In a scathing assessment of the administration of the fund, which provides loans and grants to businesses in areas hit by public sector cuts, the Institute of Chartered Accountants in England and Wales said a “lack of understanding” among officials at the Department for Business, Innovation and Skills (BIS) came at a “cost to the taxpayer and to growth”.
Despite an insistence from Vince Cable, the Business Secretary, that the fund’s processes were “robust, competitive and unbiased” following previous criticisms of the RGF, the ICAEW said there was still a “worrying lack of consistency” in the way bids were judged, reports The Telegraph.
“Staff turnover [and] a lack of appropriate skills and capabilities to understand the due diligence process [among BIS officials] continue to negatively impact the progress of the RGF,” it said in its submission to an all-party parliamentary inquiry into the RGF and the progress of new regional growth bodies.
“When a new BIS official takes on a case, vital information may be lost or not properly communicated from the previous case worker.
“Because of their lack of experience and knowledge, the inefficiencies will have an impact on beneficiaries’ access to funds”.
The ICAEW’s criticisms follow the publication of a National Audit Office report in May which said the RGF, which is championed by Deputy Prime Minister Nick Clegg, had not prioritised “value for money”, with a significant proportion of its investments “allocated to projects that offer relatively few jobs for the money invested”.
The group said that since it raised similar concerns with ministers last year, “accountancy firms were now able to… clarify expectations in a more constructive way”.
However, it added: “We are frustrated that developments… have been slow, and are concerned that, where progress has been made, it is on occasions reversed.”
It recommended training for BIS officials on the due diligence process and a simplified application system “to avoid further delays, additional bureaucracy and costs for businesses”.
Gordon Marsden, the shadow minister for regional growth, said “unacceptable delays… have dogged the scheme and led to businesses waiting well over a year for money promised to them. Ministers urgently need to get a grip.”
However, Business Minister Mark Prisk insisted the fund, which is designed to help rebalance the economy, was “good value for the taxpayer”, delivering approximately “£6 for every £1 of taxpayers’ money”.
“We are dealing with big sums of public money, so it is vitally important that funding goes to the best projects which represent value for money – we cannot compromise on the quality of our decision making. In fact the National Audit Office commended us on the best practice of our appraisal process.”
Mr Prisk acknowledged that there had been criticisms over delays in getting funding to successful projects, but added: “We have listened to feedback from successful bidders to streamline the overall process to help winning bids access funding more quickly.”