More than £1 billion of unallocated ERDF funds at risk, new report claims

December 13th, 2011 | 2 comments Source: BAD News

English regions stand to lose out on more than £1 billion of European funding as a result of closure of the Regional Development Agencies (RDAs) which have previously handled European Regional Development Fund (ERDF) allocations, according to a report from the Industrial Communities Alliance (ICA).

Until recently, money from ERDF, which must be matched with ‘clean’ funding from UK public sector sources, was channelled to local projects via the RDAs, which, in many cases, also provided the matched funding.

But the ICA warns that since the announcement of the abolition of the RDAs, ERDF funding has stalled, and with nearly £1.2 billion remaining unallocated, time is running out before the money ceases to be available. The deadline for allocations is at the end of 2013.

With a continued squeeze on public sector spending many local authorities are reluctant or unable to fill the matched funding gap following the demise of the RDAs, and other public sector organisations such as universities are in a similar situation.

In addition, the ICA report points out that two thirds of any ERDF funds remaining unallocated after the 2013 deadline will be clawed back by the Treasury.

“The Treasury is therefore set to profit directly from funding intended to promote jobs and growth in England’s most disadvantaged areas,” the report claims.

The ICA report reveals that in the six months between April and September this year, some regions, including the North West and the East Midlands, saw no progress at all in the allocation of funding. Around 40% of the ERDF money available for English regions is still unspent, compared with 20% in Scotland and 25% in Wales, leading the ICA to conclude that the problem is “distinctively English, caused above all by the abolition of the RDAs”.

The ICA believes that LEPs are ill-equipped to step into the breach because they do not have their own funding streams, while most successful bids to the RGF have come from the private sector, and are therefore not eligible to provide match-funding for ERDF money.

The ICA is calling on the Government to “make capital allocations to the appropriate LEPs so that they can match the European funds on offer”.

It also wants it to step up efforts to provide match-funding, as well as coming up with “bold spending projects” to allow ERDF money to be drawn down.

The ICA says that with two years to go before the current round of ERDF spending closes, “there is still nothing inevitable about this loss of funding but a solution will require a new emphasis on delivery”.

Otherwise, it warns, “at the current rate of progress and even allowing for a last-minute scramble to find matching money, it would be surprising if less than £700 million remained unallocated by the time the programmes come to an end.”

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2 Responses to “More than £1 billion of unallocated ERDF funds at risk, new report claims”

  • Roaming Tiger

    Well they’ve all been deliberately dragging their heels haven’t they? Firstly the RDA’s who were looking to protect their own jobs and now the new lot who want to play hardball to justify their existence. It’s a total disgrace and there should be a judicial enquiry into the practices and processes of these organisations Mind you, show me a civil servant that is able to act with any sense of urgency or real appreciation of what is happening to businesses and I’ll give up commercial enterprise entirely!

    Comment was posted on Tuesday, December 13, 2011 1:57 pm
  • Catherine Courte

    In fact, there’s a double ‘win’ for the Govt if the funds aren’t allocated (and, let’s be clear, they won’t be):
    1 Treasury gets £800,000,000 refund
    2 EU is painted as bad people who won’t let us have our money unless we stump up even more to ‘free’ it from Brussels’ clutches

    Comment was posted on Tuesday, December 13, 2011 11:31 am

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