Euro projects in jeopardy

The Welsh assembly partly funds Objective One projects

Many projects designed to help the poorest areas of Wales could be forced to close because of financial problems, BBC Wales has learnt.

Although this is officially denied by the assembly government, it is feared that jobs could be lost if Objective One schemes, which are part-funded by the European Union, are cut because of a shortfall in "match-funding".

Match-funding means that, for every pound given by Europe, the Welsh Assembly Government must also give a pound.

But BBC Wales has learned more than £100m worth of bids have been made from various organisations, agencies and programmes against a budget of just £20m.

The Welsh Assembly Government has confirmed that tough decisions have to be made.

However Economic Development Minister Andrew Davies denies there is not enough match-funding for European Objective One projects.

"There is no shortfall - it has always been very clear that match-funding is the responsibility of the project applicant," he said

As the Objective One programme has grown, there has been a greater demand on funds.

It is understood that many projects from the first three years of funding are now making bids for next phase funding.

However, these may well be turned down - leading to job losses and the closure of many programmes.

Some of the firms with an uncertain future, which did not want to be identified, have said they are experiencing severe difficulties and some have even drawn up redundancy plans for staff.

The Conservatives' Economic Development spokesman Alun Cairns says the Assembly Government has failed to acknowledge the problems.

"Unless the assembly government admits the difficulties it is in, and unless they battle for extra money from Westminster, we will continue in this crisis," he said.

"We have bumbled along the bottom for the last four year because we have not had the match-funding, but the assembly government did not admit there was going to be a stretch in finances.

"That is why it has come to a crisis point."

The Welsh Development Agency has confirmed a complete review of all its European-funded projects is underway.