Systemic failures within Department for Communities and Local Government are to blame for loss of millions of pounds of EU funding for the region.

Social Enterprise North West (SENW), the region’s lead body for social enterprise, has become the victim of bureaucratic wrangling within the Department for Communities and Local Government (DCLG) in the North West. Due to a departmental blunder, millions of pounds of European funding for business start up and enterprise support for disadvantaged communities has now been lost from the Liverpool City Region. As a direct consequence, several of the region’s social enterprises face large scale redundancies and closure.

SENW, the lead body in the European funded Big Enterprise in Communities programme, is to be issued with a demand note to pay back £1,472,653 of grant funding because civil servants cannot agree on funding rules.  SENW has been successfully delivering support to individuals and social enterprises based on a delivery model that was both agreed with and later successfully audited by DCLG’s own North West European Programmes audit team. National auditors have now interpreted the rules differently leading to the demand for repayment by SENW.

Val Jones, CEO of SENW stated:

     “I am both shocked and disgusted at the incompetence of DCLG whose wrangling between national auditors and the North West civil servants has led to this devastating decision.  This is not SENW’s liability and this high handed action has wider impacts in terms of the delivery of current and future EU programmes. It calls into question whether local civil servants have the competence required to manage European funds on behalf of the people of the North West.”

The Big Enterprise in Communities programme has been hugely successful in supporting enterprising individuals from disadvantaged areas and under-represented groups within the Liverpool City Region and in providing expert business support to the Social Enterprise sector. Delivery of the programme is through a number of organisations (predominantly Social Enterprises) across the Liverpool City Region. Through no fault of their own, and after delivering a highly successful service, the premature closure of the programme now places these Social Enterprise organisations, as well as SENW, at risk of closure.

The impact of DCLG’s incompetence in the North West has a much wider impact than the mere closure of a funding stream. Big Enterprise in Communities was a foundation that enabled SENW to leverage much needed finance into the City Region. In particular, the future of the Local Impact Fund for the Liverpool City Region, and a much needed investment of £2million for Social Enterprises, will be placed in jeopardy.

Dave Roberts, the Chair of SENW stated:

     “The Board Members of SENW have been placed in an impossible position by DCLG in the North West. Under the instruction of DCLG, the model was used in good faith to deliver a successful EU programme for 3 years, and the model is not dissimilar to Lancashire’s current business support project. SENW have questioned DCLG as to why they are now being penalised for using a model developed based on the advice of DCLG themselves, but have received no response. The impact of this debacle will have disastrous implications for the Liverpool City Region and particularly for social enterprise businesses.”

To the end of September 2014, the BEiC programme has delivered pre start up support to 3293 individuals, resulting in 1301 new businesses being started within the region. It has created 1292 jobs, and safeguarded 107. It has also assisted 249 businesses to improve their performance.

The impact of ceasing the BEiC programme will undoubtedly have disastrous consequences and far reaching effects:-

  • The Liverpool City Region will miss out on around £4.5m in ERDF and match funding;
  • SENW will close in a matter of days due to unrecoverable costs against the programme, not to mention the redundancies that will be caused to 16 partner organisations;
  • The closure of BEiC will have catastrophic effects upon SMEs in the Liverpool City Region;
  • The closure of BEiC will withdraw a key source of start up support within disadvantaged communities and under-represented groups within the Liverpool City Region;
  • A number of newly procured partner organisations for the final year of the programme have worked on BEiC “at risk” for a number of months. Their costs will now not be paid due to DCLG’s decision to cease payments;
  • DCLG setting this precedent not only affects SENW and BEiC delivery organisations, but also has wider reaching ramifications on the Voluntary, Community and Social Enterprise sectors engagement and delivery of future EU programmes.