NEARLY TWO THIRDS OF RGF REMAINS UNSPENT

A new report has found around 66% of the Regional Growth Fund remains unspent, according to a report by the National Audit Office (NAO).

The RGF was established in June 2010 to encourage private sector enterprise by providing support for projects with significant potential for economic growth; it is intended for businesses in an attempt to help kick-start regional economies, but only £492m, or 19%, of the £2.6bn allocated has reached project while a further £425m has been paid by the Government but is being held by intermediaries.

The NAO found the average cost of each net additional job increased substantially in the third and fourth rounds and a total of 22,100 jobs have been created or safeguarded since September 2012, bringing the total to 44,400 but the average cost of creating each job has by 13% since 2012 to £37,400.

The NAO stressed that the Government has a “significant challenge” to spend the money as quickly as planned.

But while Business minister Michael Fallon told the BBC the fund was working as over £2.6bn of RGF investment has been allocated to 400 local projects and programmes, which is unlocking nearly £15bn of private investment and delivering 550,000 jobs. Shadow minister for SMEs Toby Perkins disagreed:

“This report highlights ongoing concerns over bureaucracy and delays in money getting out of the door to the businesses which need it. The RGF was set up to boost private sector growth in deprived areas but instead we are seeing areas and regions held back.”

There was no regional breakdown of allocations although from the 10 largest awards Birmingham City Council was the recipient of the fund’s highest value programme at £70m,  Sheffield University was eighth with a £38m project and the Greater Manchester local enterprise partnership was 9^th receiving £35m.