The Government’s flagship Regional Growth Fund has been condemned as “a disaster” by Labour as business leaders prepare to learn which bids have been successful next week.

Ministers received 72 bids for a total of £459 million in funding from the West Midlands – but the total sum available for the whole country is only £300 million.

Nationally, the fund is massively oversubscribed with 464 bids presented to the Department for Business, Innovation and Skills, asking for a total of £2.78 billion.

It means the vast majority of bidders are likely to be disappointed.

Ministers have repeatedly highlighted the Regional Growth Fund as a key measure to boost economies in the English regions, for example by arguing it will go some way to replacing funding previously provided by regional development agencies.

Firms were invited to bid for cash to support projects which would create jobs, particularly in regions set to suffer as a result of job losses in the public sector.

The Government plans to distribute £1.4 billion over three years, but the bids submitted so far are for the first round of funding which will provide between £250 and £300 million.

But Labour called on ministers to make an extra £200 million available. The cash could be raised by taxing bankers’ bonuses, said Shadow Business Secretary John Denham.