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16/05/2014

MPs condemn local economic growth funds

Words: Huw Morris
Money tussle

Barely 10 per cent of funds available for promoting economic growth locally in England have made it to projects, according to an influential group of MPs.

The Commons Public Accounts Committee has revealed that of £3.9 billion allocated to local economic growth not even £400 million had reached the frontline.
 
Under the regional growth fund, the largest of the schemes, the government will need to spend £1.4 billion this year, compared to the £1.2 billion spent over the previous three years, the MPs said. Some £1 billion of the remaining £3.5 billion allocated to initiatives is currently parked with intermediary bodies such as local authorities, local enterprise partnerships and banks.
 
One regional growth fund programme, run by Santander UK, has distributed only £2.3 million so far out of £53.5 million.
 
In their Promoting economic growth locally report, MPs called on the government to introduce binding milestones for distributing funds and move quickly to claw back money not being spent – or spent disproportionately on administration – and redistribute it to better performers.
 
The committee said progress in creating jobs is "falling well short" of the government’s initial expectations. The regional growth fund is expected to create 550,000 jobs throughout England between 2011 and the mid-2020s, but had  created or safeguarded only around 65,000 jobs at the point of the committee's inquiry. The government’s estimate of the cost per job created has risen from £30,400 in round one to £52,300 in round four – a 72 per cent increase.
 
The MPs branded the number of jobs created in enterprise zones and through the growing places fund as "underwhelming" - 4,649 jobs and 419 respectively.
 

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