Q&A: European funding for Wales

Some of the money will go to help the south Wales valleys

With the announcement of a multimillion pound fund for regeneration projects across Wales, Guto Thomas puts the big numbers into perspective.

How many projects have been given approval for the new round of regional funding from the European Union?

To date, 42 projects have been approved. But there are many more projects in the pipeline - with 393 applications registered with the Wales European Funding Office (Wefo), of which 241 are being formally assessed, with 75 of these at the final stages of detailed assessment. Those 75 projects at the final stages of the process are close to a decision - although since this is a competitive process, some of these projects may be rejected and will never materialise.

How much money is available?

The total amount of EU funding that will be available between 2007-13 in west Wales, the valleys and east Wales is £1,762m, with a total match funding worth £1,834m. Based on an exchange rate of £1/1.26 euros, this gives a grand total of £3,596m. This is £240m more than was anticipated in August 2007, because of currency fluctuations.

How many projects will get European cash?

The early estimates are that about 500 projects will receive funding between 2007 and 2013 - which is significantly lower than the total number of around 3000 projects that were approved in the previous round of funding, between 2000 and 2006. The official explanation for this reduction is that the Welsh Assembly Government now favours a more strategic approach, with less duplication, and a significant reduction in management overheads - all of which will get more money away from administration costs, and towards front line projects.

How much of the money has been spent so far?

Because of the way that European funding works, the figures for actual money spent won't be known for some time. However, we do know how much money has been allocated to approved projects. The 42 approved projects have been allocated £380m in EU funding - worth 22% of the total available amount. Officials note that this compares favourably with the 14% level of commitment at the same stage of the previous Objective 1 funding cycle. The total value of these projects, including match funding, is £809m.

How confident is the assembly government that it will spend all of the European funding available?

Officials think they'll manage to spend around 98% of the total amount of funding from the old Objective One schemes, which is about to be wound up at the end of December. This compares to 86% of the pre-2000 schemes in Wales, and the around 80% average underspend in European funding projects more generally. This 98% rate of spend includes an extra £40m that was received because of changes in the exchange rate of sterling / euro. This was largely spent by extending funding for existing projects. It's far too early to put any kind of figures on spending rates for the new 2007-2013 schemes.

Is it true that the assembly government is approving more of its own projects than others?

No. Just under half of the projects approved so far have been sponsored by assembly government departments. The assembly government thinks this was necessary to get the new programme off the ground, as well as giving it shape and structure. However, officials say that a large number of non-governmental projects are now in the final stages of approval, and should further reduce the government's share of projects.

Is the private sector being short-changed or cut out of projects by the assembly government?

Yes and no - this largely depends on your perspective. Of the 42 approved projects so far, only two have been sponsored by private sector companies - Furnace Farm Ltd (Centre of Excellence for Welsh Food in the Conwy Valley), and UK Steel Enterprise (Ebbw Vale Innovation Centre). But on the other hand, 46% of approved funding has gone to support for business, with £196m for business finance, £84m for research & development and innovation, £10m for ICT and another £80m for other enterprise support including business start-ups. This means that rather than having many small organisations applying directly for EU funding, smaller organisations would be able to submit tenders to larger EU funded projects for specific work - effectively sub-contracting work at arms length from the complex application process for EU funds.

44% of approved funding has been allocated to support individuals - with £213m to help people into work, £134m to improve skills, and £12m to promote equal opportunities. Another 7% (£62m) has so far been allocated to support communities, environment and transport.