Committee chairman Edward Leigh

A powerful committee of MPs has expressed concern at the failure of efforts to close the economic gap between English regions.

The Commons public accounts committee said on Thursday that the £100 million per year regional grants are having "little real impact".

In its latest report, the cross-party group of MPs revealed research showing variations in unemployment rates are exactly the same as they were in 1988, despite £1.4 billion of government grants designed to redress the gap.

As it was 14 years ago, unemployment in the least advantaged region is still three times higher than in the most advantaged region, the research found.

The committee called on the Department of Trade and Industry to review the system of regional grants in order to provide better value for taxpayers money.

Committee chairman Edward Leigh said ministers urgently need to define measures against which scheme performance can be tracked rather than simply pumping cash in.

"I am very concerned just how little real impact £100 million annually in regional grants is having," he said.

"Thirty years of taxpayers' funding has failed to close gaps between the relative economic performances of the English regions.

"It has taken four years of Regional Selective Assistance to achieve a miserly half percent reduction in unemployment in Assisted Areas.

"And grants are paying for two and a half times the jobs that are genuinely created under the scheme.

"The DTI needs to think harder about how these schemes fit in with wider work providing infrastructure grants and supporting economic clusters, and revise criteria to make sure that more grants are available to the services sector."