Session 2010-12
European Regional Development Fund
Written evidence submitted by Nottingham City Council
Nottingham City Council is the responsible body for the management of ERDF Priority Axis 2 funds in Nottingham (part of the East Midlands Operational Programme).
Submission prepared by Jem Woolley, European Officer for Nottingham City Council. I am responsible for the ERDF programme in the city and for servicing the Nottingham ERDF PA2 Commissioning Group which oversees the local ERDF programme.
Summary of main points
- ERDF is a fund which is targeted, both geographically and thematically, towards key areas of growth and disadvantage and has brought forward a number of transformative projects.
- In the East Midlands, innovation has been supported through knowledge transfer and technology development projects through Priority Axis 1 (PA1).
- Enterprise growth and support for small businesses in disadvantaged parts of the region have been supported through Priority Axis 2 (PA2).
- ERDF has provided excellent value for money by providing initial impetus for projects that have then drawn in substantial levels of match funding (both public and private).
- Links with other university and private sector innovation projects produce excellent added value for the funds.
- The use of relatively small levels of funding in eligible PA2 areas produces substantial multiplier effects in local economies particularly supporting social enterprises.
- More localism rather than centralisation of the funds would produce an even more effective programme in future.
1. How, and on what, is ERDF spent?
1.1. In the East Midlands ERDF is spent on promoting economic growth and enterprise development through the use of three Priority Axes. Priority Axis 1 (PA1) is used for increasing commercialisation of innovation of small and medium-sized enterprises in the region's priority sectors. Priority Axis 2 ( PA2 ) is delegated to the regions most disadvantaged districts, including Nottingham . Priority Axis 3 ( PA3 ) is used for technical assistance (mainly management of the programme both regionally and locally).
1.2. PA1 has produced some excellent innovation and knowledge transfer projects. Locally this includes the University of Nottingham’s Environmental Technology Centre, which assists SMEs to improve their environmental and financial performance by providing them with access to emerging and established technologies.
1.3. It has also supported the University’s Institute for Aerospace Technology, a knowledge and technology transfer facility for aerospace innovation in the region.
1.4. At Nottingham Trent University there is the Future Factory project, a product, process and service design centre for sustainable business practice for SMEs, allowing access to services to enhance business competitiveness.
1.5. Innovation networks (iNets) have also been funded, each one supporting one of the regions priority sectors. For example the Healthcare and Bioscience iNet has provided research and development facilities for a sector that is increasingly vital to growth in the region.
1.6. Nottingham Development Enterprise has developed the Science City SME Energy Programme supporting the local Green-Tech SME sector, facilitating collaborations and joint ventures between SMEs and universities, and providing test beds to pilot products.
1.7. PA2 supports enterprise development in disadvantaged areas of the region. For Nottingham this has meant around £20m ERDF over the period of the programme, delivering projects providing support to people developing their own business ideas and growing them into viable enterprises.
1.8. The Enterprise Ecologies and Shield (business ideas generation) projects provide this support in some of the poorest parts of Nottingham and have been of huge importance, particularly at a time when other business support, e.g. Business Link, is being withdrawn. Over 300 people have been assisted to set up their own businesses through these two projects alone.
1.9. PA2 also supports the development of space for businesses to start up and grow. The Nottingham Pre-start Community Enterprise Centre is an initiative to provide facilities and support for businesses before start up and at early stages in their development. This project will see the refurbishment of a disused building in one of the most disadvantaged areas of the city to provide modern facilities for pre-start businesses.
1.10. The Ultraband project, led by Nottingham City Council, has developed a pilot to see how better levels of ICT connectivity can support local business centres, particularly those housing digital content sector SMEs, to provide top quality services. Three local centres are now connected and the resident small businesses are beginning to realise the benefits of superfast connectivity.
1.11. Other projects include Sneinton Gateway, where initial regeneration work has included the development of a new public square and improvement of pedestrian links in a disadvantaged area of the city to create a more attractive environment for business investment. This has been aligned with the City Council funded redevelopment of the local leisure centre, providing swimming and other fitness activities for local people in a brand new environment – showing how ERDF can be a catalyst for extra investment for the regeneration of run-down areas.
1.12. PA3 has also provided a small, but essential degree of funding to support the management of the local programme and an element of guidance to smaller, often third sector, organisations on what can be a complex and bureaucratic programme.
2. Is the taxpayer in England obtaining value for money from the ERDF?
2.1 ERDF acts as an effective way of supporting job creation and enterprise growth projects that may not otherwise see the light of day. In effect the fund is doubled as match funding is brought in either from the public sector, or, increasingly, the private sector. Often ERDF is the seed fund that enables the project to go ahead.
2.2 The use of relatively small levels of funding (for instance the Nottingham PA2 allocation is around £20m over the seven year programme) will ultimately result in around 20 projects levering in additional resources to the city. The added value of the ERDF also resides in the development of a Local Investment Plan to co-ordinate the elements of the programme with projects working in distinct ways, but linked through the common aim of generating local enterprise growth.
2.3 For this level of funding, the current Nottingham PA2 programme has in projects already contracted or in appraisal the following level of outputs:
- 1,683 businesses assisted to improve performance
- 820 businesses improving performance
- £19.4m GVA from businesses improving performance
- 3,138 people assisted to start a business
- 1,077 new businesses created or attracted to the region
- 1,776 jobs created
- 8,676 sq metres new or upgraded workspace
- 2.07 hectares of brownfield land redeveloped
We believe the value for money offered by ERDF therefore compares well with any other programme.
2.4 Links with Nottingham innovation-based projects funded through the PA1 stream allow for even more synergy in building the local economy. University knowledge transfer projects in particular feed into the restructuring and realignment of the local economy to provide additional reasons for innovative SMEs to start up and relocate here.
2.5 ERDF is possibly the most monitored, audited and evaluated economic regeneration fund around, so if this is a measure of mitigation against waste, it passes this test. One of the main issues practitioners have about ERDF is how risk-averse projects have to be, so the high level of scrutiny would certainly point to a reasonable chance of projects being good value for money.
2.6 However, the level of monitoring and auditing of ERDF projects can sometimes cause severe delays in approvals and this can reduce value for money by increasing costs and reducing the benefits of early delivery. There is an argument that simplification of these processes (while retaining robust checks) would increase the value of the programme.
3. Could the funds contributed to, and paid out on, regeneration through ERDF be spent more effectively by repatriating ERDF to the Government in London?
3.1 This argument is quite frequently made. Superficially it has some merit as it would in theory cut out a level of bureaucracy and make the system less of an administrative burden. There is also an argument that it could be more closely aligned to government priorities and strategies.
3.2 However, there is a strong counter-argument that these funds are effectively ring-fenced by being part of the EU Structural Funds. They have to be spent on the priorities of local economic development and therefore cannot be absorbed into the Treasury budget where they might be used for other purposes. The priorities of a ‘localist’ approach to economic development necessitate some level of devolution of strategy.
3.3 It is the experience of Nottingham that a regionally-managed fund, with further delegation down to district level, which has been the case for at least the last two programmes, has enabled local knowledge to inform the most effective use of ERDF. The further away from the local level that programmes are managed, the less likely it is that local solutions are prioritised, or even considered.
3.4 The most effective projects are those delivered in line with local need and to this effect we believe we have produced a local strategy for investment of ERDF (the Local Investment Plan) which has brought forward, through a competitive process, a good range of projects tailored to support enterprise development and economic growth in the city. (Incidentally, the lack of a similar regional focus to the European Social Fund has had the effect of making it less responsive to local needs).
4. With the abolition of the Regional Development Agencies responsibility for ERDF in England passes to DCLG. What effects are these changes having on the administration, assessment and payment of ERDF?
4.1 The initial disruption of the changes caused significant delays and confusion in the administration of the programme. It particularly caused delays in the appraisal of new project applications and of those already in the pipeline.
4.2 In the East Midlands there has been some continuity as many of the ERDF team transferred over to DCLG. However, there have been a number of top level changes that have been frustrating for local partners.
4.3 The changes in governance structures meant that there was a long gap between the final meeting of the Programme Monitoring Committee and the first meeting of the new Local Management Committee which meant delays to the signing off of projects. Local partners were also previously involved in Priority sub-groups which have been replaced by a single Investment sub-group with less representation.
4.4 Payments have generally continued to be made on a quarterly basis and we haven’t had any reports of problems or significant delays.
4.5 It’s worth noting that the loss of the Single Programme funds controlled by the RDAs led to a number of projects closing early or not starting as they lost match funding. This has more to do with the government’s deficit reduction programme than the abolition of the RDAs but it has significant current and future implications for the programme as projects struggle to find the necessary levels of match funding.