Scots fight pressure to repay EU funds

Scots fight pressure to repay EU funds


by Susan Downer




Scottish enterprise chiefs are fiercely resisting attempts to claw back millions of pounds in Objective 1 funding after being accused of poor management and breaking European funding rules.


The action follows a leaked European Commission audit report for the 1994-1999 programming period.


The investigation looked at a sample of 14 projects and identified ‘deficiencies in the management of projects together with a degree of ineligible expenditure’. It said some of the funds, totalling up to £10m, might have to be repaid.


The funds were administered by the Highlands and Islands Partnership, including the Scottish Executive, Highland Council, Highlands and Islands Enterprise and the islands’ councils.


But Highlands and Islands Enterprise (HIE), responsible for seven of the projects investigated, dismissed every point made by the auditors.


The largest HIE grant was £8.2m for the development of Nigg Dock on the north east coast of Scotland.


European auditors questioned this due to missing invoices, a rushed procurement procedure and an apparent £247,000 overpayment to a contractor.


In its defence HIE told the commission that in place of invoices it had sometimes submitted accountant’s certificates, which have been accepted by the HIE network for many years. If the tendering process had not been accelerated, private funding would have been put at risk and the development might not have gone ahead.


Regarding the apparent overpayment, HIE says some costs were estimated and revised in the light of the actual work involved.


Highland Council was responsible for the Small Isles and Inverie ferry service, and the A890 Achacheen to Glencarron Road.


Councillor Charlie King, chair of Highland Council’s transport, environment and commercial services committee, said additional information had been provided to the Scottish Executive to show that the expenditure was eligible.


He added: ‘We have delivered two very valuable lifeline projects to remote islands and west coast communities with the support of European funding.


‘Everybody knows about the complexities of European rules. We are confident that European money was used properly on the projects and we should not allow the complexities of audit trails to detract from the fact that we have improved the lives of folk in some of our most remote and vulnerable communities.’


Deputy enterprise minister Allan Wilson said: ‘It is true that concerns were raised in the draft report and that the report suggests that money may either have to be paid back or may not be forthcoming from the EU. It is crucial to emphasise that at this stage nothing has been decided.’


A second European audit will probe a further 26 projects next month ‘to establish if the deficiencies initially detected are prevalent throughout’.


Only after this is complete and the UK given a chance to explain itself will the commission decide whether money needs to be repaid. If the UK disagrees with the determination it can appeal to the European Court of Justice.


projects under scrutiny



Hunters of Brora woollen mill



HI Ventures (running costs)



Nigg dock development



HI Ventures (ERDF)



HIE Marks (a marketing scheme)



Cairngorm funicular



Harris Tweed marketing scheme



Small Isles and Inverie ferry service



Achnasheen/Glencarron road improvement



Broadford sewerage



Kyle of Lochalsh water treatment works



Business Development Services (Western Isles)



Eriskay and Sound of Barra integrated transport policy



Scalpay Bridge




Source: New Start