Flagship government schemes designed to support business failed to get money where it was needed while predictions for new jobs proved wildly optimistic, according to a new inquiry.
The damning verdict was delivered by MPs on the cross-party Commons Public Accounts Committee, which scrutinises public spending.
It looked at the success of measures introduced following the abolition of Regional Development Agencies such as Advantage West Midlands.
In their place the Coalition set up new programmes including the Regional Growth Fund, which provided grants directly to businesses and has allocated 拢403 million to West Midlands firms.
Ministers also asked businesses and councils to create Local Enterprise Partnerships (LEPs) while the Government also set up Enterprise Zones, where firms can claim business rate relief, including the Black Country Enterprise Zone in Walsall and Wolverhampton and Birmingham City Centre Enterprise Zone.
The Government has signed a series of 鈥渃ity deals鈥 with cities and partnerships of local authorities across the country, offering funding and the ability to borrow money to invest in infrastructure.
But now the system is set to change again, with the Government focusing on a new 鈥渓ocal growth fund鈥 worth 拢2 billion a year, which LEPs have been invited to bid for.
However, ministers insisted the original schemes had worked. Local Growth Minister Kris Hopkins said: 鈥淏ritain鈥檚 economy is growing and more people are in work today than ever before. Not only have we rebalanced the books, but we鈥檝e created more jobs and growth outside of London.鈥
But the Commons Public Accounts Committee issued a series of criticisms in a new report, warning: 鈥淧rogress in creating jobs has so far fallen below the departments鈥 initial expectations.
鈥淭he departments have not spent the money available as quickly as expected and they now face a challenge in spending the funds available by the end of 2014.鈥
MPs on the inquiry said they feared that cash would be allocated to 鈥減rojects that can spend the money quickly鈥 rather than high quality schemes.
The MPs also said the number of new jobs created through Enterprise Zones was 鈥渦nderwhelming鈥, with only 4,649 jobs created by the end of 2013, forcing the Government to admit that its original prediction of creating 54,000 jobs by 2015 would not be met.
The bid for Birmingham鈥檚 enterprise zone, backed by the city council and Greater Birmingham LEP, predicted that 40,000 jobs would be created but over the lifetime of the project, which continues until 2038.
An LEP spokesman said: 鈥淥ur Birmingham City Centre Enterprise Zone will have created 2,500 jobs by the end of 2014 and, crucially, work will be underway to redevelop Paradise Circus and extend the Midland Metro.鈥
The LEP also highlighted the success of a scheme to distribute Regional Growth Fund money to small and medium-sized firms involved in low carbon technology, which has distributed 拢19 million across the West Midlands over nine months.
Birmingham MP Steve McCabe (Lab Selly Oak) said: 鈥淲e always predicted that the stop growth strategy that would develop from abolishing RDAs and setting up new structures would actually result in a slowing of economic growth in the regions, and that鈥檚 exactly what鈥檚 happened.
鈥淚f the Government had concentrated on delivery to match their propaganda then we would have seen much better results.
鈥淭hey just do not realise how important rapid investment in economic growth in the regions is.鈥
