THE European Commission has said it is monitoring developments in the UK amid concerns Government changes could see millions of pounds in regeneration cash lost.
Johannes Hahn, the Commission’s most senior regional spending official, said he and his team are watching closely the impact of the Government’s decision to abolish development agencies.
There are worries that some £106m of unspent European regeneration cash could be clawed back by the Commission if the soon-to-be abolished development agency One North East does not spend it in time.
Government spending cuts mean councils have little spare cash to meet the 50/50 match funding rules the Commission insists upon. Commissioner Hahn, speaking before experts at Newcastle University, said while he has no reason to think the money will not be allocated by the 2013 deadline, he has raised the issue with senior Government ministers.
Mr Hahn said: “We have said we need to be sure there is no period of uncertainty. It is important there is a timetable for how to implement these changes. We have asked to be told about the impact of the changes by the middle of this year.”
The Journal revealed last month that businesses and councils warned the Government there was not enough money available to ensure all the European regeneration cash is match funded and spent in time.
Hugh Morgan Williams, a leading businessman chairing a regional loan fund, said at best the private sector would find £30m in the time available
Mr Hahn said this issue had been raised with Business Minister Mark Prisk, Communities Secretary Eric Pickles and Chief Secretary to the Treasury Danny Alexander.
Asked about how the Commission viewed the Government’s decision to remove from the North East the regional structures which gave it a voice, Mr Hahn said the EU was watching closely the situation in the UK.
“As it stands we have no comparison to other member states. It is like a pilot project for us. That is why we are watching closely the outcome.”
Mr Hahn said he warned the Government that one factor which could see millions of pounds lost to the UK is if staff from the development agencies tasked with spending the money are not retained.
Specialist staff at One North East are likely to be transferred to Government departments and hopefully kept in the region.
“We have made it clear they cannot afford to lose experienced people,” Mr Hahn said.
Labour MPs have previously warned of fears the Government may be prepared to allow an underspend in European Regional Development Funding.
Newcastle North MP Catherine McKinnell has said the public sector spending cuts may mean the Government simply sends back the cash and hopes for a reduction in its contribution to the EU as a result. Ministers have always denied this, and insisted they are on track to spend the allocated cash.
The European money is worth £340m to the region, over 2007 to 2013.
One North East will have a final year budget of between £80m and £90m, but is banned from backing any new projects as the Government winds it down over the next 14 months.
The Government has said its much-vaunted Regional Growth Fund could provide match funding, although this is vastly over-subscribed, needing to spread out a limited pot across hundreds of bids for money.
