European Regional Development Fund

Written evidence submitted by Devon County Council

Summary

· The current programme has seen EU funding more widely available across the whole of the UK but this has not resulted in an equitable distribution of funds: taxpayers in rural areas do not obtain value for money from the ERDF.

· There needs to be much more flexibility in the programmes to address local needs, with local organisations involved in decisions on programming and management.

· There would need to be a significant reduction in bureaucracy and increase in level of funding to outweigh the benefits of maintaining EU Cohesion Policy for all regions.

1. How, and on what, is ERDF spent?

In the current round (2007-2012) ERDF funding through the South West Competitiveness Programme has focused on three priorities: (1) knowledge & innovation; (2) enterprise & growth; and (3) urban enterprise.

There has been a shift of focus onto strategic, regional initiatives and away from projects to address local issues. This has resulted from the extension of ERDF funding through the Competitiveness Programme to the whole South West region (excluding Cornwall and the Isles of Scilly which have a separate Convergence Programme) rather than the more targeted nature of the previous Objective 2 programme (2000-2006). In addition, much of the funding has been utilised to support the government's Solutions for Business products. Combined with the thinner spread of the funding, this has resulted in reducing the visibility and impact of ERDF in the current round in comparison with the previous period (2000-2006).

ERDF secured through the EU Co-operation (Interreg) Programmes is very effective in helping to pool resources and share experience between EU regions. Devon County Council is currently participating in six Interreg projects including the Cycle West initiative to develop a network of cycle routes in the partner regions of Brittany, Normandy, Dorset, Devon and Cornwall and the AtlantKIS project for the development of knowledge intensive services for small businesses including ICT and R&D.

2. Is the taxpayer in England obtaining value for money from the ERDF?

The current programme has seen EU funding more widely available across the whole of the UK but this has not resulted in an equitable distribution of funds: taxpayers in rural areas do not obtain value for money from the ERDF.

Our experience in the South West of England is that taxpayers in rural areas have lost out since they share the Competitiveness Programme with cities which are more suited to the type of large-scale investment favoured by the current programme and which have therefore been able to absorb the funds much more quickly.

For example, in the South West of England, the majority of funding has benefitted Bristol (eg. £9m ERDF for the National Composites Centre) despite an agreement that funds should be allocated in such a way that the greatest impact should be on the more peripheral western part of the programme area, in particular North Devon, Torridge and Torbay.

There needs to be much more flexibility in the programmes so that both urban and rural areas can access ERDF funds to address local needs. It is therefore essential that local authorities and other local organisations are more involved in determining priorities for EU programmes at local level as well as being able to participate in more devolved management processes.

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?

The relative effectiveness of funding allocated to regeneration from either UK government or the EU depends on some critical points:

· achieving savings in administration and bureaucracy

· maintaining an equivalent budget

In favour of renationalisation:

· there could potentially be scope to improve the flexibility in how funds can be spent without being restricted to the provisions of the ERDF regulation. It is important to bear in mind that some EU regulations eg. State Aid rules, would still apply

· the UK would not be restricted to using NUTSII level data to determine eligibility for funding and so it could be targeted more precisely on areas of need. This would link well with the localism agenda and could be managed through Local Enterprise Partnerships.

· more streamlined funding would assist with project management if it meant more streamlined funding criteria, application procedures, financial controls, audit etc.

In favour of retaining EU regional funding:

· tackling regional disparities across Europe, rather than through national approaches, can help to build the capacity of poorer regions. This in turn has the potential to benefit wealthier member states such as the UK by developing potential export markets.

· the 7-year budget cycle provides continuity and allows for more strategic programming - both in terms of the longer development time required for large-scale projects and in helping to address issues over a wide geographic area through macro-regional strategies

· ERDF allows for co-operation with other countries on issues of common interest, particularly through the EU Co-operation (Interreg) Programmes. In the South West of England, there are a range of joint initiatives with partners in northern France to find co-operative solutions to issues either side of the English Channel including a range of projects involving co-operation on maritime and coastal issues.

From a local authority perspective, the reduction in bureaucracy and increase in level of funding would need to be significant to outweigh the benefits of maintaining Cohesion Policy for all regions.

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?

The County Council has had no direct access to ERDF funds in the current Competitiveness Programme and so is not in a position to answer this question.

Devon County Council

April 2012