Supplementary written evidence submitted
by Chief Economic Development Officers Society (CEDOS) and the
Association of Directors of Environment, Economy, Planning &
Transportation (ADEPT)
THE ISSUE OF MATCH FUNDING FOR EU STRUCTUTRAL
FUNDS TO ASSIST REGENERATION
INTRODUCTION
1. The Chief Economic Development Officers Society
(CEDOS) and the Association of Directors of Environment, Economy,
Planning and Transportation (ADEPT) jointly submitted written
evidence[16]
to the Committee's Inquiry into regeneration. In our evidence,
addressing the question of what action the Government should be
taking to attract money from public and private sources into regeneration
schemes, we made the point that the flow of funds through current
European programmes that benefit regeneration projects should
not be disrupted and that the Government should ensure that match
funding is available to enable EU Structural Funds to be drawn
down to maximum effect.
2. Subsequently Kieran McNamara, Chair of CEDOS gave
oral evidence on behalf of our two organisations on 23 May 2011.
During the oral evidence session, the Chair of the Select Committee
raised the issue of ERDF funding (Question 77) and his understanding
that quite a bit of it is floating around the system. He asked
whether the witnesses were aware of any possibilities that might
now be applied or whether it was the fact that matched funding
had gone away. Kieran McNamara indicated that the evidence was
that it is a matched funding issue. During the discussion, it
was agreed that we would seek to provide further information and
evidence on this.
3. Subsequently, we have consulted further with CEDOS
and ADEPT members and we are pleased to submit this supplementary
memorandum of evidence to assist the Committee. In doing so, we
would like to underline our overall position that drawing down
available EU Structural funding is vitally important to achieving
effective local regeneration. It is equally vital to achieving
the Government's policy of rebalancing the national economy and
pursuing a localism agenda - both of which we support fully.
2007-13 EUROPEAN
REGIONAL DEVELOPMENT
FUND (ERDF) PROGRAMME
4. The 2007-13 ERDF programme is worth £2.97
billion across England and is focused on providing funding for
projects to boost economic renewal and regeneration. To draw down
the available ERDF, 50% match funding[17]
is required, for which the Regional Development Agency (RDA) single
programme budgets have been the major source. Collectively, the
RDA single programme budgets were worth £1.7 billion in 2010-11.
The Government cut these budgets last year and announced the abolition
of the RDAs by March 2012. The cuts to RDA funding present a major
challenge to drawing down the remaining ERDF funding and therefore
to the process of economic regeneration in this country. Any unspent
funds have to be returned to Brussels.
5. The Department for Communities and Local Government
(DCLG) is best placed to provide the latest information on the
amount of ERDF remaining unspent in the current programme. However,
it is understood that there is currently around £1.3 billion
remaining across the English ERDF programmes. Although DCLG has
taken over ERDF governance and management, the Government has
yet to set out a clear plan to ensure match-funding is available
to draw down the remaining ERDF funding. The Regional Growth fund
(RGF) had been identified as a significant match-funding source
but the fact is that only one of the 50 successful RGF Round 1
bids was linked to ERDF. Concerns are growing at the likely impact
on regeneration of a failure to take up available EU funding as
a result of match funding problems.
IMPACT ON
LOCAL REGENERATION
PROJECTS
6. The effect on economic regeneration and recovery
is perhaps best shown by some individual examples, which have
been brought to our notice by CEDOS and ADEPT members. They illustrate
the potential impact of the loss of Regional Development Agency
match funding, and the scarcity of other financial resources to
replace it, on existing committed ERDF projects.
DERBYSHIRE—PRIORITY
PROJECT IN
THE DERWENT
VALLEY
7. The Derbyshire Economic Partnership manages the
East Midlands Development Agency (emda) single programme funding
for Derbyshire. Whilst this will come to an end in September 2011,
there are a number of projects that have stalled because emda
funding was cut for any future projects last year. Whilst some
that were matched with ERDF have managed to find funding from
elsewhere, the project that has taken the biggest hit is Derbyshire's
priority project, Cromford Mill.
8. The aim of the project is to convert Cromford
Mill Building 17 in the Derwent Valley Mills World Heritage Site
(DVMWHS) to:
— provide
managed workspace accommodation, offering networking benefits
for a cluster of small and medium sized enterprises; this will
create 19 new business units creating space for over 100 jobs
in over 13,000sq.ft. of workspace;
— reduce
out-commuting, stimulating the local economy and reducing CO2
emissions;
— be
a catalyst for unlocking the economic potential of the Cromford
Mills complex of partially redundant buildings and the DVMWHS
(15 miles along the Derwent valley from Matlock Bath to Derby),
in furtherance of DVMWHS Economic Development Plan;
— in
accordance with DVMWHS Management Plan and Economic Development
Plan, provide a visitor "gateway" to attract 100,000
visitors and signpost to attractions within Cromford and the wider
DVMWHS;
— stimulate
visitor spending and new jobs in the local economy and in other
visitor attractions along the Derwent Valley; and
— provide
an economically viable future for this "heritage at risk"
building.
9. The total cost of the project is £4.4 million.
The funding package consisted of Heritage Lottery Fund, emda single
programme and ERDF. £1 million was allocated to the project
through the single programme but following emda's budget cut,
this has now been lost to the project. The applicant is trying
to make up the shortfall but it is proving very difficult. The
applicant has until September to get match funding in place otherwise
ERDF will be lost.
NORTHAMPTONSHIRE/EAST
MIDLANDS—SUSTAINABLE
CONSTRUCTION INET
PROJECT
10. The Sustainable Construction iNet offers expertise
and advice to construction businesses throughout the East Midlands.
The cuts to East Midlands Development Agency funding have resulted
in the early termination of the contract for the iNet project,
which is operated by the University of Northampton. The amount
of emda single programme funding available will reduce by approximately
£1.4 million covering the period October 2011 to March 2013.
The single programme budget provided the match funding for ERDF
for the project, and the £1 million of allocated ERDF funding
will remain available only if alternative sources of match can
be identified by 1 September 2011. The University will seek to
provide partial match funding, but the majority of the £1
million ERDF funding will be lost unless alternative match funding,
which aligns with the original project objectives, can be identified.
Other sponsors are being actively sought to help retain the ERDF
money to support innovative businesses but this is looking extremely
difficult.
TORBAY—URBAN
ENTERPRISE FUNDING
11. The collapse of South West Regional Development
Agency (SWERDA) match funding is having a direct impact on Torbay's
ability to draw down all of the available funding from the current
EU Competitiveness project. One of the priorities of the South
West programme is for Bristol, Plymouth and Torbay to be able
to access ERDF funding for urban enterprise. This funding has
been allocated to address severe deprivation in the South West
and help stimulate essential economic growth. At present, there
is £20 million of unspent ERDF destined for the three areas.
Torbay has developed a series of projects for which it had been
agreed that the Regional Development Agency would provide around
25% of the funding, Torbay 25% and ERDF the remaining 50%.
12. The withdrawal of SWERDA support has left a gap
of some £2.5 million in match funding for Torbay. Work is
going on to find alternative solutions. They have invested time
and money developing a market analysis to support a JESSICA model
to allow land to be used as match funding but this was not supported
by DCLG. Despite the Government's rhetoric, Torbay has not yet
been able to link ERDF and Regional Growth Fund aspirations together.
Failure to find alternative match funding will result in the inability
to deliver the programme with activities such as coaching for
potential business start ups, support to start ups and social
enterprises and small scale workspace being lost. This could be
extremely damaging to the local economy and could pull Torbay
further into deprivation at a time when the area is starting to
see some positive outcomes.
THE OVERALL
PICTURE
13. The above examples illustrate the problems that
are being faced in many areas across the country. A survey carried
out by the Local Government Association (LGA), the results of
which are due in mid-July, will provide further insight. Already,
emerging findings from the survey indicate the concerns of local
authorities with around two-thirds of survey respondents being
not very or not at all confident that there is sufficient finance,
across all sources, to match-fund the remaining ERDF. 25% have
been involved in projects that have fallen through, and a third
have identified projects at risk. Whilst local authorities and
their partners are doing all they can to find alternative sources
of match funding, it is important to point out that, with the
cuts they are having to contend with, local authorities are not
in a financial position to fill major match funding shortfalls.
14. Once it has been analysed fully, the Local Government
Association will be pleased to provide the Committee with further
information from the survey, including details of other projects
that are being threatened by the withdrawal of RDA funding and
local ideas for resolving the match-funding issue, such as revisiting
priorities and eligibility criteria at programme level, attaching
higher priority to ERDF in future Regional Growth Fund rounds;
increasing the intervention rates and implementing flexibilities
to allow better private sector and "in kind" sources
of match funding.
THE WAY
FORWARD
15. There is an urgent need for the Department of
Communities and Local Government to put in place a plan across
Government and work with local authorities and local enterprise
partnerships to ensure match funding is identified and made available
to draw down the ERDF remaining across the current English programmes.
It is also important to plan ahead for the organisation and management
of future programmes. Whilst its size and nature will not become
clear until next year, it seems likely that ERDF will continue
in England during 2014-20.
16. To maximise the contribution ERDF can make to
supporting regeneration and sustainable economic growth, in our
view it will be essential for local authorities to be involved
early in the process to ensure future programmes are as effective
as possible in meeting local needs and circumstances. We would
be extremely concerned if a centralist approach was taken resulting
in a single ERDF programme for England for 2014-20. In line with
its localism agenda, we would urge the Government to examine the
opportunity for local authorities and local enterprise partnerships
to play a key role in the development and delivery of ERDF strategy
in this country.
July 2011
16 See item Regen 12 on the list of written evidence
on the Communities & Local Government Committee section of
the Parliament web site www.parliament.uk Back
17
25% in Convergence areas Back
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