European Regional Development Fund - Communities and Local Government Committee Contents

1  Introduction

1.  Reducing regional economic disparities within Europe has become an increasingly important policy objective for the European Union (EU), particularly since the accession of ten new Member States in 2004. Article 174 of the Treaty on the Functioning of the European Union states:

In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion.

In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions.[1]

2.  The European Regional Development Fund (ERDF) is the largest of the three main funds used by the EU to achieve greater economic cohesion, reduce regional disparities and promote economic growth across the EU. The fund was set up in 1975, and now operates on a seven year cycle. The total budget for the current ERDF round of 2007-13 was set at €201 billion and negotiations are underway to set the objectives, regulations and size of the ERDF for the next programming period covering 2014-20. This process forms an integral part of negotiations over the EU's whole budget for that period, of which regional funding forms an increasingly large proportion.[2] It is in this context that we decided to hold an inquiry into ERDF, with the intention of informing the UK's negotiating position over the coming months, and examining whether England's regional policy and funding should be a matter exclusively for Ministers in London.

3.   We issued the following call for evidence on 28 February 2012 asking for submissions that addressed the following questions:

  • how, and on what, is ERDF spent?
  • is the taxpayer in England obtaining value for money from the ERDF?
  • could the funds contributed to, and paid out on, regeneration through ERDF be spent more effectively by repatriating ERDF to the Government in London?
  • 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.  We received over 40 written submissions from local authorities, think tanks, academics, the European Commission, the Government and other interested parties. We held two oral evidence sessions in April and May 2012 at which we examined the themes and issues that emerged from the written evidence. We are grateful to all those who gave evidence and contributed to the inquiry.

5.  In this Report we consider in chapter 2 what the ERDF has delivered in England, and whether it is possible to assess its value for money. In chapter 3 we look at the role of the Department for Communities and Local Government (DCLG) and, specifically, at the impact of the transfer from Regional Development Agencies (RDAs) to DCLG, and how the abolition of the RDAs has affected the operation of the fund on the ground. We consider, in particular, the problem of match funding, and whether this has stopped some worthwhile projects going ahead. We then look forward in chapter 4 to the next ERDF round, covering 2014-20, and what improvements could be made to make the fund more effective. We conclude in chapter 5 by considering the issue of repatriation, and whether, in the longer term, the direction, management and funding of English regional policy should be a matter exclusively for England, without the involvement of the EU.

1   Treaty on the Functioning of the European Union, Article 174 Back

2   The terms regional policy and cohesion policy are often used interchangeably; for consistency we refer to regional policy in this report. Back

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Prepared 13 July 2012