The regional growth fund (RGF) is helping to rebalance the economy by helping those areas and communities that are currently dependent on the public sector. The fund is unlocking private sector investment in the local economy, creating jobs and making Britain open for business.
The RGF is good value for money and delivers funding to parts of the country that need it most—approximately £6 of private sector leverage for every £1 of public money.
The RGF is delivering jobs and having a positive impact on businesses: work to finalise contracts for rounds 1 and 2 is nearly complete and preparations are on track to announce round 3 awards in the autumn.
Rounds 1 and 2
Progress is good on rounds 1 and 2 with over half the bidders (127) contracted and able to draw-down funding and a further 51 completing their due diligence reports. So far, agreed offers have unlocked almost 198,352 jobs.
There is now a firm and agreed position with nine in 10 bidders; they are signing up to agreed terms or withdrawing and allowing the reallocation of the fund or in cases such as Lotus, agreeing a delay.
The priority now is to agree a way forward with the remaining few, which is being done during the autumn.
Currently 149 projects and programmes have started, unlocking almost £4.8 billion of private investment into our economy. Several companies were content to start work before receiving any funds; agreeing terms has given them the confidence to get going and start work.
The number of withdrawn projects and programmes has increased to 24 (10%). For a fund of this size this number is fairly low: withdrawals also point to the robustness of the process—something the NAG has been positive about. See annex A for the full list.
The reasons for withdrawals vary from global market conditions; realisation from their own due diligence that the project could not be supported; to changes in senior management requiring a new strategy.
All RGF projects and programmes are being monitored; this will continue for years to come, in order to understand the impact of the RGF and continue to protect taxpayers’ interests. Monitoring will include an annual review of progress that will be reported to Parliament at the end of each financial year, beginning in the spring of 2013.
The round 3 contracting process will be quicker and lessons learned from the previous rounds will be implemented. The contracting process should take no longer than six months to complete from when Ministers allocate support for the bid to the signing of final offer letters.
Of the 414 bids received in round 3, 132 have been declined, four withdrew and 278 were short-listed. All bidders were informed of the outcome of the initial appraisal stage on 14 August.
Assessment of the 278 short-listed bids continues and is on track for final announcements this autumn. Lord Heseltine’s panel will meet this month to agree recommendations, and Ministers will meet in October to make final decisions.
Annex A—Withdrawn Projects from Rounds 1 and 2
Ames Goldsmith UK Ltd
Caparo Precision Strip
Cleveland Potash Ltd
CT7—Aggregate Industries Ltd
CT8—W.D. Irwin & Sons
Diodes Zetex Semiconductors Ltd
Federal-Mogul Friction Product
Heerema Hartlepool Ltd
Nissan UK P3
Pilkington United Kingdom Ltd
Shepherd Offshore Ltd
St Modwen Properties Plc
T & N Plastics Ltd
Thales Properties Ltd (Leicester)
Vestas Technology UK Ltd
Zegen (Wilton) Ltd