Monday, June 11, 2007
Pressure to succeed
Despite the revolution instigated by Margaret Thatcher in the 1980s, governments in the UK still quite rightly believe that it is their role to intervene in the economy whenever possible, to try to kick-start growth and create jobs. Such activity inevitably puts pressure on government to deliver. Two reports in the news today highlight the dangers and risks of such an approach.
Firstly, in the Western Mail a leaked report suggests that the former Conservative-controlled Welsh Office provided misleading figures to the European Commission in order to ensure that massive state backing for the ill-fated LG project at Newport could go ahead. The project was expected to create 6,100 jobs however, at its peak, LG provided 2,200 jobs before the cathode ray tube plant closed in 2003 and the monitor assembly plant closed in 2006.
The report alleges that the misleading figures have compromised the Assembly Government's ability to recover public money that was put into the project. An agreed settlement led to the Assembly Government and the WDA reclaiming £71m of the £131m paid to LG.
The second story relates to the Assembly Government's ground-breaking Communities First project. Last night BBC Wales told us that their research had revealed that over £6m of Communities First funds was returned to the Government unused over the last two years. There are of course many reasons why money may not spent in such a large programme, especially when it is dispersed across so many small projects, however two very relevant points have emerged from this issue.
The first of these is raised by Professor Dave Adamson. He said that a shortage of trained workers and relatively high turnover was to blame. The need to train up people to help run these projects was highlighted some years ago in an Assembly Committee report. I believe that it is perfectly legitimate to question whether the recommendations of that Committee report were implemented and if not what was the impact of that failure on the underspend.
The second point is raised by Leanne Wood. She points out that seven years into a 10-year programme, Communities First has failed to cut poverty. In fact a report published today confirms that Wales has the highest incidence of child poverty in the UK.
How Communities First is evaluated was also the subject of Committee reports. I have never been entirely satisfied that the mechanisms are in place to properly satisfy ourselves that the £136m we have invested so far is being spent effectively and is producing results. In fact all the evidence is that this money is making little difference.
I am not advocating the abandonment of Communities First, I still believe that it is our best chance of making a difference. However, we need to put the tools in place to ensure that the money is spent where it is needed and that it makes a real measurable difference. That is going to be the first challenge for the new Social Justice Minister.
Firstly, in the Western Mail a leaked report suggests that the former Conservative-controlled Welsh Office provided misleading figures to the European Commission in order to ensure that massive state backing for the ill-fated LG project at Newport could go ahead. The project was expected to create 6,100 jobs however, at its peak, LG provided 2,200 jobs before the cathode ray tube plant closed in 2003 and the monitor assembly plant closed in 2006.
The report alleges that the misleading figures have compromised the Assembly Government's ability to recover public money that was put into the project. An agreed settlement led to the Assembly Government and the WDA reclaiming £71m of the £131m paid to LG.
The second story relates to the Assembly Government's ground-breaking Communities First project. Last night BBC Wales told us that their research had revealed that over £6m of Communities First funds was returned to the Government unused over the last two years. There are of course many reasons why money may not spent in such a large programme, especially when it is dispersed across so many small projects, however two very relevant points have emerged from this issue.
The first of these is raised by Professor Dave Adamson. He said that a shortage of trained workers and relatively high turnover was to blame. The need to train up people to help run these projects was highlighted some years ago in an Assembly Committee report. I believe that it is perfectly legitimate to question whether the recommendations of that Committee report were implemented and if not what was the impact of that failure on the underspend.
The second point is raised by Leanne Wood. She points out that seven years into a 10-year programme, Communities First has failed to cut poverty. In fact a report published today confirms that Wales has the highest incidence of child poverty in the UK.
How Communities First is evaluated was also the subject of Committee reports. I have never been entirely satisfied that the mechanisms are in place to properly satisfy ourselves that the £136m we have invested so far is being spent effectively and is producing results. In fact all the evidence is that this money is making little difference.
I am not advocating the abandonment of Communities First, I still believe that it is our best chance of making a difference. However, we need to put the tools in place to ensure that the money is spent where it is needed and that it makes a real measurable difference. That is going to be the first challenge for the new Social Justice Minister.
