Clive Betts expresses disappointment over DCLG criticism of ERDF report

• Report: European Regionl Development Fund (PDF 3.15 MB)
• Communities and Local Government Committee
• Inquiry: ERDF

On 13 July, GLC Committee published its report about the European Regional Development Fund. 

As reported in the Local Government Chronicle on the same date (1) a spokesman for DCLG dismissed the report’s claims as incorrect, suggesting “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....”

The same spokesman also stressed that, 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.”

Responding to these developments Clive Betts MP, Chair of the Communities and Local Government Committee, said:

“This initial response from the department is disappointing. 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.
 
“Moreover, the Committee’s findings are based on evidence gathered from over 40 organisations involved in ERDF in England, and makes prominent use of statistics provided by the Department, including the figure that 93% of ERDF funding had been spent, contracted or applied for by January 2012.

“The Department cites this figure to justify its claim that all is well. That is however not the whole story. As our report also noted, only 63% of the programme had actually been spent or contracted by this point. This leaves 37% of funding still to be contracted on projects before the end of 2013, and spent before the end of 2015 where there is no guarantee that these projects will receive approval to proceed” (2) 

In a related development, it was confirmed on 13 July that Andrew Leach, the chief executive of the publicly funded £185 million venture capital vehicle for the North West, had left his post with immediate effect. 

“No official reason has so far been given for this sudden departure, even though it follows criticism about the frequency and volume of deals made a month ago from the local monitoring committee for ERDF (which financed the North West Fund),” said Clive Betts.

Recent press reports suggest that £100 million cash in the current round of ERDF for the North West remains unspent. “If that is true, then it’s unclear how the Government can supports its claim that all is well. Moreover, this situation appears much closer to those described in the evidence available to my Committee (3) which makes plain how the availability of match funding is still a significant problem for organisations trying to make use of ERDF monies”. 

Commenting further, Clive Betts added, “As part of the Government’s commitment to transparency, the Department should now publish figures every quarter so that everyone, including the CLG Committee, can keep better track of progress.

“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, says he understands that this remains a challenge for some.(4)  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.

“Specifically, the Government must set aside part of its existing Regional Growth Fund budget to provide ERDF match funding.  Doing this is the best way to help ensure the best projects receive EU funding still available to help boost economic growth across England.”
  
Editors notes

1. “Betts: Regional fund money at risk”, Local Government Chronicle, 13 July 2012
2. Paragraph 42 of the Committee’s report, European Regional Development Fund
3. Paragraph 45 of the Committee’s aforementioned report cites a recent survey by the Local Government Association which found that ‘over two-thirds of respondent councils were not confident about the availability of match-funding for the ERDF remaining in their regional programme.
4. Concerns on matched funding are heard - and understood, Mark Prisk, Local Government Chronicle, 16 July, 2012