Clegg's £1.4bn fund to stimulate the economy yet to spend a single penny

A damning report by MPs claims that the 'dysfunctional' Civil Service is incapable of delivering the Government's reform agenda

(PA)

The Government has yet to allocate any money from a high profile billion-pound fund aimed at stimulating parts of the economy affected by public sector spending cuts.

Despite being launched with great fanfare by the Deputy Prime Minister, Nick Clegg, shortly after the General Election last year, not a single penny of the Regional Growth Fund has been spent. It comes as a highly critical report by MPs claims that there is a "serious dysfunctionality" in the Civil Service which means it is incapable of delivering the Government's reform agenda.

The Public Administration Committee warns that the Government must "formulate a coherent programme for change across Whitehall" to give much more power to the centre to intervene when departments are not performing effectively.

The Regional Growth Fund was aimed at stimulating the economy in "areas and communities at risk of being particularly affected by public spending cuts" and was trumpeted as a key achievement by the Liberal Democrats to offset the effects of Government cuts.

When the £1.4bn fund was first announced on 29 June 2010, Nick Clegg, Vince Cable and Communities Secretary Eric Pickles were all keen to be associated with it, Mr Clegg saying: "This fund can make a real difference to companies during difficult times."

Mr Pickles stressed the urgency of getting the fund underway, saying he did not want to "strangle business with red tape" and "urgent action is needed to rebuild and rebalance local economies so that new businesses and economic opportunities spread across the country". But a Freedom of Information request made by the website Liberal Conspiracy revealed the slow progress made so far. It asked for details of all bids approved for funding under the scheme to date.

In response, Philippa Lloyd, Director of Economic Development at the Department of Business replied: "The successful bids are currently undergoing due diligence (apart from one which has completed the due diligence and has been provided with a final offer letter) before a final offer of funds can be made."

The Shadow Business Secretary, John Denham, accused the Government of dragging its feet. "Nick Clegg and Vince Cable have spent all week talking tough about ensuring investment is not delayed, but this just shows how empty their words are," he said.