Evaluation lessons - Investment in small firms pays off

Regeneration & Renewal, 9 May 2008

Project: Regional Selective Assistance (RSA) in Scotland.

Period of evaluation: 2000-2004.

Evaluating organisation: A team of academics from Kingston University, Aston University and the University of Warwick.

Evaluation commissioned by: The Scottish Government.

Aims and outline of project: RSA was a prominent feature of regional policy in Britain from 1972 to 2004 and is regarded as having made an important contribution to attempts to address inequalities in regional labour markets. While superseded by the Selective Finance for Investment in England programme south of the border, the RSA continues to provide funding to companies that want to undertake projects explicitly designed to create or safeguard jobs in Scotland.

KEY LESSONS

Olivia Clymer writes: This evaluation of the RSA programme in Scotland makes it clear that focusing assistance on young Scottish-owned businesses with international connections can produce tangible results for regional and national economies.

In total, some 71 per cent of assisted companies were Scottish. Interestingly, when measured on the amount of funding individual companies received from the RSA programme, Scottish-owned companies generally received much lower grants than their foreign counterparts. However, this reflects the fact that the majority of Scottish companies that received funding were small-to medium-sized enterprises that required funding to carry out research and development projects. It should also be pointed out that Scottish-owned companies received a much higher proportion of their overall project costs.

The programme has proved a worthwhile investment. Overall, the initiative provided £126.6 million between 2000 and 2004 and had generated between 2,944 and 7,615 additional jobs by 2006, depending on how the causal link between funding and employment is defined. The evaluation reports that, for this result to constitute value for money, the average duration of these jobs would have to be between six months and two years. Given that the RSA programme requires the companies it assists to sustain newly created jobs for at least 18 months, and that the average job tenure in the UK is 5.4 years, the report notes that the RSA is overwhelmingly likely to have offered value for money in Scotland.

When such statistics are considered alongside the fact that the RSA programme overwhelmingly supported small, domestically owned companies, it is clear that the RSA continues to provide a valuable contribution to the development of the Scottish economy.

- Olivia Clymer is senior regeneration manager at the Black Country Consortium.

- Evaluation of Regional Selective Assistance in Scotland is available via www.regen.net/doc

- Contact us. Do you know of an evaluation report with important lessons for other regeneration professionals? If so, contact Adam Branson on adam.branson@haymarket.com.