Regions fail to feel the benefit

Inefficiency of growth fund

IT WAS only last month that Nick Clegg was singing the praises of the Regional Growth Fund, insisting that this region was seeing major benefits and that the fund was ensuring that a sustainable, nationwide recovery.

The verdict of Parliament, however, tells a somewhat different story. For, while a large amount of money has been pouring into the fund, very little has actually reached businesses, according to the Commons Public Accounts Committee.

As a result, if it is to hit its spending targets, the fund must spend £1.4bn by the end of this financial year, a huge task considering that it has only managed to disperse £1.2bn over the previous three years.

The prospect therefore emerges of a crazed dash to get rid of cash without schemes being properly assessed. This is an alltoo-likely scenario, in fact, given the confusion that has enveloped the fund since its inception four years ago.

Indeed, perhaps the most damning aspect of today’s report is the fact that many of the problems were first identified in the MPs’ first report two years ago, including the fact that too little funding was actually reaching businesses with much of it parked with intermediaries such as banks and local authorities.

It is deeply worrying that such little progress has been made in tackling these logjams, particularly when these intermediaries are soaking up money themselves in hefty administration costs.

Considering that the growth fund is a central part of the complex web of initiatives set up to replace regional development agencies – themselves scrapped for waste and inefficiency – this verdict is particularly disheartening.

The coalition should be congratulated for helping Britain to return to growth. But there is a real danger that spreading the benefits around the regions is being seriously hampered by such poor management of the Regional Growth Fund.