The Department for Communities & Local Government’s response to economic development funding concerns have been branded “disappointing” and “inadequate” by senior MPs.
Members of the communities and local government select committee took the unusual step of issuing a highly critical statement after DCLG claimed the MPs’ report into problems with the European Regional Development Fund was “not borne out by the facts”.
The committee also compared DCLG’s response unfavourably with the comments of business minister Mark Prisk who, in an opinion piece for LGC, conceded there were some problems and a need for “fresh thinking”.
Published last week, the committee’s report warned that DCLG’s newly acquired responsibility for the ERDF fund had led to a slowing down of approvals and fears that the unavailability of match funding would mean the funding stream would go unspent.
However, in response, the department said “more than 93% of the total programme is already spent, contracted or in the pipeline” and pointed out ministers had written to local committees to “ensure they were aware of the availability of match funds from within government programmes”
In a statement released on Tuesday, select committee chairman Clive Betts (Lab) challenged DCLG’s use of statistics
“This initial response from the department is disappointing,” Mr Betts said. “Sending a letter about match funding to all the local management committees is a thoroughly inadequate response to the problems inhibiting take-up of ERDF funding.”
Mr Betts said DCLG’s figure that 93% of the programme had been spent, contracted or applied for had been used in the committee’s report, but he pointed out that only 63% had actually been spent or contracted, leaving 37% at risk if the projects did not receive approval to proceed.
“The department cites this [93%] figure to justify its claim that all is well,” Mr Betts said. “That is however not the whole story.”
He added: “I note the difference in approach between DCLG and BIS. In his article in the LGC Mark Prisk, BIS minister, calls for fresh thinking on matched funding, and says he understands that this remains a challenge for some.
“While regional development minister Mark Prisk may now recognise there is a serious problem with match funding we need urgent action, not words, to ensure that all the available ERDF money is spent before 2015.”
The select committee has also expressed concern in the sudden departure last week of Andrew Leach, chief executive of the £185m publicly funded venture capital vehicle for the north-west.
Mr Betts said no official reason had been given for his departure, but it followed criticism by the local committee monitoring the volume and frequency of ERDF deals and amidst reports that £100m funding remained unspent.
“If that is true, then it’s unclear how the government can supports its claim that all is well,” Mr Betts said. “Moreover, this situation appears much closer to those described in the evidence available to my committee which makes plain how the availability of match funding is still a significant problem for organisations trying to make use of ERDF monies”.
The select committee has called on DCLG to publish quarterly ERDF figures and to set aside Regional Growth Fund money to act as match-funding.