European Funding in North East England
The North East England has the lowest GDP per capita in England and the second lowest GDP in the United Kingdom after Wales. The region’s economy depended heavily on shipbuilding and coal mining, and as a result, it was severely hit by the decline of the two industries in the past century. Unlike other England’s regions, the North East England was less successful in adjusting to the changed economic climate which has resulted in high unemployment rate among the urban population as well as in the rural areas. These almost exclusively depend on agriculture and tourism, and unemployment rate remains high in comparison to other England’s regions.
Despite having the lowest GDP per capita in England, the North East England does not belong among the poorest regions in the European Union. It exceeds 75 percent of the average GDP in the EU which is why it is not entitled to the European funding under the Convergence objective. Regions that fall under the Convergence criteria receive more than 80 percent of the so-called Structural Funds which provide financial support to projects that stimulate regional development and reduce disparity between the regions both within the EU member states and the EU itself. However, the North East England is entitled to the funds that fall under the objective Regional competitiveness and employment that focuses on stimulation of regional development as well.
European funding according to the Regional competitiveness and employment criteria is managed by the European Regional Development Fund (ERDF) and the European Social Fund (ESF). The latter focuses on improvement of employment opportunities in the least developed Europe’s regions and accounts for as much as 10 percent of the total EU budget. However, about 80 percent of the ESF funds are granted to the so-called Objective 1 regions with a GDP below 75 percent of the EU average and the North East England does not fall among Objective 1 regions. But since the ESF funds are distributed according to the regions’ GDP, the North East England is entitled to more funds than other England’s regions. Projects which meet the objectives of the ESF such as creation of new employment opportunities are awarded grants by the Department for Work and Pensions, Skills Funding Agency and the National Offender Management Service which manage the ESF funds in England. The 2007-2013 ESF programme for the North East England is worth 157 million pounds.
The ERDF programme dedicates even more funds to the North East England than the ESF as it guarantees 255 million pounds to the region between the years 2007 and 2013. The ERDF funds are available to projects which stimulate regional economic development, while the priority is given to projects which focus on enhancing and exploiting innovation, and business growth and development. The ERDF funds in England are managed by the Department for Transport, Local Government and the Regions.
Neither the ERDF or the ESF programmes provide 100% funding of the projects that stimulate regional development (about 50% must be found elsewhere), however, they have been shown to be major contributors to regional economic growth and creation of new workplaces.