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Coalition’s policies on boosting regional growth ‘failing’ – PAC

Vast amounts of money earmarked for promoting economic growth across the country remains unspent, with little money actually reaching businesses, a new Public Accounts Committee (PAC) report has claimed. 

After the abolition of the Regional Development Agencies, the DCLG and the Department for Business, Innovation and Skills (the Departments) set up a range of new initiatives for promoting local economic growth, including Local Enterprise Partnerships, the Regional Growth Fund, Enterprise Zones, the Growing Places Fund and City Deals. 

However, some £1bn of the remaining £3.9bn allocated to initiatives is currently parked with intermediary bodies such as local authorities, Local Enterprise Partnerships and banks – and the rest with the Departments, MPs stated. 

Margaret Hodge, chair of the PAC, said: “Despite the large sums available for promoting economic growth locally, little money has actually reached businesses. Of the £3.9bn that has been allocated in total to these initiatives, only nearly £400m had made it to local projects by the end of 2012-13. 

“The Departments have not spent the money available as quickly as expected and they now face a challenge in spending the funds available by the end of 2014-15; for example, under the Regional Growth Fund, the largest of the schemes, the Departments now plan to spend £1.4bn in 2014-15, compared to the £1.2bn spent in the first three years.” 

Margaret Hodge c. Dominic Lipinski and PA Wire

In addition, MPs stated that the results claimed for jobs created in Enterprise Zones (4,649) and through the Growing Places Fund (419) were particularly “underwhelming”. Originally, the Regional Growth Fund was expected to create 550,000 jobs throughout England between 2011 and the mid-2020s. 

The PAC has recommended that the Departments should do more to ensure that beneficiaries are ready to receive the money and deliver the extra jobs in the timescales envisaged. They should also develop an early warning system to identify if local projects are not sufficiently developed to spend the money as planned and provide support or reallocate funds as necessary. 

The Departments should 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. 

But local growth minister Kris Hopkins said: “These are old figures. Money is getting to local projects and making a real difference on the ground. The coalition government’s long-term economic plan has got Britain building again and kick started local infrastructure, created jobs, and stimulated growth. 

“For instance, the Regional Growth Fund is working – over £1.2bn has been paid to projects and companies across England – helping businesses create thousands of jobs up and down the country. We’ve sped up the process - companies get the money when they need it and after all the necessary checks have been carried out. Anything else would be irresponsible and a waste of taxpayers’ money.” 

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