Business leaders have expressed their disappointment that only £60m of the government’s flagship Regional Growth Fund has been distributed to front-line projects so far.
MPs from the Public Accounts Committee (PAC) found that £364m of the £1.4bn pot has been withheld by intermediaries such as local authorities and banks through endowments. A further £57m has been paid to other intermediaries.
“It is disappointing that the scheme has only awarded £60m since its inception in June 2010,” said Katja Hall, CBI chief policy director. “It has the potential to act as a catalyst for much-needed jobs and growth.
“But we need to simplify the application process, which experience has shown is burdensome and deters companies from applying, so this needs to change.”
PAC’s report found that only 2,442 jobs have been created and 2,762 existing jobs safeguarded. Ministers hope the RGF will hit a target of 36,800 jobs over the lifetime of the projects supported.
Chuka Umunna, Labour’s shadow business secretary, said: “The committee has blasted ministers’ failures over delivery; value for money and the endless delays on getting the money out to winning bidders.
“What’s more, it seems like there is no end in sight to the bidders that have now been waiting well over a year for their cash.”
But business minister Michael Fallon hit back saying the RGF is “delivering at the pace that companies can expand and create new jobs”.
He added: “To rush companies into expanding before they are ready would be unsustainable and would put public money at risk.
“The PAC report is based on the hearing back in May and fails to recognise the significant progress that has been made over the last four months.”