Council efforts to boost growth are being 'hamstrung' by a 'complex maze of bureaucracy' surrounding applications for government growth funding, chiefs claim.
The Local Government Association (LGA) says businesses and town halls are spending tens of millions bidding for funding from central government.
Council chiefs today warned current systems were hurting the economy by causing significant delays in project delivery. Research by the LGA reveals there are 124 funding schemes for local growth and regeneration spread across 20 central departments and agencies.
Local authorities on average face a £30,000 spend when putting in a bid for growth funding, alongside an estimated 33 days in officer time per application.
The LGA claims bidding for the Local Pinch Point fund alone could have cost the public sector around £6m, or 7% of the annual value of the pot.
'Millions of pounds and hundreds of days of officer time are tied up just trying to access funding. This is proving completely counterproductive to our efforts to create jobs, build homes and develop the infrastructure we need to get our economy growing,' Cllr Peter Box, chair of the LGA's Economy and Transport Board, said.
'The complex maze of bureaucracy Whitehall is clinging on to appears to have been designed to create work for civil servants rather than jobs for the people in the rest of the country.
'Local government has great ambition to get on with the job of building homes, creating jobs, supporting businesses and investing in new infrastructure, but has been hamstrung by funding cuts and by a convoluted system not fit for purpose,' Box added.
In 2012 Lord Heseltine appealed for an end to the distribution funding to regions according to the agendas and timetables of individual departments. The Government subsequently agreed to unite local growth funding into a single pot.
John Allan, national chairman of the Federation of Small Businesses, said: 'Having so many different funding streams each with their own timetables and objectives makes it very difficult to produce programmes that impact meaningfully on businesses. It also wastes resources on bidding processes that could be better used elsewhere.'
Alex Pratt, chairman of the Local Enterprise Partnership Network, said: 'The research findings illustrate the unhealthy extent to which the over-centralisation and fragmentation of strategic influence over the factors of production has led to damaging instability, inefficiency, and delays in realising economic opportunities.'
A DCLG spokesman told LocalGov: 'The Government’s long-term plan is returning economic growth to all parts of the country by putting power into the hands of local people, building vital infrastructure, cutting paperwork for businesses, creating two million new jobs and 1.8 million more apprenticeships.
'In the coming days, Growth Deals will be announced with every Local Enterprise Partnership in the country, supported by the £12bn Local Growth Fund. These deals have cut bureaucracy and costs by ensuring local areas can plan for the future, with the power to take more spending decisions than ever.
'This is a genuine revolution in how our economy is run. For the first time ever, housing, infrastructure and other funding is being brought together in a single pot, and put directly into the hands of local authorities and businesses to spend the way they know best.'