Disappointment over delays in schemes to kick-start economy
Council chiefs have defended the time it is taking to launch a £40 million council-led scheme aimed at unlocking development and kick-starting the local economy.
An influential Commons spending watchdog says it is “highly disappointed” so few final approvals had been given and projects started under the Regional Growth Fund, which is supposed to boost economic growth and create jobs.
Members of the Public Accounts Committee (PAC) were particularly concerned at the amount of money ‘parked’ with intermediaries.
The MPs point out that after two years only £60 million of the earmarked £1.4 billion had actually been spent on frontline projects – just four per cent.
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As a result only a fraction of the expected jobs had been created.
One of the schemes to have received cash but yet to get up and running is headed by Bath and North East Somerset on behalf of the West of England Local Enterprise Partnership.
It was awarded a total of £39,831,000 six months ago for a so-called “Endowment Revolving Infrastructure Fund”.
It is understood this would provide upfront cash for schemes such as transport improvements, to clear the way for stalled construction projects.
This would then be reclaimed from developers and ‘recycled’ back into the finances pot for future investment.
Banes has defended the time taken to get the initiative off the ground arguing it is a large amount of public money that cannot be “signed off on a whim”, and that the money was received only six months ago.
The report by the PAC into the status of the 236 RGF awards showed the grant had been received by Banes, as intermediary, but was unspent.
As a result no progress had been to meeting the expected jobs target of almost 11,000.
Speaking with the publication of the report, chairman of the PAC Margaret Hodge said: “Given the dire state of the economy, it is nothing short of scandalous that so few projects funded by the Regional Growth Fund have actually got off the ground.
“Some two years into the programme, of the £1.4 billion allocated only £60 million had reached front-line projects.
“The rest of the £470 million spent so far had been parked in intermediary bodies, over which the departments have limited control.
“It is unclear what is being done to make sure that money is not wasted but spent on creating real jobs.”
Only 5,200 jobs could be claimed as having been created or safeguarded by projects with final offers in place against a target of 36,800.
She also questioned the value for money provided by the fund.
The PAC report itself said: “Given the importance and urgency of the programme the committee was highly disappointed to find that so few final approvals had been given and so few projects had actually started.”
A spokesman for Banes said: “The Local Enterprise Partnership was awarded this investment around six months ago.
“Since then, Bath & North East Somerset Council (on behalf of the LEP) has worked extremely hard to organise and start the process of allocating this funding to specific projects to unlock local economic growth that will create more jobs and greater prosperity for the west of England area.
“The process by which such a substantial amount of public money is allocated must be carefully planned and agreed upon – it cannot be signed-off on a whim. Six months is a reasonably quick turnaround to organise this process.
“An investment award panel led by a director LEP, also involving the four unitary authorities and the private sector, will be meeting very shortly to receive recommendations on where the £40 million should be directed. The delivery of the projects agreed is due to commence early 2013/14.”
Business Secretary Vince Cable has defended the RGF’s performance hailing it a “major success story”.