We last wrote about the Regional Growth Fund in July, at the time the Government had just announced the successful projects as part of Round 4 of RGF.
We argued that RGF should be kept out of the Single Local Growth Fund and for future rounds to be restricted to business-led projects. Both of these were subsequently accepted by the Government.
Last month, the National Audit Office provided further evidence to back up the decision to restrict bids to businesses only. Their report also serves as a warning for the speed at which devolution to LEPs is being pursued.
Across Rounds 1 to 4, programmes (intermediaries in charge of allocating funds, 40% of programmes are banks, 60% LEPs and local authorities) were allocated £646m, of which only £221m has been received by projects.
In one example, a programme within the list of 'ten highest value programmes' by the NAO and run by a LEP, had disbursed less than the total amount allocated to be used for its administration. This programme formed part of Round 2 of the scheme and would have been announced in October 2011.
The NAO report highlighted that programme operators:
- Underestimated the administrative resources needed to generate, appraise, contract and monitor projects
- Had not done enough to meet the requirements of due diligence/operational reviews
- Lacked clear governance and lines of responsibility
The report also notes that Treasury rules which sees underspends not being transferred across financial years, led to instances of funds being given to programmes in haste at the end of the financial year to avoid it being lost.
This rule has subsequently been changed for RGF funds. However according to the National Audit Office, only a third of money paid out in this way in 2011/12 to programmes has yet reached beneficiaries.
This paints a worrying picture of LEPs and their capacity to deliver.
We've warned before of the headlong rush toward LEPs doing more, citing the low levels of business engagement and the unclear governance arrangements that exist.
Within the next 12 months LEPs will have their EU Funds programmes validated, negotiate with Government on their Local Growth Plans and their allocation from the Single Local Growth Fund and complete the last remaining Wave 2 City Deals all while improving their business engagement, strengthening their governance arrangements and putting in place organisations to deliver their programmes.
While it may be too late to slow down this pace, the Government should look to learn lessons from the Regional Growth Fund to ensure value for money is pursued from local plans in the future.