The National Audit Office wants the Regional Growth Fund to be spent more quickly to create jobs. It also wants a tighter grip on spending.
The government established the Regional Growth Fund in 2010 to encourage private-sector enterprise by providing support for projects with the significant potential for economic growth and to support those areas and communities that currently depend on the public sector. The Department for Communities and Local Government and the Department for Business, Innovation & Skills are responsible for the Fund.
The NAO report highlights the challenge to speed up spending that is facing the departments. Almost two thirds of the budget from the first four bidding rounds has not yet been spent. Of the money that has been spent only half has actually reached the projects.
This spending backlog increases the severity of the task for 2014-15 where the departments need to spend a budget of £1.4 billion.
There is also concern about the rising cost of job creation. The average cost of each net additional job at the point of selection increased substantially in the third and fourth bidding rounds. This brought the average cost from £33,000 in rounds one and two to £37,400 now, an increase of 13 per cent.
The number of jobs created or safeguarded has increased by 22,100 since September 2012, bringing the total to 44,400. However, just under half of the jobs to date were created or safeguarded by only five schemes and the other half were delivered by the remaining 291 operational schemes in rounds one to three.
The NAO recommends that more is done to reduce the risk that bidders with poor past performance do not receive further funding.