EC tells regional aid critics they are barking up wrong tree

It seems that news of a row over plans to redevelop an east London greyhound stadium is not the only canine-related tale to rock the regeneration world this week. Yesterday I received an email with the subject line: "Hungarian dog rehabilitation centre stripped of EU funding." I immediately opened the message and read it.

The email contained a statement from the European Commission, revealing that Hungarian authorities have decided to cancel the "Gyrotech project" for a "veterinary rehabilitation centre" in the city of Dregelypalank, northern Hungary. "All payment claims have been suspended since February 2010," the EC's statement said. "No EU funding has been paid out."

Brussels' decision to release a statement to the UK media to clarify that it is not funding a dog rehab centre in a far-flung corner of the EU is part of a what seems to be a strategy to proactively defend the record of the EC's cohesion policy (of which the two main funding instruments are the European Regional Development Fund and European Social Fund). The Hungarian dog rehab centre had received widespread media coverage last month. The Independent, for example, said that the EC had "splashed out £350,000 on a fitness centre for canines in the village of Dregelypalank, which included a hydrotherapy spa." The report continued: "It was built to 'improve the lifestyle and living standard of dogs' but it was never actually opened, so the mutts are still being bone idle." The fact that the EC had not actually paid out any money to the project was absent from the reports.

The EC's response to the media criticism of the Hungarian project follows a string of negative stories about structural funding over the last few weeks. At the end of last month, the EC requested the return of millions of euros of regional aid spent on putting on an Elton John concert in Naples. Italian authorities had used €720,000 of ERDF cash to part-fund a festival headlined by the pop legend in September last year.

And an investigation published at the end of last month by the Financial Times claimed that billions of euros of regional aid are lying idle because cash-strapped national governments cannot find the necessary matching funds to release the money. The newspaper said that internal EC documents showed that the EU has paid out only 10 per cent of €347bn allocated by its flagship fund up to 2013

The FT's investigation prompted regional policy commission Johannes Hahn to take the unusual step of issuing a statement to "clarify a number of issues". Two key points made by Hahn are that a slow take up of EC regional aid is nothing new and not surprising (member states could spend cash from the previous 2000-06 spending round up until the end of last year) and that the amount of EC regional aid affected by irregularities and fraud has been brought down.

The question is, with the UK press largely hostile to the EU, will Hahn's message get heard?

In Europe, calls for greater cohesion

Four European Union commissioners have written to the president of the European Commission proposing that a number of EU funds be brought under a single "strategic framework", Regeneration & Renewal learned this week.

What the implications for regeneration practitioners are won't be known for sure until November, when the proposals are formally announced. But R&R talked to some experts in the field to find out more about the proposals in the meantime.

The letter - signed by Commissioners László Andor (Employment and Social Affairs), Dacian Cioloş (Agriculture), Maria Damanaki (Fisheries) and Johannes Hahn (Regional Policy) - refers to the following EU funds, all of which have a regeneration focus:

• the European Regional Development Fund (ERDF) - which the regional development agencies (RDAs) currently have a hand in administering
• European Social Fund (ESF),
• Cohesion Fund (which doesn't apply to the UK)
• European Agricultural Fund for Rural Development (Eafrd)
  
• and the European Fisheries Fund (EFF)
  

The funds currently have separate strategic guidelines governing how they are administered and on what types of projects they are spent. The letter proposes drawing up a common set of guidelines for all of them - a move it claims would "reduce administrative costs, help limit the fragmentation of the different [funds] and allow better prioritisation of EU funding". Such a reform of EU structural funding would also "set the example for a more coordinated approach at national, regional and local level", the letter said.

A source at the Council of European Municipalities and Regions (CEMR), the association of European local and regional authorities, who asked not to be named, stressed that the proposed changes would be to the "general top-level procedures and formalities" governing the funds, rather than to the funds themselves.

For example, the five funds would not be merged into one, the source said, but would be grouped under the same set of EU priorities, potentially allowing for greater flexibility in how each of them are spent, it said.

The proposals have been welcomed by those in local and regional government who have been calling for a simplification of EU funding structures.

'We strongly welcome the proposals.'
Dominic Rowles, Local Government Association

Frederic Vallier, CEMR secretary-general, said: "CEMR has been hoping for such a proposal for years as it would enable a more efficient local and regional development. In the past, local and regional authorities have had problems with achieving coherence with their projects and with addressing social, environmental and economic problems efficiently and in an integrated way. These difficulties are largely due to the fragmentation of EU funding programmes."

And last October, R&R deputy editor Jamie Carpenter reported from the EU's annual cities and regions conference in Brussels that speakers from the EC's directorate general for regional policy claimed that the current process is too complex and was in need of reform.

The Local Government Association (LGA) is another organisation that has campaigned on the subject. Its EU policy and public affairs coordinator, Dominic Rowles, who is based in Brussels, said: "We strongly welcome the proposals outlined in the letter - provided there is no reduction in the overall amount of funding available."

He said that he thought that the main impact of the proposals - should they come into effect - would be to help join up the different departments within the EU that are currently designing and overseeing different EU funding streams in different ways.

He said: "This 'culture change' towards having a common approach to the funds at a strategic level could hopefully trickle down to the operational level so that national authorities could increasingly simplify and join up the processes and procedures associated with each fund. This may help to cut down on all the administration and audit requirements required for each separate fund - potentially saving time and money."

Ton van Lierop, a spokesman for commissioner Hahn, said more details would be announced in November.

So, watch this space. In the meantime, we welcome comment from readers on what a more streamlined "strategic framework" should look like - and what impact it could have on regeneration projects.

The future of structural funding

Today is the penultimate day of Open Days 2009 – the European Commission’s annual cities and regions conference, hosted in Brussels and attended by around 7,000 delegates from across the European Union. As I mentioned in my last post on Monday, despite the fact that we are not even three years into the current 2007-13 European funding round, discussions are already underway in Brussels into how the next round of structural funding will work.

This morning I attended a session on the future of European cohesion policy after 2013, when the current six-year round of structural funding ends. The most significant development to report is that the European Commission is giving serious consideration to overhauling the way structural funds are managed to focus more on results. Speakers from the EC’s directorate general for regional policy (DG Regio) and directorate general for employment acknowledged two problems with the current system. Firstly, they said that the current process – with its strong focus on financial management and control – is too complex. Secondly, they admitted that the EC has struggled in the past to point to positive outcomes resulting from the spending of regional aid. Katerina Mathernova, DG Regio’s deputy director general, said: “DG Regio has been busy working on the technical side. The solutions can be found. We all feel financial accountability fatigue.”

Fabrizio Barca, who produced a report for former regional policy commissioner Danuta Hubner on the possibility of managing structural funds on a results basis, told delegates that the quality of indicators currently used to evaluate the outcomes of structural funding is “extremely poor”. He suggested that recipients of structural funding that missed targets should not be fined. Instead, he said, the EC should evaluate why the targets were missed and then make recommendations. Sanctions should only be applied should those recommendations be ignored, Barca recommended.

It remains to be seen whether the overhaul will actually take place - the change would need approval from the European Parliament in order to be enacted. “I’m a little sceptical on this front,” Mathernova admitted.

In other news – and perhaps unsurprisingly – the Tory Party’s stance on the Lisbon Treaty has proved unpopular here in Brussels, where huge significance is attached to the treaty. Yesterday, I asked the EC’s regional policy commissioner Pawel Samecki what impact the ratification of the Lisbon Treaty would have on cohesion policy and structural funding. He said that the treaty contains a reference to the notion of “territorial cohesion”, which does not exist in any of the EC’s previous treaties. The upshot of this, he said, would be that the EC would have to take more into account “territorial features” and factors that “hamper the development of specific regions”. It would need to “be more looking in this kind of direction in spending money from the EU budget”, Samecki said.

Brussels opens for regions event

I’m in Brussels until Wednesday afternoon for Open Days 2009 – the European Commission’s annual cities and regions conference. Despite the fact that the event is pretty much unheard of in the UK, the EC sees it as a pretty big deal. Around 7,000 delegates are expected to attend from across the European Union.

Speaking earlier today, Pawel Samecki, the EC’s regional policy commissioner, said that the conference represented an “unprecedented learning exercise”. “There’s a growing need for the exchange of information between regions and cities,” he said. “This is particularly important in times of crisis.” He added that the conference also offered the EC the opportunity to listen to what regions say.

The themes being discussed at the conference give a fair indication of what the EC’s current and future priorities are. Unsuprisingly, restoring growth is high on the agenda, as is climate change. But a third theme – “territorial cooperation”, or working across borders – is also being debated in a number of workshops. The phrase “territorial cooperation” may sound nebulous, but the EC believes that cross-border working can help beat the economic downturn. It highlights a strategy being drawn up between Sweden, Finland, Poland and Germany – the “Baltic Sea Strategy” – as a good example of this.

Finally, despite it being nearly four years until the next round of structural funding begins in 2013, the EC is already starting to talk about what this might look like. Pawel Samecki offered a brief glimpse of the EC’s thinking on this earlier today – he said in future the funds would have a greater focus on results and would be simplified. Over the course of the next few days I hope to get some more detail on this.