THE redundancy bill for axing regional development agencies will top £100m, a senior Minister has admitted.
Tory Business Minister Mark Prisk said the cost had been estimated at around £102m, but added it was impossible to say what the total amount would be – along with the bill for axing contracts entered into by regional development agencies (RDAs).
He also admitted RDA experts who have helped drive the regional economy will not move to local enterprise partnerships (LEPs) which the coalition insists will do a better job of boosting growth by bringing together local authorities and business leaders.
The news comes after The Journal revealed RDA assets worth up to £500m will begin to be sold in April and that the agencies could close this year rather than next as previously planned by the Government.
Easington MP Grahame Morris, who forced the admission from the Government after raising his concerns in Parliament, said: “It is now becoming clear that the abolition of One North East and regional development agencies across England will not only adversely affect our ability to attract new investment and jobs to the North East, but it will cost the Government over £100m in redundancy payments alone.”
He added: “There is no coherent policy from the Tory-led coalition to take advantage of the wealth of knowledge and experience of the 3,000 RDA staff.
“Local enterprise partnerships will have no guarantee of funding and are not expected to recruit outgoing staff from the RDAs.”
Berwick MP Sir Alan Beith said: “There are some people who will be leaving jobs in the RDAs who could be valuable to the LEPs.
“But it must be for the new business-led organisations to decide what kind of staffing they will require because they clearly don’t intend to or can spend huge amounts of money on staff.”
The Liberal Democrat MP added the LEPs were intended to be slim, low-cost bodies.
In a series of written Parliamentary answers, Tory Business Minister Mark Prisk said: “It is not expected that staff will transfer from regional development agencies to local enterprise partnerships as the LEPs are not necessarily expected to continue former RDA functions.”
On redundancy costs, he said: “The spending review settlement for RDAs provides £464m over four years, covering various salaries, redundancies, transition/closure costs and pension liabilities.
“Of this, the preliminary estimate is that up to 22% may be required to cover redundancy costs.”
But he warned it was not possible to estimate this figure with “certainty” because the number of staff who will be working on continuing programme, such as the European Regional Development Fund, had not been finalised. Staff were also leaving, for example through resignation, said Mr Prisk.