Communities secretary Sajid Javid this week urged local enterprise partnerships (LEPs) to ‘take a good look at your corporate governance' amid transparency concerns.
Mr Javid's warning follows concerns over the £12bn Growth Fund, including claims that some LEP board members have invested in projects linked to their own businesses.
Speaking at the annual LEP Network conference, Mr Javid said: ‘We all know that last year's headlines about fat cats investing in their own businesses do not reflect the actions of the vast majority, but if we're going to get maximum value for taxpayers' money and if the public is going to trust that you will deliver then you have to make sure that every penny that you spend is transparent and justified.
‘That's why we strengthened the rules around how funds can be spent and invested.
'It is taxpayers' money.
'It is given to us on trust, to be spent for the good of the country.'
National Audit Office (NAO) officials recently contacted the Department for Communities and Local Government (DCLG) over deals undertaken by the Greater Cambridgeshire and Greater Peterborough (GCGP) LEP.
The DCLG is assessing whether GCGP has complied with Whitehall's rules.
Stephen Barclay, MP for North East Cambridgeshire, has written to the NAO, citing a lack of transparency over GCGP's business.
Mr Barclay said that while there was no evidence of wrongdoing he was concerned the ‘relationship between prominent local developers, the LEP and city deal is opaque and open to abuse, given the overlapping private business interests of board members and developers'.
A DCLG spokesman said: ‘We take these allegations extremely seriously and will work closely with the NAO to investigate this case.
'[We] won't hesitate to act if they fail to comply with these new tougher standards.'
A spokeswoman for GCGP insisted it was ‘compliant' with the Government's assurance framework.
She added: ‘We would be happy to answer any further questions the NAO or government may have regarding the matters raised.'
