European Regional Development Fund - Communities and Local Government Committee Contents

Conclusions and recommendations

Impact and value for money

1.  The European Regional Development Fund (ERDF) is highly valued by local authorities and other recipients. It has made vital contributions to a variety of projects across the country, many of which would not have gone ahead without ERDF money. (Paragraph 19)

2.  We recognise that it is difficult to isolate the impact of ERDF from other factors, but in these economic times the taxpayer must be reassured that public money is being spent efficiently and effectively. We are concerned that it has been so difficult to assess the value for money of ERDF; we recommend that the Government should evaluate this and report to us by the summer of 2013 on what has been achieved in each region. It should also ensure that monitoring and evaluation is improved and streamlined for the 2014-20 ERDF round. (Paragraph 25)

3.  Although the majority of benefits are realised in later years, the evidence available to us suggests that ERDF 2007-13 has not yet made a significant impact. It is not even possible to conclude that the 2000-06 ERDF round has done so, because of the lack of robust evidence. The challenges facing regions such as Cornwall and the Isles of Scilly are profound, and ERDF can only provide part of any solution. (Paragraph 27)

The role of DCLG

4.  We found support for the manner in which DCLG has managed ERDF in England following the decision to abolish the Regional Development Agencies (RDAs). Significantly, the decision to transfer former RDA staff to DCLG and leave them located in the regions has smoothed the transition. Where there was criticism it was that the transition had, in some areas, caused delays, particularly in approving new projects. We recommend that DCLG review arrangements for approving projects in those areas where delays have been reported. (Paragraph 38)

5.  ERDF is particularly useful for innovative projects which, because of the lack of alternative funding sources, might otherwise be unable to proceed. We urge DCLG to ensure that novel projects are supported, and not put at a disadvantage in a rush to get ERDF money spent on more straightforward, but potentially less beneficial, projects. (Paragraph 41)

6.  We are concerned that the lack of availability of match funding remains a serious impediment to the success of ERDF in England, almost a year since DCLG assumed responsibility. We are concerned that the Government does not seem to appreciate fully the problems caused by the shortage of match funding. This problem, together with DCLG's sensible desire to see all the ERDF money spent by the end of 2015, increases the risk that value for money will suffer. (Paragraph 50)

7.  We recommend that the Government reconsiders its decision not to set aside part of the Regional Growth Fund (RGF) budget to provide match funding for ERDF. We conclude that the Government needs to demonstrate greater strategic oversight in aligning funding streams, both in the short term and from 2014 onwards, to ensure that all the resources available are being used in a coherent way. (Paragraph 56)

Improvements for the future

8.  We welcome the Commission's proposed Common Provisions Regulation, which is a move towards simplification as a way of reducing the costs of the EU's regional funds for both taxpayers and organisations bidding for funding. We encourage the Government to take advantage of the opportunity this offers to streamline the system in England. (Paragraph 62)

9.  We welcome the Commission's proposals to harmonise its regional policy funds. It is vital that the available money is used effectively and efficiently; aligning the funding streams more closely should make it simpler and cheaper to administer, and easier for projects to access the funds. We also welcome the move towards a more flexible geographic basis to the Operational Programmes which should devolve management responsibility to groups such as Local Economic Partnerships. This will bring the decision-making process closer to the communities seeking funding, and should also make it easier to fund projects that span artificial regional boundaries. (Paragraph 65)

10.  We support the general principle of funding conditionality as a way of ensuring ERDF and other funds are directed towards Member States that can use the money most effectively. We agree with the Government that, on the basis of previous commitments made in the EU, macroeconomic conditionality should not apply to the UK, and we support the Government in taking a firm negotiating position on this. (Paragraph 69)

11.  We consider that ERDF resources should be targeted at the poorest EU regions, and it would appear that the Commission's proposals for 2014-20 weight the funding towards those regions appropriately. The introduction of the Transition category of regions will reduce the cliff-edge effect that exists under the current arrangement and is a sensible development. It is clear that withdrawing funding entirely from wealthier Member States is not supported for the 2014-20 ERDF round and we agree with the Government's decision not to pursue it in negotiations. The Government should, however, continue to put forward its arguments with the aim of securing enough support from other Member States for subsequent ERDF rounds. (Paragraph 79)

12.  We support the principle of repatriating regional policy funding, provided funding could be protected and ring-fenced over the long-term to ensure that the poorest English regions continued to receive the same level of support they would have received under the current system. The mechanism for achieving this objective will require the consent of other Member States and the Commission, as well as agreement with HM Treasury that the funding be guaranteed for the same seven year cycle. (Paragraph 85)

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Prepared 13 July 2012