From Brussels, with Love


The Communities and Local Government Select Committee concluded in its report on regeneration last November that the Government has “no adequate strategy to address the complex problems faced by England’s most deprived communities” and concludes in its report on the European Regional Development Fund that DCLG “needs to demonstrate greater strategic oversight in aligning [different economic development] funding streams”.

These conclusions are backed up the Public Accounts Committee’s own conclusion on the Regional Growth Fund that it was “not clear how the Fund is aligned to other programmes promoting growth”.

The root cause of the position which the Government finds itself can be found in the rather incoherent and ill resourced outcomes of the last Spending Review. Incoherent across different Whitehall agendas pulling in different directions. Ill resourced principally because of the scrapping of the Working Neighbourhoods Fund, and not matching through the RGF with what was being invested before through the Regional Development Agencies just when it was needed the most. Even though this was addressed in small part by the Growing Places Fund the damage had already been done.

Nonetheless greater coherence and additional value could have been obtained had the Government aligned the RDA’s legacy projects, their remaining property and land portfolio and the Homes and Communities Agency’s regeneration portfolio, as well as the Regional Growth and the European Regional Development Funds.

A commitment was given in the Local Growth White Paper to align RGF and ERDF. But if it hadn’t been done by then it wasn’t going to happen. The Spending Review was the time, and there was the opportunity to address the differing governance, bidding timetables, processes and award criteria across the two funds, to make it happen. But given the usual Whitehall attitudes and HM Treasury and BIS opposition to a scheme which they would perceive as benefitting local government at the expense of the business sector (even though ERDF and RGF funding is open to private-sector led projects) the two funding streams remained unaligned.

What we had instead was (and still) security guards walking their dogs round derelict public land previously earmarked for development, with RGF and ERDF funding trapped either in Whitehall bank accounts waiting for the right ticks in the right boxes or, as the Public Accounts Committee have found, passed onto ‘intermediary programmes’ with little funding so far finding its way to the frontline and actual projects which promote economic growth.

Essentially, the Government failed to pool and align the funding and land and property resources it had available to it and had instead created a new layer of bureaucracy and parallel tracks in accessing economic development funding.
The Select Committee have repeated their demands that a proportion of RGF is used to ‘match fund’ with ERDF; with DCLG responding that they do not consider it necessary maintaining that ninety-three per cent of ERDF funds for the current round is already or waiting to be contracted, with the Committee responding that only sixty-three per cent of the programme has actually been spent or contracted.

Nonetheless, the DCLG chosen statistic does gloss over the issue somewhat not only on ‘match funding’ but also the wider concerns that, after a period of hiatus, value for money might be put at risk and innovation squeezed out in the rush to ensure the funds are spent before the end of 2015.

Meanwhile developments in the next funding round means that Member States could be allowed, if they choose to do so, to pool the different EU structural funds into a single programme and devolve decision making to a local level. This is something which the Government appears to be reluctant to be drawn upon calling into question its commitment to Community Budgets and Local Enterprise Partnerships.

Where the Government are clear is in their intention to keep their contributions to the EU budget as low as possible in the next round and then lower still after 2020 through the repatriation of regional funding with wealthier states, such as the UK, not receiving Structural Funds. This reflects this Government’s euro scepticism where they have committed themselves to see cuts in overall terms to the European Commission’s budget of which the Structural Funds are a significant part. If they can secure agreement with other Member States the first part of this aim is within the Coalition Government’s influence while funding post 2020 will be decided after the next General Election.

The Commission’s funding proposals for the next round seem to provide some generous increases to some Member States. While not the biggest beneficiary in the case of the UK this amounts to a forty-three per cent increase. Though whether the UK, and more particularly regions such as Cornwall and Isle of Scilly, will benefit depends upon the criteria used to determine which regions get the highest rate of funding. But there is much left to be negotiated.

As while the rationale for this new funding strategy is to focus more money on the less developed regions, a proposal which sees Italy, Spain and Greece losing funding is unlikely to find favour and given it is likely to lead to an increase in the UK’s overall net contribution to the EU budget it will be vigorously opposed by David Cameron at the EU summit next month.

This post is written by Mark Upton, Consultant at Public Policy Strategies (www.publicpolicystrategies.co.uk) and LGIU Associate, and is based on his Local Government Information Unit member briefing on the DCLG Select Committee report on the European Regional Development Fund.

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