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RGF proving a damp squib, says business lobby group

Regional business leaders are calling for a major shake-up of the Regional Growth Fund following an alarming report by the National Audit Office.

The RGF scheme was the brainchild of Lord Heseltine, who visited the North West in 2010 with the promise that it would be an accessible and business-friendly funding pot for ambitious SMEs looking to grow or employ more staff, without excessive bureaucracy.

However, four years on the National Audit Office has revealed that more than three quarters of the fund remains unspent, with only £492m of the allocated £2.6bn actually reaching businesses as of the end of December last year, with a further £425m being held by intermediaries.

Meanwhile, the average cost of creating or safeguarding a job now stands at £37,400.

Frank McKenna, chief executive of private sector lobby group Downtown In Business, says those figures are backed up by the experiences of the group’s own members and has questioned why some of the funding has been allocated to multinationals, rather than SMEs.

McKenna said: “The National Audit Office statistics speak for themselves, but the picture is just as bad on the ground. Far from being ‘red tape free’ as the former Deputy Prime Minister intended, those companies who have applied to the fund have found it one of the most challenging and bureaucratic routes to finance.

“Of those who didn’t give up part way through the cumbersome process, the few companies that were eventually successful have had to wait an age for their money, and have never received the business support and mentoring that was supposed to be part of the package.

“Small and medium enterprises also question why companies such as AstraZeneca, Jaguar Land Rover and Lloyds Banking Group are being supported through a fund that was promoted and marketed as support for them.

“What should have been a really positive and innovative addition to business support is turning into a damp squib. I hope Lord Heseltine and his government colleagues review how this important initiative can be shaken up and put back on track. The economy may be improving, but growing SMEs still need all the help they can get.”

This was posted in Bdaily's Members' News section by Dan Minchin .