The process by which companies apply for grants from the regional growth fund is not desperately transparent. As I wrote on this blog, we don’t know the details or the sums awarded to over a hundred companies yesterday.
And questions are already being raised about how money was allocated to Sheffield Forgemasters (near Nick Clegg’s constituency), JCB (run by a Tory donor) and a company part-owned by Jon Moulton.
What we don’t know in detail is the arguments being put forward by councils and companies which have clinched the final decisions.
Sunny Hundal, founder of the Liberal Conspiracy website, has sent out a bundle of FOI requests to get hold of some of this correspondence. Out of 50 applicants, however, only six have provided the information.
What he received is interesting as it suggests a large degree of arm-twisting by some companies.
For example CQME, a Chinese technology company, has suggested it could make its British subsidiary, Holroyd Precision, the base for its European headquarters.
But if the Rochdale company did not get a £2.8m grant from the RGF, it wrote, this could damage its expansion in this country.
“Without RGF support, the project will not go ahead in the UK as it leaves us with a shortfall of £2.82 million having taken account of a £17.625 million contribution from CQME and a £3.055 million comtribution from Holroyd Precision,” it said.
“Without RGF support, it is a certainty that CQME will either move to Holland or Germany as an alternative or take the slower route in transferring the technology into China, with resultant slow loss of employment in the UK….
“The consequences are potentially dreadful. Without facility development, Holroyd will stagnate relative to its competitors, and a slow transfer of operations will occur to eother more receiptive countries in terms of inward investment, job creation or to lower manufacturing cost areas. Over time the UK company, currently employing 189 workers, could close, with the loss of all those jobs…”
A second company, Bridon International, said it was looking to set up a new operations in Newcastle – but could instead go ahead in Gelsenkirchen, Germany. Bridon, which makes wire and rope, bid for £2.2m from the RGF towards a £23m factory. It says the money would safeguard 150 jobs and create 39 new ones:
“The final decision regarding the location of the proposed facility has not yet been taken and will be significantly influenced by the availability of grant support from the UK Government…”
“If the project proceeds in Gelsenkirchen not only would there be no private sector investment in the UK and no UK job creation but the 150 jobs at the Willington Quay site would also be lost.”
Gordon Marsden, a Labour MP, tells me:
“The whole process of decision-making on this has been very opaque and needs to be far more transparent.”
Jim Pickard
Kiran Stacey