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RDA redundancies to cost £103m or more

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The cost of redundancies at England’s soon-to-be-abolished regional development agencies could be as high as £103m, business minister Mark Prisk has said.

In response to a parliamentary question, Mr Prisk, right, said the “preliminary estimate” of the cost of redundancies within the agencies, which are set to be scrapped by April 2012, would be around 22% of the £464m made available to the RDAs over the next four years to cover the costs of salaries, transition and closure costs and redundancies. That equates to around £103m.

But Mr Prisk said it was not yet possible to estimate the figure “with certainty”, as the number of staff transferring from the agencies’ European Regional Development Fund teams to the Department for Communities & Local Government had not yet been finalised, while other staff were also leaving for other reasons, such as resignation.

In a separate answer, Mr Prisk added that it was “not expected that [RDA] staff will transfer from RDAs to local enterprise partnerships as LEPs are not necessarily expected to continue former RDA functions.”

As first revealed in LGC, the total cost of scrapping the RDAs could rise to well over £1.5bn - possibly as high as £2.5bn - when all the agencies liabilities are taken into account - more than the total budget of the agencies in 2010-11.

In October, the government announced a nearly £1.4bn package to meet the cost of scrapping the agencies, with the Department for Business Innovation & Skills contributing £435m over the next four years and the Department for Communities & Local Government contributing £923m.

But Mr Prisk admitted the government did not yet know the true figure for scrapping the agencies as the “cost of cancelling or varying operating contracts” was not yet known and “will be subject both to negotiation with the parties concerned and securing the best value outcome for the taxpayer”.

 

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