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Concerns over the willingness of the Treasury to hand back funds to the EU will today be raised by council leaders during an evidence session of the Communities and Local Government Select Committee

Local areas are entitled to over £1 billion worth of European Regional Development Funding (ERDF) from now until the end of 2013 – but for the money to be claimed, it needs to be matched by other sources. However, over two-thirds of councils are concerned that there is not enough funding available to match-fund the remaining cash.

Whitehall has not done enough to help councils find this vital match funding. Instead, the Treasury seems willing to give the £1 billion back to Brussels in exchange for receiving less in return - around £670 million - as part of the UK Rebate (two-thirds of the amount).

This sacrifice of funding could have a huge impact on many local projects intended to boost jobs and growth. The failure to replace match-funding pots has left projects without enough money to continue, with over half of councils responding to an LGA survey having projects that had fallen through or were at risk of doing so.

Town hall chiefs have been looking to find matched funding to go alongside the ERDF from other local and national sources – such as the Regional Growth Fund – but this has been difficult due to nationally driven schemes and EU bureaucracy.

Cllr David Sparks, Vice Chair of the Local Government Association, said:

"This funding from Brussels is worth over £2 billion for local areas once the matched funding is taken into account. Losing this source of income could be devastating for local economic growth.

"Furthermore, it's not economic sense to abandon this cash for a lesser amount in return. Town hall leaders are urging the Treasury to think again, and consider what is necessary to ensure every penny from ERDF is invested in vital projects for growth."

In the past, the Regional Development Agencies (RDAs) have overseen the spending of EU regional funds, including providing the matched funding to access the ERDF. Following their demise, councils are keen for the EU funding to be increasingly driven by the needs and wishes of local businesses and communities.

ERDF is designed to help create a more balanced, prosperous economy. Recent EU figures found that England has the highest regional inequality across the whole of the EU, with one area having a GDP of just 73 per cent of the EU average. Local areas are entitled to this investment, and should be able to use it.

Written by Scott Buckler
Monday, 30 April 2012 8:08

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