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Yet another Whitehall block on Yorkshire?

October 11, 2013

Interesting article from Wednesday’s Yorkshire Post. The key phrase being ‘Yorkshire’s own funding allocation – still the subject of contentious negotiations between the British Government and the EU’. It seems to suggest that Brussels has millions it wants to spend in the region but, as ever, is facing a block from Whitehall. Meanwhile, across Europe, regions are happily dealing directly with Brussels in order to access funding for SMEs.

 

EU promises big funding boost for small firms

HUNDREDS of millions of pounds of European funding will be poured into supporting small businesses in Yorkshire over the coming years as Brussels signals a major shift in its approach to economic regeneration.

Johannes Hahn, the European Commissioner for Regional Policy, told the Yorkshire Post he wants to see the total amount of EU regeneration funds put towards supporting small and medium-sized business growth double from £70 billion to “at least” £140bn across Europe over the next seven years – representing nearly 50 per cent of the total money available.

Mr Hahn said previous EU funding rounds have focused on infrastructure investment, but that as the continent recovers from the financial crash it is vital to support smaller businesses with the next six-year tranche of structural funds.

Yorkshire’s own funding allocation – still the subject of contentious negotiations between the British Government and the EU – currently stands at around £670m, and Commissioner Hahn would like to see around half targeted at small business support.

“When structural funds were used in the past, (it was) mainly for investments in infrastructure,” he said. “We have now changed this to an investment primarily in the promotion of the economy.

“So in the current (tranche) we will have finally spent around 70bn euros for SME support. We hope in the next we can at least double to 140bn euro. That should be, I should say, a minimum threshold. It’s absolutely necessary to focus on SMEs.”

In England, the European funds will be distributed to the country’s 39 local enterprise partnerships (LEPs) to provide support for local economies. The Government’s current plans will see Leeds City Region LEP receive £330m; Sheffield City Region LEP receive £172m; the Humber LEP receive £86m; and North Yorkshire and East Riding LEP £82m.

Commissioner Hahn stressed that supporting SME growth should extend beyond basic grants to small firms, and incorporate wider skills training projects and innovation.

“Innovation is not just having new technology – it can be to introduce a new marketing concept, a new PR concept, apply a new administrative procedure for internal work,” he said. “Everything that can contribute to the performance of our SMEs is welcome and should be supported.”

The EU’s past focus on infrastructure improvement was a response to the often-ageing transport networks across the continent, particularly in Eastern Europe. But Commissioner Hahn said the economic crash has forced Brussels to reassess its priorities.

“In many countries we have now achieved a level of infrastructure which allows us to move to other areas,” he said. “Due to the crisis, our strong interest should be to stimulate, to motivate, to support SMEs and the economy.  It is good to have highways, but it is also good to have goods being transported on the highways. We should have both.”

The new business-oriented approach has the backing of the president of the EU’s committee of the regions, Ramon Luis Valcarcel.

“Without SMEs, a state cannot function,” he said. “The SMEs are the driver of the economy.”

How EU regeneration funds are spent remains a contentious issue. In Yorkshire, some EU-backed projects have been massive successes, such as the Advanced Manufacturing Park in South Yorkshire. But others, like the ill-fated Digital Region broadband network, flopped badly.

Jose Manuel Barroso, the President of the European Commission, told the European Parliament this week that the success rate needs to improve.

“Some of the funding in the past was not always used to the best purpose,” he admitted.

“We have to ask ourselves – how is it possible that after so many investments, some regions are lagging so much behind? How could we make better use of these euros? Sometimes our investments were not good ones.”

Nonetheless, Commissioner Hahn insisted regions such as Yorkshire benefit hugely from the EU funding they receive, and said it would be a “disaster” for Britain to pull out of Europe.

“I think in particular the regional representatives that I have visited in the UK are fully aware about the benefits and advantages of EU membership,” he said. “It offers the opportunity to get additional money which is unlikely to be provided at a national level.

“This is the position of regional representatives not only in the UK but in other countries as well.”

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