EU Commission suspends £45m funding due to 'irregularities'

The EU Commission has suspended more than £45m earmarked for Scotland under the European Social Fund after what it called "irregularities" in spending.

The ESF provides cash for projects aimed at creating and supporting jobs in member states.

Problems with the Scottish government's system for managing the funding were first highlighted last December.

Scottish ministers blamed a "technical issue" and said they were working to comply with EU regulations.

The money affected is from the ESF's last funding round covering the period 2007-2013.

Payments of about 57.8m euros (£41.4m) due to go to projects in the Lowlands and Uplands and about 6.7m euros (£4.8m) for the Highlands and Islands have been suspended.

'Extensive dialogue'

The EU Commission said it took the decision because it had not received sufficient assurances from the Scottish government.

A spokesman said: "Member states have the obligation to ensure that EU money is spent properly and that all procedures and documents respect the rules set out under the Structural Funds.

"In December 2014, the Scottish national authorities reported problems in the management and control system within the managing authorities (Scottish government).

"The control report from 2014 also found irregularities concerning expenditure in several operations.

"On the basis of these findings and after an extensive dialogue with Scottish national authorities during several months, the Commission decided that there is insufficient assurance that all the measures to rectify the problems have been taken."

The Commission said it would continue to work with the Scottish authorities to resolve the situation.

The Scottish government said the problems arose due to some public bodies failing to comply with audit obligations.

It said some projects had been "unable to adequately account for all the funding they received and spent" which led to the "interruptions and suspensions".

It said payments were not being frozen and projects had already been paid by the Scottish government.

A spokesman said the Commission would not repay the Scottish government for funds paid out in 2014 until auditors were satisfied that all funds could be accounted for.

'Fully compliant'

He added: "Clearly this is unacceptable and is being addressed. Suspension of European programme funding due to technical issues is not uncommon and no money will be lost to public bodies.

"Approvals for new programme payments are imminent but await final clearance by auditors.

"We are very keen to ensure all processes are fully compliant with EU regulations before we issue any approvals."

Scottish Labour's public services spokeswoman Jackie Baillie said the suspension of the ESF payments was "hugely concerning".

She added: "The Scottish government needs to get to the bottom of what has gone wrong here; this is cash that should be supporting disadvantaged people that isn't getting through."

The Scottish Conservatives said the "blunder" was "extremely disappointing".

The party's enterprise spokesman Murdo Fraser said: "This calls into question the SNP's financial management. They must avoid further chaos and put the necessary measures in place to ensure this does not happen again."