The Government’s “complicated and bureaucratic” scheme to boost growth in deprived areas will be the focus of a major pre-election inquiry by Parliament’s powerful Business Select Committee.
MPs are concerned that the £3.2bn Regional Growth Fund (RGF), devised in 2010 by the former deputy prime minister Lord Heseltine, is not being spent.
The RGF offers grants to programmes and projects that also raise private- sector investment, including pharmaceutical research and textiles manufacturing. This is supposed to help regions that were previously dependent on state-backed jobs to make the transition to a more private sector-backed local economy.
A National Audit Office report in February showed that of the £2.6bn allocated to projects by that time, only £492m had reached projects. The cost of creating each new job was £37,400, up 13 per cent on when the RGF was formally launched two years ago.
“The problem seems to be that the application has become too complicated and bureaucratic,” said a source close to the committee. “We need to highlight what’s working and what’s not.”
News of the inquiry emerges at an embarrassing time for the Coalition, because bids for the sixth round of funding, worth more than £200m, must be submitted by midday tomorrow.
The RGF will not be the only Coalition scheme to feature in an inquiry that is likely to take place over several hearings. The chairman, Labour’s Adrian Bailey, said: “The committee is looking at a range of government support schemes for industry – the performances of the Regional Growth Fund and the Green Investment Bank. We will also be looking at UK Trade & Investment and the Transatlantic Trade and Investment Partnership.”
The £3.8bn Green Investment Bank, which backs environmentally friendly commercial projects, has been criticised for not having any borrowing powers.Reuse content