Social enterprise body reacts angrily as DCLG issues £1.47m demand notice
A regional body for social enterprise in the North West has reacted angrily to the Department for Communities and Local Government issuing a demand notice for £1.47m.
The DCLG claimed that “serious irregularities” had been uncovered in the accounts of Social Enterprise North West (SENW).
The £1.47m was part of a grant given to SENW to run a business advisory service in Liverpool called the Big Enterprise in Communities project (BEiC) and the DCLG is seeking to claw the money back.
The BEiC project was launched in January 2012. Run by SENW together with 17 supporting organisations, it received £3.79m from the European Regional Development Fund. The DCLG administers that fund on behalf of the British taxpayer.
According to the Department, an audit carried out in July by the Audit Authority in accordance with European Commission rules identified serious breaches in the project’s accounts.
It said that under the terms of European grant funding, SENW was required to show how all public money it had received for the BEiC project had been spent.
Communities Minister Lord Ahmad said: “I accept that European Commission rules can be very bureaucratic but in this case they are perfectly clear – failure to provide evidence of how money is spent puts the funding at risk.
“The DCLG has a clear obligation to make sure every pound of taxpayers’ money is properly accounted for. It is totally unacceptable that SENW cannot provide proper accounts for £1.4m worth of public money.”
The DCLG said it would not seek to reclaim any of the money from BEiC’s 17 supporting organisations, “who operated in good faith throughout”.
The Department also suggested that the BEiC project had exceeded initial expectations. Some 3,128 businesses have been provided with start up support in Liverpool and the surrounding area.
In a statement, SENW claimed it had “become the victim of bureaucratic wrangling” within the DCLG in the North West and that civil servants had been unable to agree funding rules.
“Due to a departmental blunder, millions of pounds of European funding for business start up and enterprise support for disadvantaged communities has now been lost from the Liverpool City Region,” it argued.
“As a direct consequence, several of the region’s social enterprises face large scale redundancies and closure.”
It said its delivery model had been agreed with and later audited by the DCLG’s own North West European Programmes audit team.
“National auditors have now interpreted the rules differently leading to the demand for repayment by SENW, it claimed.
Val Jones, CEO of SENW, said: “I am both shocked and disgusted at the incompetence of DCLG whose wrangling between national auditors and the North West civil servants has led to this devastating decision.
“This is not SENW’s liability and this high handed action has wider impacts in terms of the delivery of current and future EU programmes. It calls into question whether local civil servants have the competence required to manage European funds on behalf of the people of the North West.”
SENW warned that the closure of the BEiC programme would place a number of social enterprise organisations at risk of closure. It would also mean that the future of the Local Impact Fund for the Liverpool City Region, and a “much-needed” investment of £2m for social enterprises, was in jeopardy.
Dave Roberts, the chair of SENW, said: “The Board Members of SENW have been placed in an impossible position by DCLG in the North West. Under the instruction of DCLG, the model was used in good faith to deliver a successful EU programme for three years, and the model is not dissimilar to Lancashire’s current business support project.
“SENW have questioned DCLG as to why they are now being penalised for using a model developed based on the advice of DCLG themselves, but have received no response. The impact of this debacle will have disastrous implications for the Liverpool City Region and particularly for social enterprise businesses.”
