European Regional Development Fund

Written evidence submitted by One East Midlands

1. Summary of information:

· East Midlands ERDF is split across programmes for local economic support and region-wide growth priorities. The lack of match funding now available to support local growth in particular is negatively affecting the programme and placing local spend targets at risk.

· Regional Growth Fund has not be a realistic source of match funding fro ERDF in the East Midlands

· Our failure to invest ERDF due to lack of domestic match funding will be the greatest failing to the taxpayer in England if allowed to occur.

· Decisions on how the programme is managed in the future cannot and should not be made until the needs and programme priorities are set; form must follow function and not vica versa.

· The committee should consider the opportunity to align ERDF with other programmes with overlapping priorities in order to increase impact.

2. About Rachel Quinn and One East Midlands

2.1 One EM is the regional network for the voluntary and community sector in the East Midlands. We are a membership organisation, a registered charity and company limited by guarantee. Our role is to ensure that our VCS members play an influential, valued and equal role in all policy development across our region. In relation to ERDF we play a dual role; ensuring that our members understand and engage with ERDF and local programmes and that the ERDF programme resonates the role of the VCS in addressing economic disadvantage and inequality. In addition to ERDF, One EM works on issues surrounding ESF (hosting the EM Social Inclusion Policy Forum) and on RDPE through our rural networks.

2.2 Rachel Quinn, Chief Executive of One East Midlands has extensive experience of VCS and wider third sector involvement in ERDF. Previously a Director of the Greater Nottingham Sub-regional Strategic Partnership (Economic Development Partnership), Rachel was later the VCS representative on the East Midlands ERDF Programme Monitoring Committee. In 2011 Rachel was appointed Deputy Chair of the East Midlands Local Management Committee and now Chair’s the East Midlands ERDF Investment Sub-Group.

3. Evidence

One East Midlands offers the following evidence by question:

Question 1: How, and on what, is ERDF spent?

3.1 The East Midlands ERDF programme is a mid-sized programme compared with others in the England, with investment totalling €268m or £231m at current interest rates. With match funding this equalities to a total programme worth £460m to the East Midlands.

3.2 The EM programme is simpler than many others across the country; delivered through 3 priority axis:

· PA1: Increasing productivity through innovation and sustainable business practice. Funding is focussed on priority sectors with regional relevance and has a nominal value of £100m ERDF. This axis is currently 73% committed and on track to meet all targets.

· PA2: Increasing sustainable economic activity in disadvantaged communities. This strand is targeted on the 12 most disadvantaged wards in the East Midlands and has a value of £122m ERDF. This strand is currently 46% committed and at moderate risk of underspend in the later stages of the programme.

· PA3: Technical Assistance. Supports programme management and supported access to the programme for specific groups and audiences. Value is £9m. This axis is currently 25% committed and its application to encourage greater local-level uptake is currently being explored

· In addition to these programmes the East Midlands launched the first JESSICA programme in England in 2010. JESSICA in the EM has a value of £15m from PA1 activity.

3.3 A full list of EM ERDF expenditure can be sourced from the local team. However, it is important to note that the loss of Single Programme and other sources of local match funding for ERDF have slowed on uptake (especially at local level) and have limited the types of organisation now able to apply for ERDF. PA1 uptake is now heavily focussed on the Universities as often the only source of PA1 match and PA2 uptake is becoming increasingly difficult as the programme progresses and local public spending budgets are reduced.

3.4 Regional Growth Fund (RGF) had been suggested as a possible source of match funding for ERDF at local level. However, the East Midlands had poor success with RGF with only 4% of RGF reaching the region.

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

3.5 We do not feel sufficiently informed to answer this question in detail. However, it is certain that any failure to find match funding and spend ERDF will be a great loss to local communities and economies across England.

Question 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?

3.6 One East Midlands holds specific concerns about the notion that we could consider ‘repatriating ERDF to the Government of London’ before we have decided what our priorities for the next round of ERDF should be. In preparing for the future 2014-20 programme it would be better to be focussing on how the funding should best prioritised and linked with other skills-related programmes such as ESF (something which has caused continuous problems in the current programmes) rather than spend too much time deciding who should own the funding.  Form must follow function and not the other way around.

3.7 If we consider the nationalisation of ESF as an example, there is strong evidence that delivery has been severely hampered if not impaired by the complexities and limitations of administering a national programme to address what are clearly locally distinctive issues. In the case of ESF, the use of prime contracting systems has limited the delivery policy of ESF to those which fit the procurement processes of the contracted bodies. In the East Midlands this resulted in a mass refusal to support the current ESF delivery framework by the Third Sector. This stance was taken because the framework significantly restricted opportunities to undertake anti-poverty work as the procurement process was complex, despite clear evidence of need.

3.8 Individual aspects of the Common Strategic Framework Objectives may lend themselves for a more coordinated national approach and integration with other programmes. Examples include:

· Strengthening research and innovation – this could operate as a cross cutting theme and be coordinated through a national strategy by BIS

· All environmental objectives would benefit from a national strategy and coordinated responses and again DEFRA would be an obvious leading department however;

· Anti-poverty work, supporting labour market mobility and building skills and employability are all issues with high levels of local distinctiveness and should be delivered accordingly.

3.9 It is important that each aspect of the framework is considered in relation not only to it’s relationship with each programme (and in some cases with our existing domestic programmes) but also with the most appropriate scale of delivery. Once these issues have been set then the mechanism for delivery can be decided.

3.10 Our position, based on many years experience of addressing local economic issues, is that local delivery is crucial due to the huge economic variability and stability across the country.  A ‘one size fits all approach’ simply does not fit with ERDF and local understanding and contract management cannot be best achieved from London.

Question 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?

3.11 The movement of responsibility for ERDF from the RDAs to DCLG has had both positive and negative effects locally.

3.12 The hosting of ERDF teams with the RDAs meant they had access to a wide range of specialist support services that benefited their operation. Such support services included research services, mapping and analysis, marketing and administrative support. The loss of the RDAs has significantly hampered the functioning of the ERDF team in the EM. Day to day programme operations are manageable however it must be borne in mind that lack of marketing in particular may negatively impact on uptake of ERDF in the final phase of the current programme.

3.13 In addition, DCLG have involved senior staff of the local teams in a number of national work-streams which have added to local workload and have taken on additional tasks such as RGF monitoring. The recent proposal to merge local teams with further dilute local capacity at a time when focus on delivery is of absolute importance.

3.14 However, those things considered, the possibilities for a more coordinated approach and standardisation to monitoring are welcomed at regional level. It is also felt that ownership by a central department also strengthens our ability to shape and frame local audit processes and to influence the structure and function of future European programmes in a more direct and coordinated way.

4. Recommendations

The recommendations made by One East Midlands are:

· Ensure that the future of ERDF is considered in conjunction with the other EU Structural Funds, obtaining alignment where possible.

· Future ERDF priorities and delivery should be set at a level as close to communities as possible where those outcomes and objectives have a direct community impact and focus.

· Ensure that a wide range of stakeholders are fully engaged in the future operating structure of ERDF and other related programmes; at both development, implementation and evaluation stages;

· Ensure that the existing programme teams have the resources they need to deliver the remaining programme effectively in a difficult funding climate.

One East Midlands

April 2012