Page last updated at 16:15 GMT, Thursday, 6 November 2008

European funding to be returned

Stars symbolising the European Union members
Europe has asked the UK to repay 190m in funding.

The European Commission (EC) has identified 13m-worth of grant aid awarded to the Highlands and Islands that must now be returned.

The money is part of a UK total of 190m which the EC said was spent incorrectly, but not fraudulently.

The assistance to the Highlands and Islands was spent during the 1990s.

The actions will not be punished by fines, but the commission has sought a repayment for funds that should not have been received.

Three years ago, auditors at the EC reported finding management weaknesses and ineligible spending in some projects in the Highlands and Islands.

Poorest areas

In 2006, the then First Minister Jack McConnell told the Scottish Parliament that the Scottish Executive would contest the claims "vigorously".

The provision of a new car ferry at Corran, south of Fort William, was one of several projects to receive funding during the 1990s.

It received 1.06m from the European Regional Development Fund.

The installation of mobile phone coverage and the funicular railway in the Cairngorms also got funding.

Later in 2006, and separate from the problems found with funding in the 1990s, the Highlands and Islands was allocated 106m of European regional aid to cover 2007 to 2013.

The region was among the three poorest areas in the UK to benefit from the biggest share of funding.

The then Industry Minister Margaret Hodge said the allocation formula aimed to tackle disparities in economic performance.

The UK's overall allocation was cut from 10.6bn over seven years to 6.7bn, was funding is directed towards the poorer new member states.

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