According to the Public Accounts Committee, billions of pounds set aside to boost economic growth and jobs around the country are still unspent, with only 10 per cent of the £3.9bn allocated for businesses since 2010 actually disbursed.
The Committee said that officials had been forced to admit that their initial projections of 550,000 jobs created or safeguarded by 2025 had proved “wildly over-optimistic”, as so far only 65,000 have been secured, and warned that the Departments of Communities and Local Government (CLG) and Business, Innovation and Skills (BIS), which are responsible for disbursement, could now struggle to meet their financial targets.
The funding was intended for specific areas of the country through various initiatives, such as the Regional Growth Fund and enterprise zones, which were set up by the Government after it abolished the old regional development authorities.
However, very little cash has actually been paid to the intended recipients and £1bn is still “parked” with intermediary bodies, such as local authorities and banks, with the majority of it still in the Departments’ hands.
According to the Committee’s report, one programme run by Santander UK had so far managed to distribute only £2.3m out of a fund of £53.5m, even though the bank will be able to claim administration costs of up to £5m.
Chair of the Committee, Margaret Hodge, described the performance of enterprise zones as “particularly underwhelming”, with their original estimate of 54,000 jobs by 2015 now downgraded to between just 6,000 and 18,000.
She added that the Departments need to learn lessons from the current programme and adopt a more coordinated and strategic approach when introducing the new growth deals next year.
However, local growth minister Kris Hopkins said that the Committee’s report was based on “old figures” and insisted that money was getting to local projects.