The 2007-13 English regional ERDF programmes are rapidly moving into a critical make or break phase. They have just two more years to invest what is still a significant amount of uncommitted money. The programmes have experienced very tough operating conditions having navigated through an intense recession which has fundamentally changed economic opportunities. Business growth and job creation objectives have been hit especially hard, as have those for physical development in the face of historically weak commercial property markets. Uncertainty about the short and medium term economic growth prospects suggests the recessionary backdrop may even outlive the programmes.
Looking forward, the challenge is not going to get any easier. Two additional factors are now being added to the mix:
- severe pressure on public sector funding: measures to reduce the UK’s budget deficit will curtail the amount of match funding for current and future investments
- loss of driving strategic focus: Regional Development Agencies provided the lion’s share of match funding during the first phase but also provided vital technical and policy advice to ensure quality and maintain momentum in the approval process.
Put simply, there will be less money around to invest alongside ERDF; what there is will be in smaller pots; and the guiding help needed by projects to unlock the money will be harder to find.
Regeneris Consulting has just completed its fifth mid-term evaluation of regional ERDF programmes*. Although these were carried out and reported at intervals between summer 2010 and autumn 2011, they highlighted £800 million of funding is still available to be contracted. Although the picture has moved on, the message is clear: ERDF has money to invest.
But new approaches are required to maximise this opportunity.
If they are to step up the pace, programmes will need to work around widely held perceptions that ERDF is difficult. There is no getting around some of the complexities of ERDF but they are surmountable and there are clear signs of renewed interest (partly due to other opportunities falling away). The challenge is to turn this interest into viable, compliant, eligible, quality projects which align with programme objectives and generate economic impact!
Looking across our recent evaluations, we believe that programmes need to consider the following five pointers in order to step up to this challenge.
1.Maintain the focus on enterprise and innovation: broadening the scope of programmes may make it easier to shift money, but risks compromising their core purpose. The longer term need to restructure regional economies will endure across recessions and spending cuts. Regions have a clear signal that the EU’s commitment to enterprise and innovation will remain and attempts to shift away from the Lisbon agenda at this stage may prove to just be a wasteful distraction.
2.Think creatively about new avenues: opportunities created by Broadband Delivery UK, Regional Growth Fund, TSB schemes and the low carbon technologies agenda need to be aggressively seized. Although there is enough flexibility to accommodate wide new areas of investment, real problems do start to occur when trying to agree how the regulations apply to novel areas of activity. The programmes have little choice but to work one by one through these issues if they are to tap into these opportunities.
3.Be prepared to test the rules: assertiveness and creativity are required to avoid an overly risk-averse approach to the regulations. Great importance should be attached to compliance but there is risk that the programmes become over cautious and don’t spend. The new CLG approach means less help will be available from the regional teams to help applicants. Time, resources and expertise are needed to work through issues of eligible activity, apportionment, output definitions, match funding etc. Rules often turn out not to be as rigid as initially determined but it requires persistence and creativity to get there. We have seen first-hand how projects have benefited from working constructively with programme teams to clarify the rules and deliver fully compliant packages of activity.
4.Strengthen the capacity of local partners: changes to programme management arrangements mean a greater role for LEPs, universities and local authorities who now need to provide the strategic focus for the programmes and generate a flow of new projects. These new demands coincide with significant pressure on costs and so are unlikely to be forthcoming without more extensive use of Technical Assistance. Limited use has been made of this resource in the first half of the programmes’ lives but this probably now needs to change.
5.Strike the right balance between regional and local: despite the changes of the past 18 months the 2007-13 programmes need to invest in projects with scale and reach beyond just very localised impacts. This will be more difficult now that much of the apparatus to deliver a regional focus has been dismantled. At the same time, the programmes also need to respond to the slowly gathering momentum behind localism. This will require re-building the capacity and expertise in local authorities and HEIs which was lost at the start of these programmes.
As minds turn to the next round of programmes (about which we will blog shortly) there is a risk that eyes are taken off the ball currently in play. Much hard work needs to be done and new partnerships and approaches forged if the money due to the English regions is going to be spent well.
These programmes got off to a slow start because of the shift in responsibilities between regional government offices and RDAs. Unless the final two years are marked by a greater sense of momentum, the next round of programmes will fall into the same early pitfalls.
* The North West Report can be found here
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