Ministers have been urged to honour a promise to match-fund European Union support for economic development in the regions.
A failure to help areas access European Regional Development Fund (ERDF) could mean the money available in this round is not used before the 2015 deadline, the communities and local government select committee has warned.
Clive Betts (Lab), chair of the committee, said the abolition of the regional development agencies (RDAs)had removed the main source of match funding for ERDF-sponsored projects and the economic downturn meant alternative sources were harder to come by.
“Unless ministers take urgent steps to deliver on the government’s promise to make it easier for projects to secure match funding through the Regional Growth Fund, there is a significant risk that value for money will suffer and ERDF will not make the impact it could to help rebalance the UK’s economy,” he said.
Ministers have denied there is any problem with the fund.
A report into the ERDF by the select committee also called for local enterprise partnerships to be given control of ERDF cash in future under proposed EU reforms to the fund.
The report said the transfer for managing ERDF from the RDAs to DCLG had “generally been managed well” but it warned that DCLG was taking longer to approve bids than RDAs had. It also warned that “bids for innovative projects are being rejected because of a more risk-averse approach at DCLG”.
The government “does not seem to appreciate the problems that projects are facing in securing the match funding needed for them to go ahead”, the report continued, and “has not delivered on its promise to make it easier for projects to use its regional growth fund as match funding”.
A spokesman for DCLG dismissed the report’s claims as incorrect.
“The committee’s findings are not borne out by the facts. More than 93% of the total programme is already spent, contracted or in the pipeline. Projects are required to identify their sources of match funding before they can enter the contracting process and more projects are continuing to come forward for funding. Money can be paid out until the end of 2015.
“The government realises how important match funding is which is why, in December, [business minister] Mark Prisk and [local government minister] Baroness Hanham wrote to all the chairs and vice chairs of the local management committees which oversee ERDF funding locally to ensure they were aware of the availability of match funds from within government programmes.”