Thursday, 22 July 2010

European funding

Last week there was a flurry of speculation about the future of regeneration schemes after the RDA suggested that all projects under the European Regional Development Fund had been stopped. Cornwall’s MPs found themselves hard at work making the case for important plans like “Next Generation Broadband.”

Regional development programmes have played an important role in the regeneration of Cornwall. Objective One helped kick start some really worthwhile projects such as the Combined Universities for Cornwall and there are good plans being put forward under the new “Convergence” programme too.

But the new coalition government has its work cut out getting to grips with the financial crisis. Although George Osborne made clear in his emergency budget that he would make no further cuts to capital spending, the last Labour government had already put in train a 50 percent cut in capital spending and those cuts now have to be reconciled against specific projects.

As the government identifies which projects to cut and which to keep, I think it must apply some clear criteria to ensure we get things right.

Firstly, where no government match funding is required, projects should be approved immediately. That is why the swift decision to make clear that projects like “Next Generation Broadband” will go ahead unhindered was so important.

Secondly, one of the key criteria applied should be the extent of match funding on offer. In Cornwall, because of the support we are entitled to from EU funding streams, each pound that national government spends usually levers in three pounds of additional investment. That puts us in a strong position relevant to other projects elsewhere in the country.

This case would be made stronger still if EU rules on the amount of match funding needed could be modernised. At the moment, the EU sets rigid rules stipulating that projects must have “match funding” from other sources – usually national government. It leads to the ridiculous situation where the inability of a national government to find the cash demanded means that its poorest regions lose everything –not just the money from national government but also the EU money which makes no sense at all. EU officials need to be ordered to prioritise spending in areas most in need and on projects that add most value and not to get bogged down by petty rules setting arbitrary requirements for match funding.

Finally, when it comes to prioritising capital spending, the most important factor considered should be the impact on jobs and enterprise. There is only one way out of this recession and that is through creating new businesses and new industries. The government needs to separate out the "nice to have" projects which could wait from the essential projects that unlock economic potential. If all these criteria were applied, then many of the projects currently being reviewed in Cornwall will come out well from the current spending review and this puts us in a strong position.