Fund still too slow to support regional businesses

A report by the independent National Audit Office (NAO) has found less than £500m of the £3.2bn regional growth fund has actually been handed out to firms since its launch in 2011.

Companies looking to expand can apply to the fund for support, but are required to make clear commitments about the number of jobs they will create. The fund was heralded by Ministers as a key plank of their economic policy for the regions, but has been beset by delays since its launch, with many firms dropping out without receiving any money.

The NAO study said the fund is now operating more effectively but warned there was still a “significant” amount of money to be allocated. Around £492m has now reached projects – but most of the fund remains unspent, with a further £425m still held by intermediaries rather than having been passed on to firms.

The Government welcomed the report’s findings that the administration of the fund has improved.

Business Minister Michael Fallon said: “The NAO report rightly recognises the steps we’ve taken to strengthen the fund by improving its governance and getting money into the hands of businesses more quickly.”

But Labour pointed to the large number of businesses – including Forgemasters in Sheffield – which were allocated money, but eventually dropped out after waiting years for the funds to materialise.

Toby Perkins, the MP for Chesterfield and Labour’s Shadow Minister for Small Business, said: “We desperately need to see better-balanced and sustainable growth across the UK’s regions – but the Government’s flagship growth fund has been plagued by chaos and delay.

“A potentially valuable contributor to re-balancing the economy is being undermined by Ministers’ failure, meaning more than a third of winning bidders under the scheme’s first round have now pulled out entirely. Others have been left waiting almost two years to receive their money.

“This report highlights ongoing concerns over bureaucracy and delays in money getting out of the door to the businesses which need it.”