DTI and DTLR want rules on gap funding eased to help deprived areas
Piers Wehner
The government is attempting to overturn the European Commission’s restrictions on gap funding for regeneration projects.
Civil servants at the DTI and DTLR will meet with senior officials in Brussels and representatives from other EU member states next month in an attempt to introduce a dedicated framework for regeneration. The changes would make EU laws on state aid less restrictive for UK regeneration projects.
Hugh Savill, director of European policy at the DTI, said: “We are going to marshal the arguments for a framework on regeneration. What we are working up is a general corrective to the commission to look at the state aid from the point of view of regeneration.
“At the moment, the commission is looking at the whole issue solely from the point of view of trade.”
Savill agreed that the current structure was “regulation gone mad”, but said that the commission had not been opposed before because the British civil service “didn’t want to queer the pitch for replacement strategies”.
Regeneration experts told MPs at a House of Commons select committee this week that the European Commission’s “chaotic and arbitrary” gap funding regulations pose a significant threat to boosting deprived areas.
Tom Bloxham, chairman of regeneration company Urban Splash, said: “Developers are being scared off smaller regeneration projects. Even if a scheme is worth supporting, there is no mechanism to support it.”
Dave Chetwyn, senior planning officer at Stoke-on-Trent council, said that an estimated £100m investment had been lost to the Stoke area as a result of the EU regulations.
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Gap funding |
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EC asked to demonstrate flexibility |
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Gap funding – public money that aims to fill the gap between the cost of a regeneration project and its immediate viability – is classified under European Union law as state aid. As such, it is fiercely regulated by the European Commission, which sees state aid as a potential threat to fair competition across the EU trade bloc. Under the current system, gap funding is only permitted if it can be transferred across EU countries. Projects must meet several criteria, such as: the development is won through open tender; has under 50% housing; and will have small companies as the main tenants. Any new funds must first be approved by the commission, which can take around two years. |
