Send us your pictures, video, news and views by texting NORTHERN ECHO to 80360 or email us
AN MP has accused the Government of failing businesses after a report branded the Regional Growth Fund a flop after finding less than 4 per cent of funding had reached companies.
MP Tom Blenkinsop said the fund was a "poor replacement" for Regional Development Agency One North East (One) after the Commons Public Accounts Committee report, out yesterday, found just £60m of the £1.4bn scheme had reached frontline projects.
The Confederation of Business has also waded into the row, saying the fund's application process is too complex and should be simplified.
The news came as the Government admitted just 2,442 new jobs had been created -with another 2,762 safeguarded - compared with a target of 36,800 over the lifetime of the projects.
But local enterprise partnership Tees Valley Unlimited defended the fund, saying the region had seen a number of successes in securing funding which had boosted the economy and helped private sector growth.
However, the report also highlighted how - of the £530m spent so far - £470m had been "parked in intermediary bodies", including banks, local councils and local enterprise partnerships.
The fund was supposed help stimulate job creation in the North to help aid the economy out of recession.
Mr Blenkinsop, whose Middlesbrough South and East Cleveland constituency includes one of the scheme's beneficiaries, Redcar steelworks SSI, said: "This scathing report into the performance of RGF brings to the front the incompetence of the Government when it comes to generating the growth needed to get the economy back on track.
"They are failing businesses who could be the sparks that get people back into work and getting us out of this double-dip recession.
"It is particularly depressing news for North-East firms who are not getting the support they require to succeed after the Regional Development Agency - One North East (ONE) - was abolished.
"While the RGF is a centrally run scheme ONE was a well-established agency with local knowledge and expertise and had strong links to North East businesses and industry.
"Hopefully this report, by a committee that has two Teesside MPs from the coalition as members, will act as a catalyst for the Government to get a grip of the scheme and ensure that the funding is getting to businesses that require it. If not the economy will continue to fail."
Katja Hall, the CBI's chief policy director, said: "It is disappointing that the scheme has only awarded £60m since its inception in June 2010.
"It has the potential to act as a catalyst for much-needed jobs and growth.
"But we need to simplify the application process, which experience has shown is burdensome and deters companies from applying, so this needs to change."
Neil Kenley, Tees Valley Unlimited's director of business investment said: "Tees Valley has seen a number of successes in securing Regional Growth Fund to help private sector growth and provide a much needed boost for our local economy.
"Those Tees Valley companies awarded funding through RGF Rounds 1 and 2 have reached varying stages in the implementation of their projects and so far five projects have started and committed their capital expenditure and three projects are anticipated to start in the next couple of months.
"One project is seeking a revision to its original proposal and seven projects are still completing due diligence as they await either parent company sign-off for investment, or clarity with regard to market conditions for their product or services.
"These are all large-scale projects and as such, longer term time-scales should be expected.
"The LEP's proposals to RGF Round 3 have the potential to lever in an additional £1bn of private sector investment and create over 8,000 Tees Valley jobs. This is will undoubtedly form a platform for greater economic growth and stability."