On the government picking winners

However, the announcements are set to be over-shadowed by stinging criticism from the Public Accounts select committee of the Coalition’s existing scheme, the Regional Growth Fund. According to the committee, the fund has allocated just £60m of a possible £1.4bn to help boost British companies.

What if there aren\’t any winners to pick?

Or perhaps government can\’t recognise a winner while picking?

2 thoughts on “On the government picking winners”

  1. Or government is so bound up by bureaucratic process that it’s incapable of making a decision quickly enough to be of any use?

  2. The problem has apparently been that the civli servants involved weren’t very confident about doing the necessary due diligence.

    There is a related problem which also beset the predecessor funds administered by BIS/RDAs. That is that in order for support not to be an illegal subsidy it has to be fitted to the terms of a number of European Commission Block Exemption Regulations. Largely these require assessment to be driven by non-business decisions. It was incredibly hard to get support for projects which had clear, strong and reliable business plans demonstrating a path to profit for the recipient – supporting such projects would basically involve the State handing profits to businesses. To get support, such projects had to demonstrate “value add” in terms of job creation for disadvantaged groups (long term unemployed, women, disabled) and to be sited in relatively disadvantaged areas, or other “good” aims like subsidising businesses to go beyond current environmental standards.

    However, once you stick that baggage on, you make the funding unattractive to the businesses which are most likely to deliver actual long term growth without the need for ongoing support. Making them focus on all the broader social and regional value rather than the perhaps relatively small amount of help they need to get on without that social engineering ends up being counter-productive – their managers have to produce a lot of weaselly words about stuff they really don’t care about in order to get through the due diligence hoops. On the other hand, complete lame ducks which are proposed by people who are good at sucking on the public teat and pushing the right buttons on “value add” got through. Experienced officials actually hated these projects because they could see through them, but they didn’t have grounds to kill them off and had an incentive to push them through just to demonstrate they were doing something.

    I suspect that BIS may well have designed its systems to get rid of the pipeline of dross, but not been able to find a way to streamline the assessment of good projects and reduce the amount of nonsense that their proposers needed to spout to get over the EU regulations.

Leave a Reply

Your email address will not be published. Required fields are marked *