The Government’s flagship growth fund still owes the North East £109m despite Ministers claiming thousands of jobs are being created.
Nationally more than half the £2.4bn allocated from the Regional growth Fund has yet to be handed over to firms who were told they have secured the cash.
While some projects, including The Journal’s Let’s Grow scheme, have spent their money on helping firms expand, others are still waiting for cash from the four earlier rounds of the fund.
In October 2011 the Government announced winners from the second round of the Regional Growth Fund, with the North East securing £64m. But of that some £8m still has not being paid out.
In some cases the money was eventually declined by the firm, but in many the amount of paperwork and a lack of sufficient due diligence is thought to be the cause of the delay for many small firms.
Last night Durham North MP Kevan Jones said the cash delay was “genuinely shocking”.
He said: “These figures explode the hollow myth that is the Government’s support for the regions.
“Many businesses will be quite rightly angry that cash has not being spent. It is now time for the local enterprise partnerships to voice a strong protest rather than remain silent on this.”
Of the £450m of funds allocated over two years to special programmes run by local enterprise partnerships, local authorities and even local newspaper campaigns, less than a third, £144m, has actually been invested.
The figures were revealed in parliamentary answers from Conservative business minister Michael Fallon, a former Treasury official who was tasked with ensuring the growth fund starts paying out.
Deputy Prime Minister Nick Clegg has linked himself to the fund, helping announce winners and visiting firms benefiting from the cash.
Shadow business secretary Chuka Umunna said Labour would end the growth scheme and instead let regions take charge of jobs spending.
“This government took office promising a rebalanced economy but instead things have gone backwards,” Mr Umunna said. “We are seeing local areas and whole regions held back. The Regional Growth Fund has been plagued by bureaucracy and delay.
“It is staggering that hundreds of millions of pounds have been left gathering dust in Government coffers for years on end and that over £300m is still being held by intermediaries rather than being put to good use.
“Where this Government has failed, we would decentralise and give local areas and regions the powers and budgets they need to drive growth across the country.”
Mr Fallon has said much of the backlog will be cleared up from this financial year. In his formal disclosure of the latest RGF figures, the minister confirmed £1.238bn had not been drawn down.
“Of this,” the minister said, “currently £1.152bn is budgeted to be drawn down in 2014-15 and later years. Payments schedules are agreed with companies and payments are made when they need them.”