Companies owed £8m after delays in EU grant payments

Irish companies are owed up to £8 million because of delays in clearing EU research grant payments through Forbairt. It is putting unnecessary financial pressures on companies affected by the administrative delays, according to the IBEC group that represents companies involved in product and process research.

About 50 companies are affected according to Dr Dick Kavanagh, managing director of the Irish Research and Development Group. It was "a cash flow management problem", Dr Kavanagh said yesterday. "It has always been there to some extent but has got particularly bad in the last six to eight months."

The grants are payable under an EU funded programme, Measure 1. This was introduced in 1994 to encourage more companies to carry out research and has moved £88 million into Irish firms. So great was the demand that its budgets were exhausted last July, well ahead of the expected end of the scheme in 1999. An additional £28 million was agreed last autumn to continue it under a new name, the Research Technology and Innovation scheme, and 528 companies had become involved since 1994.

The funding was fully approved "but the problem is getting it out", according to Dr Kavanagh, who said that £8 million was owed. Some of the companies which invested cash flow in good faith were being forced into short-term borrowings because of delays in getting the money back from Forbairt, he said. This in turn was damaging the scheme because of problems with "credibility", he added.

"If you are a small company turning over £3 million to £4 million and you are owed £150,000 it can be serious," Dr Kavanagh said. "This seems to be typical of what is going on. The Department of Finance won't let [Forbairt] spend their own money" to pay these approved grants.

These problems were acknowledged by a spokesman at the Department of Enterprise Trade and Employment which is responsible for the scheme. "There was some difficulty getting the monies released," he said yesterday. He estimated the shortfall at £6 million.

"We will be putting a mechanism in place to overcome that problem," he said. It related to "balancing budgets" in Brussels, he said. "We were waiting for the money from them," he said, but this had now been released.

Forbairt acknowledged that funding for the programme had reached it. "We do have the money in to pay the eligible claims," a Forbairt spokesman said.

It represented a part of the outstanding amount and further payments would be made in July.