The latest report from the National Audit Office (NAO) into the running of the RGF revealed not only the problem in getting the money out the door – just £492m of the £2.6bn allocated in the first four rounds of the RGF has actually been paid out to businesses to invest – but also the fact that the average cost per job created has risen steadily throughout the RGF’s existence, from £30,400 in round one to £52,300 in round four.

Sadly these numbers are across the whole RGF and not for print, which has largely used the RGF to support asset-based investments, for which the fundamental criteria were that you could only apply for up to 20% of the total investment and you would have to create or safeguard one full-time job for every £25,000 of grant. This number, which has since fallen to one job for each £15,000 of grant, is due to come down to one job per £10,000. This has made the benefit increasingly marginal and led some printers, such as Kendal-based MTP Media, to walk away from the process.

MTP Media owner Alistair Sanderson cited two main factors that led him to ditch his application for an RGF grant to support a £250,000 press investment. First and foremost of these was the requirement to create one job for every £15,000 of grant. Given that these jobs have to last for at least two years, he felt that this would leave the business worse off in the second year than it would have been without the grant. The second problem was time.

“You had to submit something by a certain point then wait for six weeks for them to come back with any amends. Then it went away for another six weeks before they would eventually say if you could have it,” says Sanderson. “That isn’t something you can plan around if you want to bring in a piece of kit to improve your business and you’re having to wait three months for somebody to say yes or no. I rang up the bank the other day about HP for a press and they told me within five minutes. The RGF doesn’t work on a commercial wavelength.”

High demand

If print already has one of the lowest grant money/job ratios, then why is it being tightened even more? The reason lies in the fact that the asset-based lending schemes backed by RGF money are in the highest demand. Take RBS, which applied for £70m in the first round and quickly distributed £69.8m of that to businesses. So while the RGF as a whole may have a backlog of money to get rid of, the asset-based programmes are not the problem.

All of which means that printers may find the case for using the RGF increasingly marginal, particularly where they would not be looking to create additional roles as a matter of course. However, a crucial point that should not be overlooked when weighing up whether or not to apply for or accept an RGF grant is that while you will be tied to the job creation requirement, there is nothing to say what those jobs have to be.

“You have to create a job for a period of two years, yes, but the question is at what level of competency you create that job,” says CS Labels managing director Simon Smith. “It has to be a full-time job and you can’t just create a job cleaning the floors, but if you’re buying a digital press and you have one operator, quite often you’ll have to create another three to four jobs behind the scenes.”

CS Labels is a successful RGF beneficiary, having received funding for three separate investments, including 35% of the cost of a Xeikon 3500, which Smith says was a very short-lived increase in the 20% limit at a time when the government was concerned about the uptake of the scheme.

Understandably, Smith is an advocate of the RGF and while he accepts that the business case is becoming more marginal, he still believes it’s worth printers’ while. “Each scheme they’ve brought out has become less and less generous but it’s still worth doing if you’ve got a major capex planned,” he says. “We’ve actually ended up taking on more new staff than we had to under the terms of the RGF grant and while we would have been able to make the same investments without it, it’s enabled us to make those investments quicker.”

The fact is that there is plenty of RGF money out there and there will continue to be until at least the next general election, after which it will be up to whoever is in government whether or not they want to continue with the scheme. 

For Sanderson, the RGF isn’t worth the effort. “I think when they come to these things they make them so people can’t rip them off,” he says. “But it also means that people who genuinely want to apply for them just don’t bother.”

The founding aim of the RGF was to safeguard existing jobs as much as it was to create new ones. This enabled the likes of Print Leeds to secure a £500,000 investment based on protecting 20 jobs – a far more realistic goal than creating 20 new ones.

While the official word from the BIS is that jobs safeguarded are still given the same weight as jobs created, anecdotal evidence suggests that this may not be the case for much longer. If the goalposts – already narrowing in terms of the level of grant per job – continue to be moved inwards then, for print at least, the RGF will cease to be a viable option.

Opinion: Refinement of the funding process makes it effective

Robert McClements, chief executive, CDi PrintYorkshire

It is important to take into account regional and industry sector variations within the overall performance of the Regional Growth Fund. There have also been a variety of routes for applications, which will have different outcomes.

The BPIF has promoted the RGF and has found most success with SMEs where the 20% grant is eligible. In the North East there is an additional focus through CDi PrintYorkshire, working with the Leeds City Region – which was awarded RGF monies from the BIS to create a local business growth programme – to identify potential eligible companies and encourage them to make applications. This allows decisions to be made locally and, depending on the level of funding, the decision period can be as little as a few weeks.

The key to this success is informed intermediaries like us finding suitable candidates and engaging with the decision-makers who are otherwise occupied running their businesses. It’s that refinement of the process that is making it more effective. Suffice it to say we have found a job to be done and receptive companies that would not have made applications without our encouragement. 

The result is that in the creative and digital industries sector, where print continues to represent the majority of capital investment, that jobs created as a result of RGF support are significantly lower than the National Audit Office data suggest. The sector has a target of £10,000 per job created and is achieving successes at that level.

A lot of the RGF investments in print have been to fund a piece of equipment and the mindset has been that the jobs have to be operators on that machine. We’ve been looking at it in a more rounded way and it may be that the jobs are in sales, in support or in back office – it’s about the impact that investment has on the business as a whole, not just the number of people it takes to run the machine.

Reader reaction: The Regional Growth Fund – what’s your experience?

Michael Rawcliffe, managing director, PNG Media

“We received a grant of £9,500 towards our £38,000 Konica Minolta bizhub press through the Fuse Fund, which is a start-up fund run by Regenerate Pennine Lancashire. The investment was key to launching the business although we would have made it anyway without the grant. The process was more straightforward than I’d anticipated and it only took about three weeks for the money to arrive. The only requirement is that we create two part-time roles within 12 months. One of those will be admin; we haven’t decided on the second.”

Simon Smith, managing director, CS Labels

“We’ve actually had three grants in all. The first was 35% of the cost of our Xeikon 3500, then we applied again and got 20% towards our GM label converter and we have just taken delivery of our Xeikon ICE press, which we also got 20% funding for. In all three instances we have had to create one full-time role for each £25,000 of funding, although anyone looking at the RGF now will potentially only get £15,000 per job because the requirements have changed and become tighter with each round of funding.”

Rod Fisher, managing director, Print Leeds

We secured a £500,000 grant towards a new B1 Heidelberg, which was the maximum 20% we were eligible for, but we were told we just had to make sure we could safeguard 20 jobs and bring in two new ones. If we’d had to create 20 new jobs I don’t think we’d have gone for a new machine. It certainly would have put me off. I think the onus should be on safeguarding rather than creating, particularly in print. I must get five new CVs a week from ex-printers looking for work.