Coalition attempts to boost local economic growth over the last three years have failed to deliver value for money, a spending watchdog has reported.

A National Audit Office study issued today finds the Department for Business, Innovation and Skills (BIS) view less than half, 17 out of 39, Local Enterprise Partnerships (LEPs) as having a strong case to represent a functional economic area.

The auditors' review into the progress of Coalition growth initiatives launched since the 2010 white paper, Local growth: realising every place's potential, found the hybrid local authority and business groups which replaced the Regional Development Agencies are making progress at different rates.

It also claimed the Growing Places Fund has been limited to date in spending money and creating jobs.

Ambitious job-creation targets for the 24 Enterprise Zones - areas supported with tax breaks and infrastructure support to entice business relocations - are set to be missed, the NAO found.  Although it was predicted EZs would support  54,000 job creations by 2015, current estimates suggested far fewer, between 6,000 to 18,000 would instead be generated.

In disbanding the RDAs, the Government did not set up replacement funding and support programmes quickly enough to prevent a significant dip in local growth funds and job creations, the NAO stated.

As a result, direct Whitehall spend on local economic growth plummeted from £1.46bn in 2010/11 to a mere £273m in 2012/13.  However, it is set to increase to £1.7bn by 2014/15.

The watchdog advised government departments to plan such transitions more effectively and ensure sufficient capacity was in place both centrally and locally to oversee programmes and ensure clear accountability.

Sponsor departments for local growth initiatives, BIS and DCLG, were also told to address how they plan to monitor future outcomes and performance of growth plans including the Single Local Growth Fund and City Deals.

Amyas Morse, head of the National Audit Office, said the transition from the old to the new schemes has not been orderly and there has been a significant dip in growth spending.

‘To secure value for money from both the existing schemes and the new £2bn Growth Deals, central government needs to make sure that there is enough capacity centrally and locally to oversee initiatives, that timescales are realistic and that there is clear accountability.'

In response, local growth minister Kris Hopkins said: ‘This Government is taking the difficult decisions needed to tackle the deficit inherited from the previous Government, and thanks to our long-term economic plan, we're now seeing the UK economy growing faster than any of our competitors.

‘We are investing billions through our growth programmes, supporting thousands of local businesses, securing billions in private sector investment, boosting skills and creating tens of thousands of much needed local jobs."

‘And we are now reaping the rewards, with the latest GDP figures showing the economy is back on track, with the deficit falling and employment at its lowest for more than three years.'