Government throws away £84.4 million for the West Midlands in EU funds

12.00.00am BST (GMT +0100) Tue 19th May 2009

Liz Lynne, the Liberal Democrat MEP for the West Midlands has today expressed her anger at the news that the Government has rejected an estimated £84.4 million of EU money for the region that was intended to combat the recession.

The EU Commission had offered £671 million in unspent European Regional Development Fund money to England to be spent across the regions most affected by the economic downturn. The West Midlands would have received a substantial part of this money, an estimated £84.4 million.

But despite taking the money for the devolved regions of Scotland, Wales and Northern Ireland, the Government decided not to pass on the money to English regions as it 'did not make economic sense'. Instead, the treasury will be able to claim the money back from future contributions to the EU budget.

Liz Lynne, who is the Vice- President of the Employment and Social Affairs Committee in the European Parliament, said she was appalled:

"It is incredible that Ministers have thrown away this opportunity to spend money now to kickstart the economy in Birmingham and the West Midlands. For the Government to turn its nose up at this type of funding at the present time shows that they are completely out of touch with the needs of local regions.

"The West Midlands is in desperate need of action to pump prime the local economy and the European Regional Development Fund has in the past been one of the most positive benefits of the EU to the region. This money could have been put to good use and yet the government has instead decided to look a gift horse in the mouth.

"We need to tackle what economists call the 'velocity of circulation' - money is just not being spent. Even if the total value of money in an economy stays the same, if businesses and consumers sit tight out of fear instead of using it to buy and sell from each other, the real effect of the recession is far worse.

"The role of government must be to offset this paralysis, which is preventing people from ordering supplies, goods and services. This is why Barack Obama is moving with such speed to kickstart the American economy, we need to do the same in Europe and here in the West Midlands.

"It is a scandal that this opportunity is being thrown away by the Treasury. We need every tool in the box to get the engine of the economy in Birmingham and the West Midlands firing again. I do not hold out much hope that the West Midlands will reap any benefit from the Treasury decision to use the money to reduce its own budgetary contributions in future years."