NAO Says Regional Jobs Fund Drains Resources

Friday, May 11, 2012 Print Email

The National Audit Office (NAO) has slammed a government job creation scheme after it revealed that it cost taxpayers up to £200,000 per job.

The £1.4bn Regional Jobs Fund was created to help businesses create jobs in the private sector in areas of the country with high levels of public sector employment. But the National Audit Office (NAO) questioned its value for money.

The government spending watchdog examined the first £1.4bn awarded from the fund and found it could result in some 41,000 more full-time-equivalent private sector jobs in the economy than without the Fund. But it could have achieved more, its report said.

The NAO said the Fund had not optimised value for money because ‘a significant proportion of the £1.4bn was allocated to projects that offer relatively few jobs for the money invested’. The expected cost per job varies hugely between projects, from under £4,000 per job to over £200,000 per job.

Amyas Morse, head of the NAO, said: ‘Some of the funding was allocated to projects that offered relatively few jobs for the money invested. To achieve better value for money from the further £1bn now available, the government should develop more challenging targets for the number of jobs projects should generate relative to their cost.’

The report concludes that applying tighter controls over the value offered by individual bids and then allocating funding across more bidding rounds could have created thousands more jobs from the same resources.

‘Rigorous evaluation will be required to quantify precisely the Fund's overall employment impact’, it adds. More than two thirds (28,000) of the 41,000 additional jobs are expected to be delivered indirectly, through knock-on effects in companies' supply chains or the wider economy.

The report authors said it had taken longer than expected to turn conditional offers of grants for projects into final offers, resulting in only around a third having so far received final offers of funding.

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