More than three quarters of a government fund that was created in order to bolster the strength and spending power of local economies is yet to be utilised, according to the National Audit Office.
The Regional Growth Fund is comprised of over £2.5 billion worth of finance that is available to local economies across the UK, though it has emerged that under £500 million has actually been utilised for progression projects since its creation back in 2011.
The NAO identified that the price of creating new employment opportunities through the fund had actually risen in the past 3 years by 13%, but did optimistically forecast that it would begin to reach businesses local economies far quicker from this year on.
They did however highlight that whilst the number of jobs that have been incurred through the fund had over doubled to 44,000 in the past 2 years, that nevertheless a ësignificantí level of work needs to be undertaken in order to ensure that the finances are better managed moving forward in the future.
It is estimated that just £425 million of the £917 million distributed out via the fund last year is currently in possession of local economy groups, which is far below a meaningful value that will effectively contribute to the improvement of regional areas all across the country.
Success or failure?
Whilst the NAO did optimistically identify their belief that the management of the finances will improve over the course of the year, they nevertheless did highlight that just 19% of the total funds had reached their intended projects, which they argued exemplifies the ësignificant challengeí that the Department for Business, Innovation and Skills and local project managers are facing to improve the rate in which the money is being spent.
The intended purpose of the fund is to improve the level of employment opportunities available to people across the UK, particularly in the public sector which has struggled since the start of the global financial crisis.
And Business Minister Michael Fallon identified his belief that the fund is succeeding in its aims at present, pointing to the quantity of local projects that have been undertaken since its implementation back in 2011.
“Over £2.6bn of RGF investment has now been allocated to 400 local projects and programmes, which is unlocking nearly £15bn of private investment and delivering 550,000 jobs,” Mr Fallon said.
However, the Labour party have criticised the fund for failing to devise a system that transfers the funds at a quick and effective rate, pointing to the fact that over 33% of the local project managers bidding for funds from the scheme had since lost interest due to the excessively long waiting times to access the finance.
Shadow minister for small business, Toby Perkins, said: ìTo grow our way out of the cost-of living crisis we desperately need to see better-balanced and sustainable growth across the UK’s regions, but the Tory-led government’s flagship Regional Growth Fund has been plagued by chaos and delayî.
“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 backî.