Liverpool City Council and Sheffield City Council have instructed lawyers jointly to prepare the case for a judicial review against the Government over the allocation for the next round of ERDF.
In June, the Department for Business, Innovation & Skills announced that Merseyside will get €222m, or £185m, from the European Regional Development Fund between 2014 and 2020. This equates to €147 for each person in the city region, compared to €380 under the 2007-2013 programme.
Liverpool claims that BIS based the allocation on the average ERDF spend in the last three years on Merseyside, but says it spent more at the start of the 2007-2013 programme as it prepared to host the European Capital of Culture events in 2008, and completed capital projects along the waterfront including the Arena & Convention Centre Liverpool which received nearly £50m alone from the European programme.
The current ERDF NW programme is worth €755m of which 41%, or €309m, was ring-fenced for Merseyside as a so-called transition area, reflecting its previous Objective 1 status as one of the poorer regional economies of Europe. The UK receives its ERDF funding centrally and then divides the pot between different areas.
This time the Government decided to allocate an extra £650m to Scotland, Wales and Northern Ireland, including £350m which, Liverpool said, the European Commission had ring-fenced for poorer transition regions such as Liverpool City Region.
A spokesman for Liverpool City Council said that in "discussions with the European Commission we have established that they had expected us to receive €100m more than the government has allocated us."
BIS said in response: "The Government made a clear decision to base European Structural Fund allocations on 2013 funding levels rather than average funding levels across 2007-13.
"There was a 15% increase for Merseyside in relation to its 2013 scheduled payments and this is just one way that the government is supporting growth in the area.
"We could not justify making Merseyside a special case when there are signs its economic outlook has been improving. This would have significantly reduced funds available for other places equally in need."
BIS added that as a result of official statistics showing increased prosperity in Merseyside relative to the EU, European funding has been decreasing and the region is now classed as an improving 'transition region'. EU funds to Merseyside have been tapering down over the last seven years to reflect that increased prosperity relative to the EU average. So the baseline for its allocation in the next funding round was set at the level of 2013 funding, not at the level of 2007 funding or any average of the seven years.
Liverpool will also get less than the rest of the North West from 2014-2020, despite being officially classed as poorer than Greater Manchester, Cheshire and Warrington, Lancashire and Cumbria.
The other sub-regions of the North West were allocated the following budgets:
- Greater Manchester: €415.6m
- Lancashire: €266.3m
- Cheshire & Warrington: €142.2m
- Cumbria: €91.4m
ERDF is used to partly fund major projects, with up to 50% of costs typically available, to be matched by other sources.
Mayor of Liverpool and chairman of Liverpool City Region Cabinet, Cllr Joe Anderson, said at the time of the BIS decision last month: "This is an absolute travesty and a devastating blow for our area. It is like Robin Hood in reverse – robbing from the poor to give to those that are richer."
Liverpool and Sheffield had argued that a safety net should be applied to the new funding allocations to limit the reduction. They said this was the rationale the Government used to transfer the money to Scotland, Wales and Northern Ireland.
The Department for Business, Innovation & Skills was unavailable for comment.