Regional Growth Fund too costly and complicated for businesses
The Government's £2.4 billion Regional Growth Fund (RGF) has been criticised for poor management and being 'too costly' for businesses applying for funding.
The Institute of Chartered Accountants in England and Wales (ICAEW) said the 'burdensome' application process was leading to delays in funding approval and distribution and undermining its original purpose of supporting private businesses.
The Government launched the RGF last year, making a total of £2.4 million available in loans and grants to businesses in areas hit by public sector cuts. It hopes projects and programmes will lead to sustainable private sector employment.
In a submission to a Parliamentary enquiry into the RGF the ICAEW said that a 'lack of appropriate skills and capabilities' within the Department of Business, Innovation and Skills (BIS) to effectively manage the fund was 'costing the taxpayer.'
It also said there was a 'worrying lack of consistency' in the way applications were accessed by BIS caseworkers.
The ICAEW has been working with the BIS since August 2011 to streamline the application process. It had raised initial concerns last year but said it could now clarify further expectations.
However, it voiced concern that it was frustrated that developments had been slow, saying 'where progress has been made, it is on occasions reversed.'
"Staff turnover, a lack of appropriate skills and capabilities continue to negatively impact the progress of the RGF. There has been a continued lack of understanding by some BIS officials about the work that accountancy firms can and cannot undertake. When a new BIS official takes on a case, vital information may be lost or not properly communicated from the previous case worker," read its Parliamentary submission.
The criticisms come following a National Audit Office (NAO) report in May which said that funding was often allocated to projects that offered relatively few jobs for the money invested.
The ICAEW advised that the RGF application process should be simplified and that BIS officials should be better trained on its process.
"If BIS had consulted with the accountancy profession at an early stage it could have avoided persistent problems with due diligence - which comes at a cost to the taxpayer and to growth," it added.
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