£45m EU job fund frozen after government blunders

The EU Commission has suspended the money earmarked for Scotland. Picture: AP
The EU Commission has suspended the money earmarked for Scotland. Picture: AP
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A FUND of over £45 million, supposed to go toward job creation has been frozen by the EU Commission because of problems with the Scottish Government’s system for managing the cash.

The EU Commission has suspended the money earmarked for Scotland under the European Social Fund after what it called “irregularities” in spending.

The ESF provides cash for projects aimed at creating and supporting jobs in member states. The programmes funded by the cash focus mainly on increasing employment by support for unemployed, economically inactive and disadvantaged people.

Problems with the Scottish government’s system for managing the funding were first highlighted last December.

Scottish ministers blamed a “technical issue” and said they were working to comply with EU regulations.

The money affected is from the ESF’s last funding round covering the period 2007-2013.

Payments of about 57.8 million euros (£41.4 million) due to go to projects in the Lowlands and Uplands and about 6.7 million euros (£4.8 million) for the Highlands and Islands have been suspended.

The EU Commission said it took the decision because it had not received sufficient assurances they had ironed out the issues from the Scottish Government.

Scottish officials first reported problems with their system for managing the money in December.

There followed eight months of talks between Edinburgh and Brussels, which failed to satisfy the Commission that enough had been done to sort out the problems.

The suspended funds represent around one quarter of the £193 million supposed to come to Scotland from the social fund between 2007 and 2013.

A EU Commission spokesman said: “Member states have the obligation to ensure that EU money is spent properly and that all procedures and documents respect the rules set out under the Structural Funds.

“In December 2014, the Scottish national authorities reported problems in the management and control system within the managing authorities (the Scottish Government).

“The control report from 2014 also found irregularities concerning expenditure in several operations.

“On the basis of these findings and after an extensive dialogue with Scottish national authorities during several months, the Commission decided that there is insufficient assurance that all the measures to rectify the problems have been taken.”

The Commission said it would continue to work with the Scottish authorities to resolve the situation.

Last night the Scottish Labour Public Services spokesperson Jackie Baillie said: “This is hugely concerning news, especially given that this money goes to job opportunities for vulnerable people.

“The Scottish Government needs to get to the bottom of what has gone wrong here; this is cash that should be supporting disadvantaged people that isn’t getting through.”

A Scottish Government spokesman said: “It is important to stress that no money will be lost to Scotland as a result of this process.

“Current interruptions to programme payments were prompted by some public bodies failing to comply with their audit obligations – clearly this is unacceptable and is being addressed. Approvals for new programme payments are imminent but await final clearance by auditors. We are keen to ensure all processes fulfil EU regulations.

“Interruptions with European programme funding due to technical issues are not uncommon.”