NAO: Whitehall taking too long to distribute Regional Growth Fund

24 Feb 14
Securing value for money from the government’s Regional Growth Fund hinges on Whitehall improving the examination of bids for public funds, the National Audit Office said today

By Richard Johnstone | 25 February 2014

Securing value for money from the government’s Regional Growth Fund hinges on Whitehall improving the examination of bids for public funds, the National Audit Office said today.

In a progress report on the programme – established in June 2010 to provide government support to private sector projects that could make a significant contribution to economic growth – auditors said governance had improved since its last report in May 2012. This report had been followed by an examination by the Public Accounts Committee, which found ‘scandalous' delays in the distribution of funding from the programme, which has completed four rounds.

In today’s update, the NAO found that both the Department for Communities and Local Government and the Department for Business, Innovation and Skills had taken on more staff to improve the assessments of bids. As well as improving the understanding of the proposals, the departments had managed to speed up the process of making final offers to bidders.

However, the two ministries face a significant challenge to agree funding deals within the scheme’s six-month target in 2014/15, when the budget for the fund is £1.4bn, the report concluded.

In addition, the majority of public money allocated in the previous four rounds remains unspent. Only £917m of the £2.6bn allocated had been distributed by the end of 2013 and £425m of this was being held by intermediaries.

Auditors also highlighted that the average cost of each net additional job created by the scheme had increased from £33,000 in rounds one and two at the point of selection, to £37,400 in the latest round.

As a result, value for money would be dependent on the departments tightening controls further on the jobs projections and other benefits claimed by bids, relative to their cost.

Responding to the report, business minister Michael Fallon said the NAO had recognised the steps taken to strengthen the fund by improving governance and getting money into the hands of businesses more quickly.

‘RGF is working,’ he added. ‘Over £2.6bn of RGF investment has now been allocated to 400 local projects and programmes which is unlocking nearly £15bn of private investment and delivering 550,000 jobs.’

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