Thursday, 20 October 2011

European Regional Development Fund loses millions


Alastair Jamieson at the Telegraph recently reported that huge amounts of public money were lost by the EU after being used to prop up schemes to “reduce economic disparity” between countries and regions as part of the European Regional Development Fund (ERDF).

The total ERDF budget for England was £3.7 billion between 2000 and 2006 during which time the Department for Communities & Local Government (DCLG) confirmed that £38.1 million (about 1%) had been misspent or unaccounted for. Losses could have totalled £236 million, but officials had managed to “claw back” £63 million and a further £133.9 million remains outstanding.

In 2010 the UK made a net ‘contribution’ to the EU of £9.2 billion (about the cost of the police and courts combined) and a total transfer to the EU of £19.7 billion (roughly a quarter of the education budget). Amongst the indispensable projects on which this money was misspent were:

  • an enterprise scheme in Tees Valley where £1.8 million is unaccounted for due to “audit trail and document retention issues”;
  • a rooftop plant nursery to provide seeds for biodiversity projects, which lost more than £300,000 after its promoter, Tower Hamlets Environment Trust, went into liquidation;
  • regional film agency Screen East was responsible for £368,000 of “ineligible expenditure”.

The situation was so bad by March that even the EU had had enough and cut funding for the projects. Funding resumed in July after the DCLG, which allocates funding for projects, introduced tighter controls to prevent further losses.

The EU itself doesn’t seem too concerned. Out of a total budget of €140 billion (£122bn) the EU claims that “a 2% to 5% error rate is not big” which works out at £2.4bn-£6.1bn . This is fine, we are told, since “this represents a considerable reduction from past levels”. Luckily, suspected fraud only accounted for about £244 million of the EU budget by their own estimates.

DCLG may be reintroducing weekly bin collections but there is still a large waste management problem to tackle with these EU budgets.

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