Funding cul-de-sac

The UK’s dismal result in May’s Eurovision song contest, scoring
nil points for the first time in the event’s 47-year history, is
not the only consequence of a changing Europe. Professionals in the
UK’s regeneration initiatives are looking to 1 May 2004 when 10
more countries join the European Union. These new members will be
able to apply to the same EU funding programme – objective 1
funding – that is financing much of the regeneration work in the
UK’s most deprived communities.

The intention behind objective 1 funding is to increase economic
growth, raise employment and provide more opportunities for people.
To be eligible for this funding an area’s gross domestic product
per head must be less than 75 per cent of the EU average. The four
areas in the UK that receive this funding are Cornwall and the
Isles of Scilly, Merseyside, South Yorkshire and west Wales and the
valleys.

There is a concern that the UK’s eligibility to access this revenue
will be removed by the entry of 10 new states, eight of which are
from the former communist bloc, because they are poorer than the
UK’s most deprived areas.

EU aid is channelled through structural funds. These include the
European regional development fund (ERDF), of which objective 1 is
a part. Between 2000-6 the three objective 1 areas in England will
receive more than £1.2bn. The largest portion, £565m, is
going to projects in the Merseyside area, followed by £497m to
South Yorkshire and £190m to Cornwall and the Isles of Scilly.
Regeneration schemes in west Wales and the valleys are to receive
£1.2bn.

Andy Churchill, chief executive of regeneration agency Merseyside
Network for Europe, says European structural funds (ESF) are
continuing to change and there may be less available to the UK in
the future. “ESF could be used more efficiently,” he says. “It
could be targeted primarily on social inclusion rather than split
into a variety of activities, many of which are now
mainstreamed.”

Sandra Hayes, Communities First programme co-ordinator at Swansea
community regeneration unit, says the changing face of Europe can
only be a positive thing for regeneration and communities in Wales.
“It means we have to ensure that our projects and programmes are
self-sustaining and not reliant on external changes, which is the
whole essence of regeneration,” she says.

Even if objective 1 funding does go to the new EU members Cornwall
may still be eligible at the end of the current funding programme,
says Rob Pickering, project manager at Cornwall Voluntary Sector
Forum, because wages are 30 per cent less than the UK national
average.

Many Cornish community groups feel objective 1 funding has
by-passed them because of its narrow economic definition for
regeneration. “Improving quality of life is more important than
just increasing gross domestic product,” he says.

Local Government Association economic and environmental policy
officer Tony Rich says regeneration will not grind to a halt come
2006 as many areas are already not eligible for objective 1 funding
and use other sources of revenue to run their schemes. He advises
projects that receive existing objective 1 funding to “look to
become self-sustaining” if possible.

Yorkshire and Humberside Assembly director for Europe Paul Wardle
says regeneration initiatives will not necessarily have a “landing
with a bump” in 2006. “These projects will have a lengthy lead-in
time to adjust and draw up exit strategies from EU funding.”

Regeneration and its relationship with EU grants is high on the
government’s agenda. It is contributing to the EU’s debate on the
future of European structural funding and a four-month
cross-government consultation into reforming regional policy,
including reviewing ESF, ended earlier this month. Chancellor
Gordon Brown proposed the EU should no longer operate the regional
policies that support regeneration in the UK. Instead, he suggested
the Treasury provide more funding for regional policy in the next
comprehensive spending review for the UK areas no longer in receipt
of EU money.

At the launch of the cross-government consultation in March, Brown
argued against extending the ESF budget to help poorer members. He
said: “The better way forward is agreeing both a sensible ceiling
on European funding focused on the poorest member states and, at
the same time, offering far more freedom and flexibility for other
member nations to tackle market failures in their own localities
and regions.”

A spokesperson for the Office of the Deputy Prime Minister says an
enlarged EU will affect the four regions in the UK receiving ERDF,
such as objective 1 funding. This is why the government is calling
for richer countries to fund their own regeneration initiatives
while a central fund supports poorer members.

“By taking full control of funding we will allow decision-makers in
the regions, and local partners, to have a bigger stake in the
regeneration of their own communities,” she says.

Professionals involved with regeneration initiatives should take
into account the possibility of not having EU funding streams in
the future and conduct the necessary risk assessments, argues
Wardle. “Is it not our aim to become non-eligible for objective 1
to reduce dependency on public aid in the economy?” he asks.

Pickering adds that objective 1 funding was always understood to be
a one-off programme and projects should have considered this when
planning their work.

There is likely to be structural funding available in objective 1
areas until several years after 2006, although this has yet to be
finalised. And regeneration schemes may also continue to receive
the matching funding they had to attract to qualify for objective
1.

Hayes says some communities could benefit from a longer exit period
from the programme to adjust as they may struggle initially to
overcome the loss of objective 1 funding. She says this will be
less of a problem for areas in Swansea. “Communities here have
planned to be self-sufficient while EU funding remains in
place.”

Rich agrees that communities dealing with social deprivation will
be hit by a change in objective 1 funding. He urges relevant
authorities in those areas to seek other sources of public and
private financing. “They should also seek greater private
investment and generate a greater self-sustaining community
enterprise.”

But Churchill says deprived communities are unlikely to experience
any drastic change. “Structural funds are in any case not meant to
exist for ever,” he says. “They are there to solve structural
problems and, once solved, they can be used elsewhere.”

Although Pickering says there will be little immediate impact on
communities, he warns: “In the longer term these communities will
need these initiatives to be funded from somewhere if regeneration
is to continue.”

The 10 states that will join the European Union in 2004
are:

Cyprus

Czech Republic

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Slovakia

Slovenia