Double whammy of cuts
Dec 17 2008 by Adrian Pearson, The Journal
A GOVERNMENT raid on North East regeneration cash will put millions of pounds worth of European cash at risk, experts warned.
Ministers this week admitted they may have to launch another raid on funds destined for the region. The Government took £34m from development agency One North East earlier this year to support southern housing.
But any new move by ministers will jeopardise a £255m EU cash injection which can only be claimed back from the European Commission if every penny spent is matched by the region’s regeneration funds.
As the economy heads for recession, regeneration bosses were hoping to lessen the impact by speeding up spending from the European Regional Development Fund. But a smaller budget for One North East will mean the region is in effect hit by a “double whammy” of cash cuts.
Last night Euro MPs warned the Government they faced undoing European regeneration efforts and adding to the jobless totals if they continue to eye up already allocated funds.
Labour MEP Stephen Hughes said: “There is a real danger that we will reduce our ability to pull down and spend European cash at the very time when we need to be doing all we can to bring forward funding and help us through this downturn.
“We are looking at changing the rules to help regions spend this vital cash but while they stay as they are, we would seriously limit our ability to act if the Government were to take more North East cash.”
Liberal Democrat MEP Fiona Hall was even more direct. “It would be a disaster for our region if the Government in effect robs Peter to pay Paul.
“This is a time when everyone is saying we have to invest and do what we can to lessen the impact of a slowdown, it is certainly not the time to be putting our growth at risk.
“This European cash has made real differences to the North East, helping us rise from an unenviable position at the bottom of many league tables. The Government needs to realise that what we risk losing here is considerably more than just any cash they will take from One North East, and that now is hardly the time for such short-term thinking.”
Incredibly the proposed cuts to match-funding come at a time when changes in the value of the pound versus the Euro means the region should be getting millions more Euros provided they can spend it in time.
Since the European spending programme began last year, the Euro has strengthened by nearly 20% against the pound.
This means, as things stand, the region has a bigger than expected pay day coming. One North East’s Europe manager Iain Derrick said: “The 50/50 match funding split does not have to come from One North East, but we do contribute to many projects and we are a large overall contributor to many of the ERDF schemes.
“We intend to make it clear to the Government that we have significant concerns that any further changes to our budget will hinder the region’s overall ability to match-fund these projects.”
