14 November 2008
By Paul Dicken The UK government might have to repay £190m for errors made in allocating European Union regional funding across the country, as the European Commission seeks to toughen up controls on spending. The commission hopes to finalise proposals which will result in the UK paying £190m of the £1.2bn total for all member states by March next year. This figure could come down after discussions between the commission and the states. European Commission spokesman for regional policy Dennis Abbott said: ‘The UK is not being singled out; other countries face even bigger corrections than the UK. For 2007–2013, the UK will receive over £1bn a year from regional investments from Brussels, in total, £8bn. The corrections are significant sums, but they should be seen in the context of how much Brussels has transferred to the UK.’ He said that structural funding was ring-fenced and would provide a ‘rock of stability’ for the UK during the financial crisis. The EU has radically increased the policing of how the £30bn a year of regional development funding is spent. This year, a total of £680m has been clawed back from member states in financial corrections for errors made in distributing funding, up from £231m in 2007. The Audit Directorate at the commission launched a plan to reduce errors in payment claims made by member states earlier this year. This followed recommendations in 2007 by the European Court of Auditors, which provided an ‘adverse opinion on the legality and regularity’ of most EU expenditure, for the thirteenth successive year. The lack of this assurance from the ECA does not relate to fraud, which the European anti-fraud office Olaf (Office Européen De Lutte Anti-Fraude) estimates affects only 0.16% of the total EU budget. The errors generally refer to breaches of regulations, such as contracts for large projects being awarded without the correct tendering procedure or lack of documentary evidence for claims. On November 10 the ECA repeated the dose in its latest annual report, once again finding ‘too high a level of error’ in the allocation of structural funding during 2007. The ECA acknowledged that estimated error rates had fallen in some areas, and said there had been improvement in ‘high-level controls’ at the commission level. But it added that this could not compensate for ‘inadequate lower level controls’ by member states. The £680m being clawed back, which includes £19.5m that was supposed to co-finance the North West Objective Two and Urban programmes, relates to the Regional Development Fund, European Social Fund and the Cohesion Fund. Member states accepted errors for the bulk of this figure, with £175m enforced by formal decisions. The commission has introduced measures to prevent errors, such as requiring a certificate of compliance for the 407 programmes going ahead under the 2007–2013 funding period. Furthermore, member states risk losing money through financial corrections unless they improve controls.
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