Press Release
Treasury move over EU billions could hit jobs and growth
30 April 2012
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.
Notes:
For more information on the CLG Committee inquiry, please vistit their website: CLG Committee inquiry [http://www.parliament.uk/business/committees/committees-a-z/commons-select/communities-and-local-government-committee/news/erdf---ev-session/]
Some examples of the vital projects being funded by EU funds include:
Wakefield MDC transformed its city centre with the Wakefield Waterfront development, which includes new residential and shopping centres, the project used £9 million ERDF and some council investment to attract and additional £22 million of private sector finance. Over 20 years the council estimates that over 10,000 jobs have been created, with £120 million of EU structural funds helping to leverage over £1 billion private sector investment in the District.
Cornwall Council used ERDF to transform the county with high profile investments such as the Eden Project, but also in supporting small businesses to thrive – some examples in the last year include support for; an engineering company to build capacity and win new business in France, the expansion of manufacturing company to move into new markets, and supporting the relocation and expansion of an exciting new furniture company. More information can be found at: Convergence investments[http://www.convergencecornwall.com/convergence-investments/]
Liverpool City Council used £50m ERDF to construct the Liverpool Arena and Conference Centre (ACC Liverpool) on the Kings Dock, once the largest vacant site in the city centre, and a centrepiece of the city's modern renaissance.
On 19 April LGA met with Commissioner Hahn, the responsible EU politician for EU Structural funds, to push the case for more locally responsive spending.
Overall EU Structural Funds are currently worth €9.4 billion (over £8 billion) to the UK from 2007-2013, and include the European Regional Development Fund, the European Social Fund, and Transnational Cooperation fund. A similar level of cash, worth around £1 billion per year, has been granted for the next period, running from 2014 to 2020.The full regulations, which will now be debated by the European Parliament and the European Council, can be found at: EU Cohesion Policy 2014-2020: legislative proposals[http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_en.cfm#1]
An LGA survey revealed that over two-thirds (61 councils from 91 responses) of councils were not confident that they would be able to leverage enough matched funding to use for local growth projects. Over half (54 councils from 91 responses) had projects that had either fallen through or were at high risk of doing so.The LGA website has the full LGA Survey[http://www.local.gov.uk/web/guest/eu-funding/-/journal_content/56/10161/2855023/ARTICLE-TEMPLATE]
The latest figures from the EU indicate that England has the highest regional inequality across the entire region. In England, Cornwall had a GDP of just 73 per cent of the EU average in 2009, compared to 332 per cent in Inner London – a huge difference of 259 per cent. While in France the difference was just 57 per cent between the highest (Rhone Alps) and lowest (Guyane). In Germany inequality in GDP terms stood at 110.7 per cent, between Hamburg and Brandenburg-Nordost. Eurostat published new GDP data for regions and NUTS II areas across Europe on 13 March. For more information, please see the Eurostat press release:
Regional GDP per capita in 2009: seven capital regions in the ten first places[http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/1-13032012-AP/EN/1-13032012-AP-EN.PDF]
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