband should focus on what’s important. Strategy, not tactics.
Miliband should ignore Cameron as far as possible, other than to point out how much he has sided with the fund managers, and how very typical that is. The main message should be that Cameron is now an irrelevance.
Miliband should get on with setting out clearly how the removal of the fiscal stimulus option, under the proposed Treaty, would be an unmitigated economic disaster both for the Eurozone and for the UK as a key trader. He should be pointing out that Germany’s economy has remained fairly strong till now precisely because:
a) Back in 2002, Germany broke the same deficit rules now proposed under the Treaty, but then set out under the European Growth & Stability Pact, using its political weight to have the rules ignored;
b) Germany, now calling for fiscal restraint, has itself used a bigger stimulus to keep its economy going than any other European country since the 2008 crash.
Miliband should be in Europe every other weekend, talking to Centre-Left and Leftwing leaders about developing coherent alternatives to the proposed Treaty, following on the lead given by François Hollande. He should not be afraid to go for Merkel’s jugular, calling her out on her hypocrisy. The message he should try to get over is that Merkel is the important player, not Cameron.
He should be using his Labour MEPs to the maximum to ram home the message that Labour is interested in finding workable, long-term solutions to the European crisis. This will send a strong message, to LibDems in particular, about where Cameron’s tactics have got us, without ever having to mention Cameron, other than as an irrelevance.
Finally, he should recognise that if Francois Hollande does become French President in May, the whole political landscape in Europe will change, and that there is a chance the disastrous Treaty could effectively be stopped in its tracks (even if it has been signed, implementing it is another matter).
He should be talking to the Labour NEC this week about how the Labour party can get behind the Socialist Campaign in France, getting resources and volunteers over in numbers; this campaign is more important now than the Obama campaign in 2008, which saw lots of willing young Labourites lend a hand.
It’s time for Miliband to stop shouting from the sidelines, brush Cameron aside, and get on with the real business of social democratic politics in Europe.
In this period Miliband’s total “likeability”, according to the pollsters, was the same as Michael Howard’s in April 2008.
Over the period between October 2010 and February 2011 the proportion of the public who were dissatisfied with Ed almost doubled from 22% to 43%.
Furthermore, the polls picked up a lower “don’t know” percentage than is typical of an opposition leader. This means that many more people have an opinion on the leader of the opposition, today, and according to polls it has been negatively placed.
YouGov, for the Sunday Times, have today revealed another uncomfortable figure that shows Ed Miliband’s “well figure” of 26% equaling the lowest he’s seen.
The percentages for David Cameron have increased by 2% while Ed has dropped 4%. And yet, this month’s ComRes online poll for the Independent on Sunday and Sunday Mirror shows Labour to be leading the Tories by 4% – signalling no change for Labour, but a drop of 2% for the Tories.
The perception of Ed Miliband has changed very little over the year. While the Labour party tops polls, particularly now the cuts are starting to bite (despite the majority of the public, according to other polls, saying they agree with the Coalition’s economic policy – though whether they agree with this being frontloaded onto the frontline remains to be seen), Ed Miliband himself is not being trusted by the public.
More disagree today that Ed Miliband would be better protecting jobs than they did in April and January this year, and less agree today than they did in January and April.
On other points of note, most people agree that there is a class system today, while fewer see themselves as working class. Ipsos MORI made a damning statement looking at the Labour party vote in the last election saying a “working class” party, given the percentage of people who identify as such, and the percentage of those people who vote, is not feasible anymore. So perhaps the squeezed middle strategy was right, and so too the appeal against predatory capitalism?
Whatever your thoughts, it is not working for Ed, the figurehead of these moves.
Nothing other than concern can be said for these results. We cannot believe everything we read in polls, but they are the best indicator we have, and they are often very close to correct. We are where Gordon Brown was coming up to the election of 2010 a year later, even with a new leader, and a government doing unimaginable things without mandate. This is greatly worrying.
Chuka Umaana has waded into the Coalition on the Regional Growth Fund calling it a ‘fiasco’. He smells blood, and is asking the obvious (though not yet the correct) questions.
Nick Clegg, who chairs the RGF Minsterial Panel which decides who actually get the funds, clearly knows a toxic brand when he sees one, and has made no comment at all on it since Miliband went for the jugular at PMQs.
So Michael Heseltine, who was wheeled into BIS to chair the RGF Advisory Panel, has been wheeled out again to defend the fund.
Heseltine’s done his best:
People haven’t fully taken on board that when we announced a deal under the Regional Growth Fund in many cases the private sector or the partners put up the money and spend the money first. The government support comes at a later stage.
Mind you, that’s not what’s in the RGF bidding guidance:
RGF support will normally be phased in line with third party expenditure and/or job creation/safeguarding. (p.11).
Nor does the idea that partners will put up any money appear in the applications that Heseltine asked personally to be submitted by Northcliffe Media and Trinity Mirror, in which the £1m RGF grant is matched by only £175,000 from the applicants, most of this probably contribution-in-kind (p.9).
Perhaps Heseltine’s confusion on this score is linked to what the two 1m applications are actually about. They are not actually for projects that will deliver jobs, but are projects which will dispense £900,000 of the £1m in small grants to as yet unidentified small enterprises, who will need to find at least 50% math funding before they can get their hands on any cash.
In fact, look behind the scenes and there’s a lot of this money-shuffling going on, and the two media-led bids are small fry in comparison.
£30m is due to go the Community Development Finance Association (CDFA), which when matched with 30m from two banks, will then go out to the CDFA members, various Community Development Finance Initiatives, who then in turn will seek applications from social enterprises for loans from the £30m.
This is all good stuff in itself, but with the money passing through two tiers of organisation before it gets to those who might use it to create and maintain jobs, it hardly looks like the urgent action to create non-public sector jobs that the government has been going on about.
But in pride of place is the £25m grant to Capital for Enterprise Ltd (CfEL) towards its Business Angel Co-investment Fund.
CfEL, readers may note with interest, is a company 100% owned by BIS, so BIS is effectively making a grant to BIS.
This grant isn’t spent directly on job creation either. It goes into a pot that venture capital ‘business angel’ syndicates can bid into, matched with their own funds, so that they then have more money to invest in businesses approaching them through the various business angel networks.
These business angel syndicates, of course, usually invest their money in return for a share in the business, and the documentation makes clear BIS/CfEL fund ”will operate by investing alongside and on the same terms as Syndicates”.
Thus a company wholly owned by the government will start to own bits of businesses up and down the country, courtesy of the Regional Growth Fund. An odd idea for a Conservative government opposed to state meddling, you might think?
So why has Clegg’s panel has decided on such circuitous routes to job creation, when they could have chosen a whole range of investment and even spade ready projects which were held up by lack of cash. 9 out of 1o bids to the RGF were unsuccessful, after all.
The anwer lies with Clegg and his own short-term political needs.
Look at the list showing the successful round 1 applications and the jobs they are claiming to create/safeguard either directly or indirectly. It’s easy to work out that these two latter loan/investment projects make up around 35% of the total job figure (45,000 of 124,000 direct/indirect combined) but only take up around 12% of the total spend (£450m in round 1 of the fund).
Essentially, Clegg needed desperately to boost the jobs total so that he could announce a 100,000 job figure in April 2011, just before the local election (something I predicted with total accuracy in January 2011, with an explanation as to why).
The jobs from the other projects were almost certainly coming up short, because you simply can’t ’buy’ sustainable jobs for £4,500 each - they cost between £14,000 and £27,000 each, dependent on a variety of factors.
So Clegg and his colleagues, I suspect, simply decided to magic up the jobs their PR machine needed, by approving application that had the jobs numbers they needed on paper, irrespective of the fact that many of these jobs may never appear in reality, and certainly won’t appear quickly.
Clegg, and the Ministerial Panel around him (Cable and Pickles among them) have acted dishonestly over the Regional Growth Fund, and now that they’re being found out they’re leaving the old man Heseltine out to dry.
But perhaps it’s not all bad new for Heseltine. He saw a £1m grant dished out to the Western Morning News for its own grants project, which he had personally asked to be submitted.
Western morning News is owned by Northcliffe Media, in turn owned by the Daily Mail. Oddly, the editor-in-chief of the Western Morning News made no mention of job creation when he spoke of the award back in April 2011, preferring instead to focus on how the grant would help his paper’s market position:
Primarily it is to cement the Western Morning News within the community.
So that’s what the RGF is for? To bolster the position of the Tory-supporting press? Who’d have guessed?
Nick Clegg – how did that happen? A Review of The revival of British Liberalism: from Grimond to Clegg
It should go without saying that this book is relevant to the UK’s current political landscape. For my lifetime, the Liberal Democrats were at best a quiet protest party for the bleeding hearts in the South West of England, and at worst a grouping speaking to themselves, able to make promises nobody will ever ask them to substantiate upon (tuition fees being one case in point). Now the liberals are encountering their first direct input of the country since Churchill’s wartime coalition, dealing with the challenges that follow.
Currently, childcare support is only available if you work 16 hours or more, but the Government is removing the minimum hours rule so that all families receiving Universal Credit will be eligible for financial help. This means that families on low incomes will receive more support to keep them in work.
As now families will be able to recover childcare costs at 70 per cent – up to £175 for one child or £300 for two or more children per week. The money will be paid through Universal Credit from 2013 and will mean that around 80,000 more families with children will be able to work the hours they choose.
Let’s set aside quickly two more obvious matters already widely commented upon - first, that this support doesn’t start for another 18 months, and second, that this move does nothing for those working/wanting to work 16 hours or more per week, who suffered big cuts in April 2011 when 500,000 people, mostly women, lost an average £436 a year, and up to £1,300 a year”.
What other commenters don’t appear to have noticed is that for the most women who work or want to work for less than 16 hours per week, all of that childcare is already free, and has been for some time now.
Yes, that’s right. The government is offering to pay up to 70% of childcare costs on hours of childcare which, for most parents, are 100% free anyway.
This 100% free care comes under the longstanding Nursery Education Grant programme, under which all children 3 years and over get 15 hours per week free provision. The programme is also already being extended, plans, to provide the same free care for children 2 years and over.
So in fact the only group who will benefit properly under the new scheme are parents of 0-2 year old children. This would be fine, except that we already know that the number of parents seeking care for this younger age group is proportionately much smaller than for the 2-4 year age group. (For example, the most recent Lancashire Childcare Sufficiency Assessment (p.40) found only 4,344 childcare places for 0-2 year olds, compared with 24, 206 places for 2-4 year olds.)
The 100% free care does currently cover only 38 weeks of the year (effectively a 50 week year because pretty well all childcare ceases for two weeks over Christmas). It might be argued therefore that the new 70% support announced could help with holiday care costs, but surely if this had been the intention the government could simply have topped up funding specifically around holiday provision.
Similarly, there might be an argument that this move is in some way targeted at parents of school-age children so that they can work outside of school hours (for example, in a 8am to 11am job which means they need to use a breakfast club), but there would be much more effective ways of doing this (not least given the lack of breakfast clubs in most schools).
All in all, while there will be some benefit around the margins, it’s difficult to see this move by the government as anything other than a short-term panic measure, whether or not backed by some cunning plan to ‘unspend’ some of the £300 million once everything settles down.
DWP officials MUST surely understand that the government is largely announcing 70% support for a group already being 100% supported, although there may be some confusion caused by the fact that DWP implements the former, while the Department for Education is responsible for the Nursery Education Grant system.
Whatever the case, it does look a little like Labour’s initial reaction – that this is nothing more than a ‘smoke and mirrors’ announcement – has some justification, and there must be some suspicion about whether this £300 million will be effectively spent or later sucked into existing budgets.
And certainly, the Spectator’s view that the announcement “owes more to politics than policy” rings true, when the detail of the actual policy is examined in the context of existing arrangements.
Before the Liberal Democrats were kingmakers in the UK political landscape, they were no saints. They were, however, haunted by their aversion to Toryism. The only reason the social market policies of David Steel were not set about in manifesto was because internal critics felt the language looked a bit Thatcher-lite. The reason David Laws’ Singapore-style plans for the NHS were not taken up as policy was because it would give Labour a free ride to say LibDems were the party willing to sell hospitals in local elections – where the activists tended to be more to the left.
The Liberals have never been angels, but they have always been weak.
Though it’s possible that without them, Blair’s reforms for the public sector would never have happened. While the Tories were always geared towards favouring the market, the Liberals made their policies look like they were the ones in tune to the turning consensus that state regulation of market productivity was self-defeating.
But though there was universal fear of Blair among the political elite, now that the consensus is that his politics are finished, it has left a gaping hole in the soul of the Labour Party.
The Liberals have, as part of their inheritance, Liberalism. Whether they heed to that inheritance or not doesn’t matter, it still stirs their core audience. The Conservatives have conservatism as their inheritance, and they rarely heed to that, but that is almost beyond the point.
Labour have socialism, but are terribly embarrassed to admit so.
No amount of ideas will take away from the fact that Labour deny their own inheritance. And with this, the party jeopardises having any sort of ideal of which to aim. Like the Liberals and the Conservatives alike, Labour needs to be more than just a party of means, it needs to return to being a party of ends. Otherwise it will find itself in the same position as the Liberals did in the 70s, 80s and 90s, cautious not to announce what it really stands for on the grounds that it will look too assertive.
And as Owen Jones recently put it: “We need to talk about Socialism”.
The Liberals wanted to form a coalition government. Remember that. I’m talking of course about the Liberals in the 1981 SDP-Liberal Alliance under the leadership of David Steel. It was that year he told delegates “go back to your constituencies and prepare for government.” Then the Fawklands war happened, and the rest is history.
During Steel’s tenure, he was criticised by social democrats for legitimising Thatcher’s economic policies – ambiguous, as it was, whether he put too much emphasis on the market, and not enough on the social, in his “social market” policies.
As far as Steel was concerned, he was just being liberal. The Conservatives and Labour were the non-progressive forces leeching off vested interests, whether that was monopolistic big business, or militant trade unionism.
His version of social market economics posited that more people, families and communities should be the beneficiaries of a thriving market, as opposed to a select few up the top, and that surplus should be better distributed as part of an adherence to the basic precepts of welfare.
Today, all parties think like this. In fact, some go further still. When Mandelson told us he was comfortable with the super-rich, he was basically telling us that surpluses should stay locked in at the top, and that monopoly capital did not affect the chances of the rest of us.
In a sense, Steel dreamed up an economic policy which imagined free markets, when better regulated by the state to be less monopolistic, would benefit everybody. But this is not a free market. When free markets work properly, monopolies are a reality – there is no getting away from this. Just ask any supporter whether Microsoft contradicts capitalism.
I’m sure Steel had good intentions, but the type of good capitalism he wanted – which is accepted today across the mainstream political spectrum – cannot have it both ways. Either the market is allowed to control itself, in which case capital will be concentrated, or you try and control it in the pursuit of some kind of dream-world stakeholder society.
Save for the Randians (for whom the moral pursuit is self-interest), if your politics are based upon an ethics of the good society, then the prospect of the free market working as freely as possible will not appeal. It is for this reason that Steel and his modern day adherents are deluded and wrong – the market that is most free is not the one that creates the highest amount of inclusion in it.
Let’s start by being fair to Nick Clegg, and actually quoting what he said, rather than what the Dail Mail interprets him as saying.
Using its quotation marks for the purpose, the Daily Mail reports Clegg as having said:
‘nobody could have predicted’ the crisis now afflicting the hapless nations of the Eurozone.
In fact he didn’t say this. What he actually said was much more specific:
I don’t think anyone could have predicted at the time the euro was created that the rules which were supposed to be in place to ensure that everybody looked after their own financial affairs properly would be so spectacularly ignored and broken.
He then goes on with his carefully planned justification for the LibDems previous stance:
My own view remains that if the disciplines – and they were strict fiscal disciplines – on which the euro was originally launched had been respected and adhered to, the euro would not now be in the trouble that it was.
In so doing, Clegg cleverly/cynically focuses attention back on what people could or could not have predicted way back in 1997, when the Stability & Growth Pact was signed, and away from the fact that joining the euro was official LibDem policy until three years ago.
Here, though, is where for our support for Clegg stops.
Because this carefully worded claim – that LibDem policy was based on a perfectly reasonable, and at the time a totally unquestioned, assumption that everyone would abide by the terms of the Pact – is rubbish.
The Pact, which essentially sought to institutionalise a deficit limit of 3% of Gross Domestic Product (GDP) amongst all states participating in Economic and Monetary Union, was never anything other than a last minute compromise, finally reached in the early hours of 13th December 1996, in parallel sessions of the Ecofin Council and of the European Council.
This compromise made allowances for the breaching of the deficit rules in circumstances where recession had taken hold, such that
[while] a recession of less than 0.75% ‘as a rule’ does not qualify as exceptional, a recession of over two per cent automatically does [qualify as an exception].
If the recession is in between these two figures the Ecofin Council will determine whether or not the recession is exceptional. The result is a rule that can be overturned by an Ecofin blocking minority of at least 26 out of 87 weighted votes or covering at least six Member States if they refuse to label a budgetary deficit of over three per cent as ‘excessive’ (source).
This was effectively the thin end of the wedge, and with automatically tirggered sanctions ruled out in favour of political judgments over whether countries (including Germany in 2002), rule enforcement was alwas going to be difficult, from the very moment the Pact was agreed in 1996 (coming into force in 1997).
Certainly, doubts about the credibility of the PACT’s self-imposed rules were very evident by 2003, when the 13th House of Lords Select Committee on the European Union reported (para 132) reported
[T]he Stability and Growth Pact came under severe strain last year when the Council did not endorse the Commission’s recommendation to issue an early warning to Germany and Portugal. As explained above, this decision was widely interpreted as undermining the credibility of the Pact.
The Stability & Growth Pact was a key element in the entrenchment of neoliberal policies within the European Union in the 1990s, and in that respect it was a victory for Germany over France, whose initial position was much more in favour of a more holistic ‘gouvernement économique’ focused on growth and employment (the addition of the word ‘Growth’ to the Pact was little more than a sop to France, as there was nothing about it in the actual agreement).
What is important, here, though, is that even in Clegg’s own terms (the desirability of enforcing neoliberal norms upon unsuspecting populations), he is quite wrong to say that none of the ‘it’s OK if Germany breaks the rules’ stuff could have been anticipated. As I’ve shown, albeit in brief, the evidence was there from the mid-90′s cobbling together of the Pact onwards, and was staring Clegg and co in the face by the early 2000s.
But perhaps Clegg wasn’t a very assiduous MEP between 1999 and 2004, as he appears not to have noticed what was going on.
Communities Minister Eric Pickles has revealed that councils will be able to keep the growth in rates they raise from local businesses, a change from the current system which sees councils collect rates on behalf of central government, which then redistributes it to councils according to need.
But critics have pointed out that poorer areas will benefit the least, since they’re the ones having difficulties in attracting local business. Pickles has promised central government will pay a fee to councils as a safety net, in case business rates fall – but this will not suffice to cover costs in area improvements or bids to attract businesses.
For the most deprived areas these changes, set to occur in 2013, will make local growth even more difficult – but then these places aren’t Tory hot spots anyway, so was Pickles really going to go out of his way to appease them?
In order to give areas what Pickles calls a “direct growth incentive” he is taking away from “councils which rely on business rates redistribution” without a plan of action for how those areas can attract growth too.
But thriving areas are incentives in themselves, and now local governments will have to compete with each other to attract business, without any change being done to how they set rates – which will still be set centrally by the Valuation Office Agency. The upshot of this will see a wider rich/poor divide between areas at a time when many services are being cut.
It’s hard not to see this is a typical Tory ploy: a deprived area is no longer a beneficiary of a re-distributive business rate system, it becomes less attractive to businesses looking to set up/invest/maintain residence in an area, the area loses out on rates, it relies on the new system of basic tariffs, and cannot afford to spend money on improvements to attract business. The poor stay poor, the rich get rich.
What chance does a deprived area have? Even if they were given control of how they set business rates, in order to attract business they would be forced to offer low rates which will have detrimental effects on how much they can raise anyway.
This is really the wrong direction for the empowerment of local councils, but is unsurprising of a Tory mindset (and championed by Nick Clegg – the yellow Tory) that wants to remove redistribution of wealth from affluent areas to ensure poorer communities don’t fall through the net.