Social enterprises hit by Government cash clawback after EU grant mistakes

Business Editor, Sunday Herald

Sunday 15 July 2012

One of Scotland's leading social enterprise companies has criticised the Scottish Government for trying to make it pay back £370,000 of EU grants it was mistakenly allocated between 2000 and 2006.

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The Wise Group hardest hit by attempt to reclaim funds By Colin Donald

Glasgow's Wise Group blames the government for errors in administering the European Structural Funds (ESF) – a position it says was supported by former auditor general, Robert Black, last year.

Wise Group – which last year had a turnover of £27 million, and which has won praise and contracts from SNP government ministers – insists that its claims were "entirely consistent" with the then government guidelines, and is negotiating to have the claim rescinded.

The ESF awards are administered in Scotland by a department of the Scottish Government. The tapping of grass roots organisations for ESF cash follows demands on the Scottish Government to repay nearly £33m of the £79m it received from Brussels for ESF awards made under previous administrations in 2000-06, which were retrospectively deemed ineligible following a routine "financial correction" process by Brussels. The EU has already reclaimed the money through deductions from other budgetary allocations to the Scottish Government between 2000-06. European audits routinely determine whether European social funds have been dispensed in line with elaborate anti-corruption checks, and if they have fallen foul of poor record-keeping or "ineligible expenditure". The Wise Group is by far the hardest hit of four social enterprises currently facing repayment bills. The North Lanarkshire Volunteering Development Agency, the children's home group Quarriers, and the workplace skills specialist Communitas, plus The Moray Council and Scottish Enterprise are also required to make repayments, though in the latter case the sum is a token £30. The case for resisting repayment demands was bolstered last October by then auditor general Robert Black, who appeared to lay the blame for wrongly-allocated ESF awards on civil servants when he appeared before the Scottish Parliament's Public Audit Committee. He said: "I consider that all those repayments represent a loss of European funding to Scotland. They arise because Scottish Government procedures have not been meeting the standards required to ensure that the use of funds complies fully with European legislation."It is important that the Scottish Government continues to address concerns about the management and control of European funding programmes and ensures that it learns the lessons from its experience of previous programmes." A spokesman for the Wise Group told the Sunday Herald: "It was the Scottish Government that was investigated by the European Court of Audit, not the Wise Group."The Wise Group's use of European funding was entirely consistent with Scottish Government directions at that time. We are currently in discussion with Scottish civil servants regarding this and related matters."A spokeswoman for the Scottish Government said: "Currently the Scottish Government is pursuing £445,000 from six applicants from historic ESF programmes totalling almost £79m. We always work with projects to allow them to introduce repayment plans if they wish. "We are regularly in discussions with recipients about repayments. That is the current position with the Wise Group and those discussions are ongoing."Sources close to another of the companies affected have claimed that attempts to recover funds have strengthened since the appointment of Shane Rankin to the post of head of European Structural Funds last year, the organisation having previously indicated that it would not seek to reclaim them. However, this has been denied by the Scottish Government. A spokeswoman said: "There has not been any renewed effort in recent months to recover funds which should not have been claimed or paid. Most of the recovery work has been ongoing since 2008 when the 2000-06 structural funds programmes closed. It is absolutely right that the Scottish Government carefully monitors funding in this way, and indeed the EU demands that we do so as a legal obligation."

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Social enterprises hit by Government cash clawback after EU grant mistakes

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