The European Social Fund is essential to the UK's regeneration, but it won't be around for much longer. Associations should grab the money while they can, says Katie Puckett 鈥� with more EU finance reforms on the way, they'll need all they can get.
Over the next seven months, South Liverpool Housing's Neighbourhood Plus project will get 36 local people off the long-term unemployed people register and back into work. They will join an existing team of 12 estate caretakers, looking after their neighbourhoods and learning the skills that local employers want, such as driving, working with customers and using machinery and equipment.

"The main aim is to get people into permanent employment, but what's also attractive about it is that we get those who live on the estate and are committed to making their community a place to be proud of," says Clare Budden, deputy chief executive at South Liverpool Housing.

This project, like hundreds of others, was possible because of the European Social Fund. South Liverpool received 拢260,000 from this fund, which will pay for half of the cost of the scheme. "Without that, our ability to do these programmes would be very limited," says Budden. After 2006, however, things are going to be different.

The EU's expansion from 15 to 25 countries next year has sparked discussions about financial reform, which are due to be finalised in 2005. Housing providers will be affected by much of this, but their greatest loss will undoubtedly be the European Social Fund.

The end of an era
The ESF aims to even out disparities within the European Union's regions and is distributing 拢3bn to UK schemes via regional government offices from 2000 to 2006. Projects funded by the ESF tend not to have an obvious alternative funding source (see "Where the euros go", right). European cash cannot be used to build houses, but it is often crucial to an area's regeneration by improving skills and employment prospects.

There are still a few months' grace, though opportunities to bid vary in each regional government office. Paul Tilsley, director of the West Midlands European Network, which assists voluntary organisations to access EU funds, says: "All regions have targets 鈥� so many hectares of contaminated land, jobs saved, people with improved skills, plus the whole issue of including black and ethnic-minority groups. Government offices are looking for organisations that can help deliver these targets."

Objective thinking
EU funds are currently distributed to areas according to their classification as Objective 1, 2 or 3 (see "Watching the objectives", overleaf) and it is these classifications that stand to be affected by the rest of the financial reform. From next year, the UK's most deprived areas will seem relatively well-off in comparison to others in the enlarged EU, and therefore potentially no longer eligible for the same level of funding.

The areas of Britain that receive the highest levels of EU funding will be devastated if this cash is withdrawn. Merseyside, where South Liverpool Housing operates, is a prime example. From 2000-2006, it is getting 拢844m, which will help create 39,000 jobs, train 70,000 people and reclaim 840 ha of brownfield land. This money must be matched by other public and private sources of funding, bringing total investment in the area to more than 拢2bn.

Councillor Flo Clucas, Liverpool council's member for housing and European affairs, is concerned about future funding. "The EU enlargement will enhance the UK's business prospects and make for a safer Europe, but it's going to have a significant impact on areas like Merseyside," she says.

And it's not just the money that's at risk.

As a region whose GDP is 75% of the EU average 鈥� Merseyside is Objective 1 and exempt from European rules banning state aid to business, so councils can support fledgling companies. "It's really important to our growth that this should continue," says Clucas. But with less-affluent countries joining the EU, the average GDP could drop, changing Merseyside's status.

Clucas and three other councillors from London, Newcastle and Birmingham discussed the issue with chancellor Gordon Brown at a meeting in May. "He was quite open, he listened," she says optimistically.

The West Midlands, meanwhile, is classified as Objective 2 鈥� a region undergoing economic restructuring because of the loss of traditional industries. It is getting 拢550m from 2000 to 2006.

"The worry is that unless there are changes to the rules, our status will go. That would be quite a hammer blow," says the West Midlands European Network's Paul Tilsley. "The problems we've got aren't going to go away in 2006 鈥� we will still need help. We're still going to need substantial help to get communities to re-engage with economic life."

Like Clucas, Tilsley is hoping that some provision will be made for areas hit by the expansion. They will have to wait some time to find out. In January, the EC will publish a report into the future funding structure 鈥� the start of a long consultation period. A final decision is expected by the end of 2005, and it will apply to all funding from 1 January 2007.

As housing associations work to rebrand themselves as social businesses, they should look to exploit the EU funding on offer 鈥� while they still can.

Where the euros go

Devon & Cornwall Housing Association
Funding: 拢462,000 from European Regional Development Fund, Objective 2. Opening in January, the latest of Devon & Cornwall鈥檚 foyers at Torbay will provide 20 beds for young homeless people and training facilities for residents and local people. Since it opened in 2000, a similar foyer in Plymouth has helped about 100 people every year move to permanent housing and employment. 鈥淓uropean funding has been absolutely vital to all the foyers we鈥檝e done so far,鈥� says Andrew Noquet, foyer services manager at Devon & Cornwall. 鈥淚f it didn鈥檛 exist, I鈥檓 not sure where else there鈥檚 that kind of money sitting around.鈥� Portsmouth Housing association
Funding: 拢3m since 1997 from European Social Fund, Objective 3. Portsmouth Foyer, which has 100 beds, has got more than 1000 people into work since 1996. It is also the base for a number of community groups, including employment and training facilities for under-24s and an education and training group for Bengali women. Residents sign up for the employment service when they move in, and organise their own 鈥渙utward bound鈥� courses to promote team building and 鈥渓earning by stealth鈥�, according to Tania Davies, finance director for Create, the regeneration department of Portsmouth Housing Association. 鈥淓uropean social funding has allowed to really add to what we can do down there,鈥� she says 鈥淚t鈥檒l be a shame when it comes to an end, because these aren鈥檛 the sort of things that it鈥檚 anybody鈥檚 business to fund.鈥�

Watching the objectives

  • Objective 1 areas are the 48 regions within the EU that have 75% of its average GDP. The UK鈥檚 Objective 1 areas are Merseyside, Cornwall, South Yorkshire, the Scilly Isles, West Wales and the South Wales valleys. They will receive 拢3.9bn during 2000-2006. When the union is enlarged next year, there will be 67 Objective 1 areas, mainly in the 10 new EU member states.
  • Objective 2 areas are those facing major economic or social restructuring due to failing industry, such as the West Midlands. British Objective 2 areas cover 14 million people and have 拢3.1bn of EU cash for 2000-2006.
  • Objectives 1 and 2 can both bid for the European Regional Development Fund and European Social Fund.
  • Objective 3 funding from the European Social Fund is available to the rest of the union. The UK is getting just under 拢3bn for 2000-2006. Objective 3 projects aim to develop labour markets and skills, targeting the long-term unemployed and those facing barriers to finding fulfilling employment because of a disability, race or sex.

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    Housing Today