Study slams Government growth funds bidding process ‘a waste of public money’
Local councils are wasting tens of millions of pounds a year in an often fruitless attempt to negotiate a maze of Whitehall bureaucracy when applying for growth funding, a major report has claimed.
The complexity of bidding processes, with 124 funding schemes for local growth and regeneration schemes across 20 departments and agencies, is inefficient and outdated according to the Local Government Association.
New research by the LGA reveals for the first time the true cost to councils and businesses of applying for growth funding and shows cost of compiling the bids is eating into the public purse.
Local authorities and business issued a joint call for Government to scrap “an inefficient and outdated system” that channels funding for local growth through more than 100 separate pots and instead devolve money to local councils and businesses directly through a single investment fund.
They are warning that the current system is hurting the economy by creating significant delays in delivering projects and generating confusion and frustration for businesses.
The plea comes days before the Government is to announce winners of a bidding process for a £10 billion Local Growth Fund. Greater Birmingham and Solihull LEP has asked for £86 million in 2015-16 and is competing for funding against 38 other LEPs.
The Local Growth Fund pulls together just six of the 124 funding streams identified by the LGA research and it amounts to less than 10 per cent of what the Government currently spends on local growth and regeneration.
In 2012 Lord Heseltine’s No Stone Unturned report recommended that Government stops allocating funds in “penny packets”, with departments distributing funding to local areas according to their own particular objectives, timetable and requirements.
The Government subsequently agreed that funding for local growth should be brought together into a single pot without internal ringfences.
However, the LGA research shows that Government funding for growth is becoming even more fragmented with the number of funding streams now having doubled since Lord Heseltine’s report.
• There were 124 funding schemes for local growth and regeneration across 20 departments and agencies, amounting to over £22 billion in 2013/14. About half of these required local authorities, businesses and charities to bid for money.
• The average cost of putting together funding bids for local authorities alone was about £30,000. It also cost local authorities an estimated 33 days in officer time, per bid.
• The overall cost to the public sector of bidding for the Local Pinch Point fund alone may have been in the order of £6 million, based on the average cost of preparing a bid and the number of bids submitted. This equates to about 7 per cent of the annual value of that fund.
• Only a small minority of applicants are receiving formal grant offers within six months. Most are waiting up to a year and many are waiting even longer.
Cllr Peter Box, Chair of the LGA’s Economy and Transport Board, said: “Millions of pounds and hundreds of days of officer time are tied up just trying to access funding.
“This is proving completely counterproductive to our efforts to create jobs, build homes and develop the infrastructure we need to get our economy growing.
“The complex maze of bureaucracy Whitehall is clinging on to appears to have been designed to create work for civil servants rather than jobs for the people in the rest of the country.
“It is farcical that Government persists with a system which requires millions of pounds of public money to be spent on bidding for funds from the public purse, whilst creating uncertainty for businesses and investors. Councils and businesses want to spend this money on improving the economy, not reams of costly bureaucracy.
“Local government has great ambition to get on with the job of building homes, creating jobs, supporting businesses and investing in new infrastructure, but has been hamstrung by funding cuts and by a convoluted system not fit for purpose.
“Local economies are complex and national funding streams are not as coordinated, flexible and responsive as we need them to be in order to get projects off the ground in good time.”
John Allan, National Chairman of the Federation of Small Businesses, said: “This research clearly shows the problems that result from having such a fragmented system for promoting regional economic development.
“Having so many different funding streams each with their own timetables and objectives makes it very difficult to produce programmes that impact meaningfully on businesses.
“It also wastes resources on bidding processes that could be better used elsewhere. What is required is a far more co-ordinated approach focused on fewer schemes that actually work over the longer term.”
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