Up to 22% of the £464m provided for England's doomed regional development agencies in the spending review may have to be spent on redundancies, business minister Mark Prisk has admitted.
In a Commons written question, Easington MP Grahame Morris asked what proportion of the sum to wind up the RDAs is expected to go on redundancy costs and to pay for cancelling operating contracts.
Mr Prisk responded that the £464m budgeted over four years is intended to cover salaries, redundancies, transition and closure costs and pension liabilities, but the preliminary estimate is that 22% of that - £102m - will be spent paying redundancy money.
"It is not, however, possible to estimate this figure with certainty because the number of staff who will be working on continuing functions (such as European Regional Development Fund, Rural Development Programme for England, UK Trade and Investment etc. has not been finalized and staff are also leaving on other bases such as through resignation," said Mr Prisk.
"The cost of cancelling or varying operating contracts is not yet known and will be subject both to negotiation with the parties concerned and securing the best value outcome for the taxpayer."
The South West Regional Development Agency recently published its transition and closure programme which says its ERDF and RDPE work are expected to return to Whitehall sometime this year or next. But DBIS has yet to tell it how the £900m in the spending review for ongoing contractual commitments will be allocated.
It says decisions are also awaited on RDA assets although SWRDA believes some of the most significant like its National Composites Centre will transfer to the Technology Strategy Board.
In December, chief executive Jane Henderson wrote to stakeholders saying that closure plans are well advanced.
She said it is no longer possible to approve new single programme investments and this year's money must be spent this year.
"We are in discussion with some project partners about de-committing from investments wherever this is practically possible," she said.
"In some cases, this could have a direct bearing on the viability of the project or its time frame. In all these discussions, we are obliged to seek the best value for money for the taxpayer while doing what we can to safeguard economic value for the regional and national economy. I sincerely hope, but cannot completely guarantee, that we will be able to manage things by agreement without unilaterally breaking contractual arrangements."
She said her Agency's capacity to provide help and advice would decline significantly from January onwards.
