In a new Communication, the Commission sets out plans to “reduce the administrative burden and facilitate access to funds by EU citizens and businesses”.

For example, it points out that grant beneficiaries can face several time-consuming audits each year by both their national authority and the EC. One of the simplification measures it is proposing is for projects worth less than €100,000 to be audited just once, and larger projects to be limited to one audit a year.

However, the Commission has said that “simplification is ultimately a shared responsibility between the EU Institutions and Member States, which means that combined efforts are required throughout the legislative process for both the general rules of the Financial Regulation and the sector-specific rules.

“Simplification efforts at the EU level will not be fully effective, unless they are accompanied by parallel efforts at the national and sub-national level”.

At the end of last year a report from the Industrial Communities Alliance (ICA) warned that funding via the European Regional Development Fund (ERDF) had stalled since the abolition of Regional Development Agencies, and time was running out before the remaining money, estimated to around £1 billion, ceased to be available. The deadline for allocations is at the end of 2013.

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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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