Regional Growth Fund: Sticking-plasters aren’t enough
Yesterday the government announced a £1bn regional growth fund to offset the offset the impact of the swingeing spending cuts , but a quick glance at today’s papers suggests that the regional growth fund sticking plaster won’t do much to mitigate the impact of the hatchet-like cuts inflicted by the Budget.
Last night Adam blogged about the Guardian’s report that the Treasury has estimated that the budget will cost 1.3m jobs. As the TUC predicted in our budget submission, these job losses will not be restricted to the public sector – instead, up to 700,000 private sector jobs are expected to be lost by 2015 as a result of the government’s programme of swingeing cuts.
An article in today’s FT contradicts the Treasury’s rather rose-tinted estimate that these jobs losses will be offset by the private sector creating 2.5m new jobs over the same period. An FT survey of 12 top companies employing more than 375,000 people between them found that they had, ‘no plans to ramp up recruitment’. As Tim Leunig at the LSE succinctly puts it,
“If the government thinks the private sector is automatically going to step into the gap left by the public sector, it is sadly mistaken’
Against this backdrop the governments decision to replace RDA’s with a potential patchwork quilt of Local Economic Partnerships poses a real risk. Are the RDA’s perfect? – of course not. But an independent assessment has shown that they have had real economic benefits, and there is a danger that these gains may be lost as attention is focused on the practicalities of re-organising the RDA’s functions and new organisations take time to bed-in.