European Regional Development Fund

Debate between Lord Foster of Bath and Chris Williamson

Thursday 28th February 2013 Westminster Hall

[Chris Williamson (Derby North) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries, for the first time. I congratulate my hon. Friend the Member for Sheffield South East (Mr Betts) on securing the debate and on the excellent report that his Committee produced. I hope that the Government will look at the report and implement its recommendations.

The European regional development fund is clearly an increasingly important funding stream in a time of austerity, when funds from other sources are under pressure. That brings about its own issues, and local government funding cuts are making life increasingly problematic in enabling local authorities to find the match funding necessary to draw down the important ERDF funding stream. I regret to note that the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), when he was on the “Today” programme this morning, was urging even more reductions in the years ahead, even though we have already had unprecedented funding cuts to local government. That will obviously make life even more problematic for those councils that seek to secure the funding stream through the ERDF.

I have spoken to a number of colleagues in local government, and there is some anxiety and cynicism about the possibility of an underspend. I am reassured to some extent by what I have heard in my hon. Friend’s contribution and by what I understand Ministers are saying about ensuring that the fund will be spent in total, without an underspend. That has not, however, stopped the anxiety or the cynicism expressed to me by colleagues, who are concerned that under the terms of the UK rebate any unspent European funding or a proportion of it—two thirds of it—is clawed back by the Treasury. The fear is that that might be an under-the-radar funding cut being sought by Government over and above the cuts that they have already made to local authorities around the country.

Last year, there was concern about an underspend of up to £1 billion, but I believe that that is now not likely to be the case. Nevertheless, as my hon. Friend referred to, there is significant concern about projects falling behind or being in danger of collapsing altogether, and a significant sum remains uncommitted at the moment. Two thirds of local authorities are already anxious about their ability to match-fund, so any further reductions in funding will be even more problematic. With 50% of councils falling behind with projects, there is obviously a major problem to be addressed.

For the record, although the debate is not about the abolition of the RDAs, they clearly played an important role in dealing with ERDF funding in the past. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) tabled a written parliamentary question last year, which was responded to by the Minister for Housing, the hon. Member for Hertford and Stortford (Mr Prisk). My question is about value for money under the new regime, because in his response, he said:

“The net cost per job for the Regional Growth Fund (RGF) was £32,000 in round 1 and £34,000 in round 2. As set out in the NAO Regional Growth Fund report published on 11 May, the detailed appraisal process is in line with HM Treasury’s Green Book and reflects good practice. As set out in the NAO Regional Growth Fund report, the average cost per net additional job generated by Regional Development Agencies occurring as a result of spend between 2002 and 2007 is £28,000, with wide variation between schemes.”—[Official Report, 24 May 2012; Vol. 545, c. 896W.]

Job creation, therefore, is clearly costing up to £6,000 more per job under the new regime than pertained under the old RDA regime. That is a source of concern, particularly when finance is tight. I wonder what the Minister will say in response to that and whether there are any ways in which the Government could assist in obtaining better value for money, or at least the value for money that the previous regime achieved under the old regional development agencies.

There has been a transition of ERDF administration to the Department for Communities and Local Government, but another concern that has been expressed to me is that the teams responsible for administration are quite small, and that might lead to difficulties.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)]

Value for money.

[Chris Williamson]

But will it be value for money if it leads to delays, and results in value-for-money comparisons of jobs created costing several thousand pounds more than under the old regime? The Minister may argue that it is a tighter ship, but if in the long run it does not provide the same value as previously, it should be looked at.

Will the Minister outline how any delays that have been reported will be tackled and what support and assistance he will give to local authorities to deal with them and iron them out. How will he address the shortfall in match funding that local authorities have articulated? The point has been made that two thirds of local authorities are concerned about the availability of match funding. On the “Today” programme this morning, the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth, called for even more reductions in funding for local government, and that will create real tension. How will the Government assist in addressing the shortfall in match funding that we are all aware of?

Will the Minister allow the regional growth fund to be used as a match-funding source, and what steps is he taking to enable novel projects to proceed? I understand that there is anxiety because novel projects may be sacrificed to facilitate the spending of available money by supporting less complicated projects that are easier to deliver. What assurances can he give on that? Finally, what is he doing to maximise the impact of ERDF funding in areas such as Cornwall and the Isles of Scilly where there are particular problems? Perhaps he will outline what steps he can take to ensure that this important fund delivers the maximum impact.