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New fears over loss of regions' Euro billions

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Just one of the 50 successful bids to the government’s flagship regional growth fund has sought match-funding from European economic development cash raising further fears that billions of pounds of renewal funding could be lost to the regions.

In response to a parliamentary question, business minister Mark Prisk revealed that of the 50 successful bids to the government’s regional growth fund, just one bid - for the Manchester Eye Hospital - included match-funding from the European Regional Development Fund (ERDF).

Mr Prisk said that of the 464 bids to the first round of the RGF, worth £1.4bn over three years, 66 included match-funding bids for ERDF cash funding in their application, “some of this was confirmed and some unconfirmed”.

The lack of alignment between ERDF and RGF raises further concerns about the potential loss of billions of pounds in ERDF cash following the abolition of the regional development agencies.

Earlier this year, exclusive LGC research revealed the scale of the challenge England’s regions face to maximise their ERDF programmes, with £2.3bn - or 77% of the programme - yet to be spent.

The 2007-13 ERDF programme, worth £2.97bn across England, is focused on the country’s poorest areas and provides funding for projects aimed at boosting economic renewal and regeneration.

More reading: EU Funding:Why abolition of RDAs may cost billions

For ERDF cash to be claimed, bidders must secure match-funding through other public or private sector sources which, until recently, has largely been secured through the RDAs’ single programme budget, worth £1.7bn in 2010-11.

But ministers’ decision to scrap RDAs and replace them with council and business-led local enterprise partnerships - which will not receive dedicated funding - has left ERDF programmes across England facing “serious difficulties” in securing match-funding over the remainder of the programme, RDA sources have told LGC.

Ministers have insisted that the RGF and ERDF funds will be aligned, to ensure that the ERDF monies are drawn down and spent. However, the revelation that just one successful bid is also drawing on ERDF cash raises questions whether this is possible, with experts warning that the two funds are “radically different”.

Any cash that is not spent at the end of the ERDF programme is lost to the regions. But with the unspent cash coming off future UK contributions to the European Commission, that loss represents a gain to the Treasury.

Some in the regions now fear that the decision to cut the RDA single programme budget heralds a wider move by the Treasury to mop up the ERDF billions as part of the government’s deficit reduction programme.

Mr Prisk said officials in the Department for Business, Innovation & Skills and in the ERDF teams at the regional development agencies, “have worked closely together to align, where practical, the respective funds’ bidding processes”.

“Most ERDF programmes will be managing a simultaneous call for proposals to compliment the timing of the RGF’s second round, with the aim of encouraging applicants to maximise the available public resource,” he said.

Asked if he would take steps to ensure that a larger number of bids using ERDF funding were successful in the second round of the RGF, Mr Prisk said success would “be dependent on the quality of the bids, which need to demonstrate how they deliver sustainable private sector jobs and help places currently reliant upon the public sector make the transition to sustainable private sector led growth”.


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