Fears region could lose EU funds

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Yorkshire could miss out on hundreds of millions of pounds of EU funds for boosting the regional economy due to hesitancy at Whitehall in supporting innovative new projects, a report by MPs warns.

A study by the communities and local government committee says Ministers are being too “cautious” when deciding whether to put forward the match-funding required for projects in Yorkshire to secure money from the European Regional Development Fund (ERDF).

The report reveals Yorkshire has so far secured little more than half of the £500 million allocated to it by the EU for the six-year period up to 2013 - the worst record in the country. By contrast, Cornwall and the Isles of Scilly has now signed deals securing almost three-quarters of its funding.

The money must be spent by the end of 2015 or will be lost to the region for good.

Committee chairman Clive Betts, the MP for Sheffield South East, said: “There is a pressing need to spend each region’s ERDF allocation before 2015.

“Unless Ministers take urgent steps to deliver on the Government’s promise to make it easier for projects to secure match funding... there is a significant risk (the) ERDF will not make the impact it could to help rebalance the UK’s economy.”

The fund is the main mechanism used by Brussels to support economic growth in regions across Europe.

Money is allocated depending on each area’s relative need, and in the 2007-2013 tranche Yorkshire won the UK’s second-highest allocation - £505 million.

However, the money can only be accessed when projects by local authorities or private firms secure match-funding for their grant from the UK Government.

Previously regional development agency Yorkshire Forward played a leading role in working with projects on ERDF bids and providing match funding.

But with Yorkshire Forward having been wound up by the Coalition this year, responsibility has fallen on Whitehall to match-fund projects directly, through the Department for Communities and Local Government (DCLG).

The report finds projects are now taking “longer to be approved” as a result of the change, and that “bids for innovative projects are being rejected because of a more risk-averse approach at DCLG.”

It concludes: “The Government does not seem to appreciate the problems that projects are facing in securing the match funding needed for them to go ahead.”

As a result, it says, only 54 per cent of Yorkshire’s allocated funds have been secured through contracted deals so far.

Mr Betts said the Government “has not delivered” on promises that its £2.4bn regional growth fund would be used to give targeted support to schemes bidding for EU money.

“We urge the Government to set aside regional growth funds specifically for this purpose,” he said.

He added that over the longer-term, the UK’s relationship with Europe needs to change so that funds designed to boost regional growth in Britain are controlled directly by the British Government.

DCLG hit back last night, denying funding could be lost and insisting that if other planned projects are taken into account which have not yet been signed off, the UK has secured the vast majority of its ERDF money.

A spokesman said: “The committee’s findings are not borne out by the facts.

“More than 93 per cent of the total programme is already spent, contracted or in the pipeline.

“Projects are required to identify their sources of match funding before they can enter the contracting process, and more projects are continuing to come forward.”