MILLIONS of pounds of funding designed to boost regional businesses has been handed to subsidiaries of industry giants based abroad.

The Government has given nearly £3m of its Regional Growth Fund (RGF), aimed at investing more into the private sector, to two Oxfordshire companies.

Element Six, which was given £1.25m in 2013, is part of global diamond mining giant De Beers and has its head office in Luxembourg. It generated annual revenue of US$500m (£330m) in 2014. And the Mini plant in Oxford, which got £1.56m in 2012, is owned by German firm BMW.

Local business leaders have asked why more Oxfordshire firms have not been given direct RGF grants.

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Richard Dick, executive chairman of Oxford-based W Lucy & Co, which has interests in real estate, electrical systems, metal castings and street lighting, said: “Why haven’t more firms succeeded in getting the money?”

Andrew Hammond, managing director of Witney-based Oxford Products, which sells motorcycle accessories, said: “You don’t want a foreign-based business getting funds.”

Andrew Smith, Labour MP for Oxford East, said: “It’s extraordinary that only two businesses in the whole of our county has had help from this £3.2bn fund since it started four years ago.

“It looks to me that Oxfordshire is not getting a fair crack of the whip here. This fund is supposed to be boosting private sector employment, and it would greatly surprise me if there weren’t more businesses locally who would be keen to do just that.”

Mr Smith said he could “understand why there might be criticism” of global companies receiving UK taxpayer support.

He added: “The big global businesses can play one region or one country off against others. If they don’t get support in one country, there’s always the risk they’re going to get it from another.”

But Mr Smith said he had supported BMW’s application for RGF funding for general training at the Cowley plant.

He will raise the issue in Parliament and ask the Secretary of State for Business, Innovation and Skills, Vince Cable, to “list by local authority area the number of applications to the Regional Growth Fund since its inception and the proportion approved”. The question is due to be answered in Parliament today.

A spokesman for Deputy Prime Minister Nick Clegg, who established the RGF, said two other companies in the county had successfully applied for funding but had decided not to go ahead with it.

The spokesman said the fund “was always intended to be applied to areas outside of London and the South East that were reliant on public employment”.

Mr Clegg issued a press release last week detailing for the first time the number of projects and programmes backed by the fund.

So far, the RGF has distributed more than £1bn to support 400 projects aim create 100,000 jobs, including 28 projects or programmes were in London and the South East.

Element Six, which manufactures synthetic diamond products for industrial applications, got the grant to expand its research & development facility at Harwell.

Steve Coe, Element Six’s executive director for commercial & marketing, said the company consolidated its research and design activities, which had previously been in South Africa, Ireland and Sweden, at Harwell from July 2013.

The Global Innovation Centre initially employed 120 staff. The expansion, which is costing about £5m in total and is due for completion in the first quarter of this year, has generated 24 jobs for scientists, engineers and technicians.

The company provided about 80 per cent of the cost, he said.

A spokesman for BMW (UK) said the £1.56m RGF grant helped fund technical training for its 4,000 workers at the Cowley plant in preparation for the new Mini, launched in November 2013.

“Without this we would not have been able to do the training at the speed and the scale that was required,” he said.

The RGF’s guidelines state that funding will only be given to projects or programmes that would not be pursued without RGF support, must be for a minimum £1m of RGF funding, and the public funding amount must be at least matched by private financing.

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