The committee said that that only £60m had reached actually businesses, with a further £240m allocated but sitting idle.

The RGF is aimed at creating, or safeguarding, jobs largely in northern provinces that are heavily reliant on public sector employment and consequently likely to suffer as the government reins back public spending.

It was set an initial target of delivering 36,800 jobs by 2015 but it was hoped that a "snowball effect” would create hundreds of thousands of additional jobs as well. But just over 2,440 new jobs have been created so far with a further 2,762 existing jobs being safeguarded.

PAC was also critical of the Departments for Business, Innovation & Skills [BIS] and the Department for Communities & Local Government [DCLG] which jointly administer the RGF saying that the administrative process lacked sufficient staff to allocate the money efficiently.

The government challenged the findings and the accuracy of the figures which it claimed were out of date and said that the fund had actually "unlocked" 200,000 jobs and more than two-thirds of projects which have been allocated money have started.

Minister for Business Vince Cable suggested that investments of this type can take decades to deliver their full effect.