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UK flood schemes may benefit from European funding

This week saw the opening of the Tywyn Coastal Defence Scheme, a £7.6M flood defence project that will protect 78 properties in the North Wales town (see £7.6M coastal defence scheme opened at Tywyn).

Forty-six per cent of the funding for this project was provided by the European Union’s (EU’s) Regional Development Fund (ERDF).

With 274 flood defence schemes now postponed following the government’s recent Comprehensive Spending Review, could this European funding stream be an underused resource?

With 274 schemes postponed, could this funding stream be an underused resource?

The Environment Agency estimated in 2009 that £1bn a year must be spent on flood defences over the next 25 years just to maintain existing levels of protection.

And with tight public finances, the Department for the Environment, Food and Rural Affairs (Defra) is proposing that local communities contribute private funding to make their schemes more cost-effective for the government to fund (NCE 2 December 2010).

It makes sense, then, to maximise the use of other funding options including the ERDF. In this country ERDF funding is administered by regional development agencies (RDAs).

Assessing bids

Although they are in the process of being replaced by Local Enterprise Partnerships (LEPs), RDAs currently assess bids against objectives set out in a six year Operational Programme.

The fund is available to regions which qualify for cash under the EU’s convergence or regional competitiveness and employment objectives.

Convergence status is awarded to regions with the lowest GDP per capita, and allows them the biggest share of the ERDF.

Since 2007, the Welsh Assembly Government has secured almost £50M from the ERDF towards a £100M programme of 28 flood defence schemes.

West Wales and the Welsh Valleys, Cornwall and the Isles of Scilly are convergence regions. All other UK regions are eligible for smaller amounts of funding allocated according to regional competitiveness and employment criteria.

Possible uses for ERDF money identified by the European Commission include “risk prevention”, “building sustainable communities” and “protecting and improving the environment”.

These categories of spending broadly allude to building flood defences. In fact, the Welsh Assembly Government has shown that the fund can be used for just that. Since 2007, it has secured almost £50M from the ERDF towards a £100M programme of 28 flood defence schemes.

“EU funding is expanding our capital programme quite a lot,” says Welsh Assembly Government Strategic European Programme manager Jo Larner. “EU money is allowing us to do a lot more than we would have done otherwise.”

Stopgap or strategic?

The ERDF is used for flood defence schemes in other parts of the UK too − but infrequently, and without the strategic oversight seen in Wales. The Environment Agency is unable to bid for ERDF money itself, but is able to encourage and help local authorities to make bids to their RDAs.

An Environment Agency spokesman said it does this when a scheme is judged to be likely to qualify under its region’s Operational Programme.

“EU money is allowing us to do a lot more than we would have done otherwise.”

Jo Larner, Welsh Assembly Government

However, that judgment process is only triggered when an otherwise desirable scheme encounters a funding shortfall. Then ERDF becomes a stopgap rather than something all projects could be qualify for.

While bids for ERDF cash are very competitive, it seems that a strategic approach could increase the number of overall bids from flood projects, and with it the chances of success.

One major obstacle is the regional Operational Programme against which all bids must be justified in order to be successful.

The current programme for West Wales and the Valleys explicitly states its aim of “improving inland and coastal flood defence infrastructure” and sets a target to have 2,000 additional people benefit from flood protection measures between 2007 and 2013.

By contrast, plans for Cornwall and Isles of Scilly only briefly mention flooding and fail to identify its mitigation as a specific aim, making it much harder to identify flood defence as a suitable use of the ERDF in that region.

Limited opportunity

Unfortunately, operational programmes will not be rewritten until 2013, and the administration is set for upheaval with ERDF functions transferred to LEPs and the Department for Communities and Local Government.

It may not be possible to replicate the extent of Wales’ ERDF success elsewhere, because in non-convergence regions “intensity thresholds” limit the percentage of the overall cost of a project that can be delivered by the ERDF.

An intensity threshold is the maximum proportion of a project’s cost that can be paid for through the fund. This threshold is commonly set at just 10%, says legal firm Cobbetts partner Jonathan Branton, so in most cases the ERDF could only make a small contribution to a given project.

But every little helps − and with a more co-ordinated effort it wouldn’t take too many rounds of 10% leg-ups to put some extra cash in the flood defence coffers.

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