WHITEHALL’S decision to withhold £10m of Objective 1 money from Merseyside smacks of petty-minded, tight-fisted nonsense.
The money at issue is the tail-end of a pot of cash that originally came to the region from Brussels for much needed economic development over the past eight years. That pot of cash has been used for some major local projects, including the Echo Arena and BT Convention Centre, on the waterfront.
The money at issue was part of a purse worth 1.3bn euros, when it was allocated to the region at the turn of the Millennium. The steady decline of the pound against the euro has made Brussels euros worth more in sterling than the original estimate of £830m. Sterling’s weakness has added £100m to the kitty over the lifetime of the Objective 1 project.
To their credit, our local Objective 1 managers have spent the majority of the windfall, but £10m remained unspent.
The rules say unspent cash should be returned to Brussels, but the European Commission has agreed to allow regions to keep any spare cash to help offset the effects of the credit crunch and economic downturn. Brussels has extended the deadline for spending the money by six months.
However, Whitehall has stepped in and refused to play ball, and has kept for itself any money earmarked for English regions. On the other hand, Northern Ireland, Scotland and Wales have been allowed to hold on to their cash.
The inconsistency is obvious. The Government’s tight-fisted attitude is all the more surprising because Mr Darling and his fellow cabinet ministers were in the region just a few days ago, and surely saw for themselves both the beneficial effects of regeneration spending on Merseyside and the scale of the work still to be done.
If Whitehall had allowed Merseyside to keep the cash, it would have had to do the same for Devon and Cornwall, South Yorkshire and anywhere else in receipt of European funds. The total would have been a lot more than £10m. Worse still, Whitehall would have been required to match-fund Europe’s largesse, pound for pound.
So, by taking the money off Merseyside, central government not only earns itself a tidy windfall, but saves the same sum again from its own spending plans.
Given the state of the public purse, with its anticipated trillion pounds of national debt, it’s little wonder the Chancellor is clinging on to every penny he can find.
ONE way any additional Objective 1 cash could have been used was by granting it to Merseyside Special Investment Fund.
The fund issued a press release yesterday highlighting the rate at which it has invested money in the past year, saying 2008 was its most active year yet.
That’s no surprise. The credit crunch has dried up other sources of business investment, such as the banks, so local firms are turning to the one place that is still open for business.
But the need for extra business support has not been missed by the Government, which is planning to guarantee up to £20bn of debts owed by small and medium-sized firms. Ministers will announce a package of measures within the next few days, possibly as early as today.
If confirmed, the plan would be similar to one endorsed by the Tories – although they have called for a £50bn commitment.
Hopefully, the measures will succeed and encourage banks to lend to more small firms.
