Under Labour, the Department of Trade & Industry has spent £1.4bn with the intention of funding 300,000 jobs at a cost of £4,600 each.
But comptroller and auditor general, Sir John Bourn, said that while regional grants had resulted in the creation in a number of additional jobs in areas of high unemployment, there was still a ‘substantial difference between the number of jobs initially supported and the number which are truly extra’.
In its report on regional grants, the NAO also criticised the number of grants given to the manufacturing sector and said companies had lower total productivity before and after receiving the grants, and foreign-owned plants, which also received grants, were 10% less productive.
A review of how the DTI is using its resources to improve productivity, wealth and employment in deprived regions is to begin next month.
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