European Regional Development Fund

Written evidence submitted by Tees Valley Unlimited

Summary

· This evidence is submitted by Tees Valley Unlimited, the Local Enterprise Partnership for the Tees Valley. The Tees Valley covers the five Boroughs of Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton on Tees. This response incorporates the views of the five local authorities and the Local Enterprise Partnership.

· Tees Valley Unlimited has been involved with European funding through many programming periods.

· We have had extensive involvement with the management of European programmes.

· ERDF has been of particular benefit to the Tees Valley, details of which are given below.

Q1. How, and on what, is ERDF spent?

In the Tees Valley ERDF has been spent on a range of activities, including a mixture of capital and revenue projects. These activities have covered both priorities of the North East programme – Enhancing and Exploiting Innovation (Priority1) and Business Growth and Enterprise (Priority 2).

For example, a business support package is currently being administered with Tees Valley Unlimited as the nominated project lead, supported by all five local authorities and Teesside University. This has included the provision of incubation facilities, enterprise coaching activities, and an intensive start up support package for disadvantaged areas. Headline figures from the package demonstrate that in excess of 200 new SMEs and over 250 existing SMEs have been assisted, and over 300 jobs have been created.

Other schemes in the Tees Valley have been targeted at specific sectors, such as the Digital City which is a major initiative to encourage the growth of the digital technology industry, with its main objective being to create a vibrant, successful and self-sustaining "supercluster" in the Tees Valley based on Digital Technologies, Digital Media and the Creative Industries. ERDF funding has helped to establish both the Institute of Digital Innovation and Digital City Business, helping Digital City to become a powerhouse for all things digital.

Across the North East a number of other business support packages have also been delivered, such as the historic match to the Business Link contract, match funding for UKTI delivery and a range of other enterprise coaching schemes.

It is likely that ERDF capital funding will be sought to support the development of business accommodation on the Tees Valley Enterprise Zone sites, enabling SMEs to access appropriate accommodation to meet their needs.

Q2.  Is the taxpayer in England obtaining value for money from ERDF?

TVU has noted some issues which have been identified in recent months that could help ensure greater value for money from ERDF. For example, a recent audit has identified that internal recharges are difficult to claim, i.e. universities using their own venues for workshops and recharging for the refreshments or a local authority using an in-house printer. The amount of evidence required for these internal recharges is considered to be extremely excessive, and encourages local authorities to use external venues and companies for printing, which costs more than an in-house solution. TVU does not consider that this offers value for money and would welcome a process that made internal recharging easier to evidence.

It is also note worthy that organisations that are contracted with to carry out Article 13 and Enhanced Article 13 audits are not ERDF experts. This can impact on the way audits are undertaken and can make the process extremely onerous for project leads and key delivery partners.

Tees Valley Unlimited welcomes the Government’s commitment to simplification in the new programming period and believes that there are aspects to the current process that could be streamlined and by so doing could improve value for money even further.

Q3. Could the funds contributed to, and paid out on, regeneration through ERDF be spent more effectively by repatriating ERDF to the Government in London?

No. The Tees Valley considers it is imperative that decisions on investments are made locally, and are determined using local experience and intelligence and experience by using local partners.

Local decision making ensures that duplication of investment and activities is avoided, local initiatives are joined-up so that the impact is greater than with just stand alone projects and is not disjointed, and significant added value is demonstrated. A good example of this in practice can be seen with the current Tees Valley business support programme, where the delivery of the activities through a new ERDF project ensured there was no overlap or duplication of provision. This would not have been possible without the local knowledge and overview of activities in the North East.

Tees Valley Unlimited strongly supports to proposed changes to the administration of ERDF 2014-2020, specifically the creation of transition regions. This would enable areas such as the Tees Valley and Durham to agree the best ways to target funds to help achieve local priorities. Some joint working has already been undertaken with County Durham, as a rural satellite of Digital City has been located in Barnard Castle and has had a significant impact on future development of support to digital and creative industries across the two areas. This joint working will be advantageous to delivering in the new programming period via the Tees Valley and Durham Transition Region area.

The current ESF Programme has illustrated that a national programme with activities and priorities determined outside of the area of benefit does not work.

Q4. 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 changes in responsibility from the RDA to DCLG are still in the process of bedding down, and as such it is still a little too early to assess the impact of the changes. However, TVU has noted that while there has been little change in speed of processing, the process has not been streamlined and there are still a number of hoops to jump through at each stage. Changes in personnel have resulted in some information being requested in a different format, which has caused some confusion and had an impact on TVU processes.

Further concentration by CLG on Compliance means claims process is still extremely onerous. For example, the level of detail required in the transaction sheets is believed to be excessive. In addition to this there has been duplication in the type of queries raised by the ERDF secretariat, meaning TVU has been required to respond to the same query on a number of occasions, for example the methodology for HE sector overheads which are calculated and agreed at a national level. The concentration on the extreme level of detail has the potential to detract away from potentially more risky or serious issues.

Tees Valley Unlimited

April 2012