Bidders stay away as fund for growth fails to impress

THE Government has been forced to defend its flagship £1.4bn Regional Growth Fund to help areas like Yorkshire after admitting receiving only four bids shortly before today's deadline.

Ministers expect a last-minute flood of applications for the first round of funding which is designed to create jobs and tackle the North-South divide.

But the low number submitted so far will fuel criticism of the fund which aims to boost economies at a time when regional development agencies are being abolished. Critics have questioned the limited amount of money available and the short period between the Government setting out criteria on which applications would be judged and the deadline to submit them.

Business leaders have expressed surprise that, despite being heavily promoted by the Government, only four bids had been received by Monday for a slice of 250m of cash which is available in the first bidding round.

Richard Kendall, policy director of Hull and Humber Chambers of Commerce, said: "This is the practically the only post of money around so we were expecting competition to be fierce."

The Regional Growth Fund, which will run for three years and is headed by former Cabinet Minister Lord Heseltine, was announced by Deputy Prime Minister Nick Clegg last year in response to fears that areas reliant on public sector jobs would be badly hit by cuts in public spending.

It is designed to provide funding for projects which can create jobs and grow economies outside London and the South East to close the economic gap between the capital and the rest of the country grew wider.

A handful of bids from Yorkshire are likely to be submitted by tonight. Metro and Wakefield Council are looking for 14.3m to replace Castleford's bus and rail stations with a modern transport interchange, while a 10m application is being made for a housing regeneration scheme in west Hull. Others were still being developed last night.

Business leaders in the region recently voiced concern, however, that the fund may be too focused on short-term job creation rather than projects looking to longer-term growth.

Hull City Council leader Carl Minns predicted a "deluge" of last-minute bids from around the country.

A spokeswoman for the Department of Business, Innovation and Skills, said: "It's typical in any competitive bidding process for applications to be received at the last minute, so we expect a large number of bids for the first round of funding to reach us in the final days of the bidding process.

"There has been considerable interest in the fund since it was launched. Lord Heseltine and Sir Ian Wrigglesworth have hosted a series of road shows across the country, where we have met with well over 1,000 individuals and businesses who have expressed interesting in applying."