Billions of pounds in enterprise-boosting funding is currently ‘parked’ in intermediary bodies and not being spent on the economy, a cross-party government committee says.

The Public Accounts Committee (PAC) says the vast majority of government funds that should be used to boost UK enterprise are going un-spent.

The Committee, headed by Labour MP and former small business minister Margaret Hodge, says since 2010 just 10 per cent of the £3.9 billion dedicated to boosting growth and jobs has be used.

Ms Hodge said departments such as the Communities and Local Government, and Business, Innovation and Skills would struggle to meet targets for creating and safeguarding jobs.

The Regional Growth Fund, a key pillar in the government’s efforts to promote economic recovery country-wide, has spent around £1.2 billion in the last three years.

Ms Hodge said an additional £1.4 billion would need to be spent this year alone to meet financial targets set out for the fund.

She added: "Some £1bn of the remaining £3.5bn allocated to initiatives is currently parked with intermediary bodies such as local authorities, Local Enterprise Partnerships and banks - and the rest with the Departments.

"Progress in creating jobs is falling well short of the Departments' initial expectations."