Charity rocked by agency's cash demand

A charity which helps some of East Anglia's poorest families faced closure last night - after the government demanded it re-pay almost �200,000 in euro-grants.

A charity which helps some of East Anglia's poorest families faced closure last night - after the government demanded it repay almost �200,000 in Euro-grants.

The Lowestoft-based Aid and Assist project lost important invoices in a flood, but because it could not show the government where every penny of its money had been spent, the whole amount has to be paid back by February 14.

The charity, which has been working in the town since 1983, was awarded �185,000 of European Social Fund money in 2000 to set up a work-shop to repair and restore donated furniture for low-income families.

In September 2006, the workshop, in Rotterdam Road, Lowestoft, flooded and boxes of financial documents and invoices were destroyed.

When the project was audited last year, it was unable to submit documents which had been destroyed in the flood. Now the charity has been told that, as it failed the audit, the �185,000 has to be repaid by February 14 - a demand which has been branded "pathetic" by the area's MEP.

Aid and Assist project manager Ann Stockdale-Bond said: "We've been told that as we can't provide that paperwork, they want all the money back. We've tried to get copies of invoices but obviously these were all from several years ago

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"There's no way we can find that money in the next nine days. We plough any small profit we make back into the charity. We assumed the auditor would accept the insurance claim documents from after the flood as proof that the invoices had been damaged, and that would be it."

Eastern MEP Richard Howitt, who is coming to Lowestoft tomorrow to meet the charity's management team, said: "It is utterly dreadful. It is pathetic that they are being treated this way. This European funding was meant to allow the charity to expand and enable them to reach even more people. It is a travesty that this funding has been recalled.

"I'm going to work with the project to come up with a plan to reassemble the records to the best of their ability. Then they can say that, because of an act of God and no fault of their own, that is the best they can do.

"It won't be perfect but it will be all they can do, and I believe it should be accepted. It's not the project's fault that there was a flood."

Mrs Stockdale-Bond said the charity would struggle to make any kind of repayments. "Our only offer could be to pay about �5 a week because at the moment we'd struggle to pay even a nominal amount.

"In the past year we've had to make two people redundant because, although we have furniture to sell in the shop, we don't have so many donations coming in because people aren't replacing their furniture at the moment. If we close, six staff will lose their jobs."

The European Social Fund grants are managed in the UK by the Department for Work and Pensions. A spokesman for the Government Office for the East of England said: "As part of the European Social Fund programme, projects are required to hold pertinent documentation for audit purposes to ensure that public money is spent appropriately. As they do not have that documentation, we have been looking at the regulations and the options open to us, which has included sharing the documentation that we hold here.

"Unfortunately, there is still insufficient evidence, which would satisfy stringent EU audit processes, to show how the funding has been spent.

"To ensure that we carry out our responsibility for managing public money, we therefore have to refer the matter to the Department for Work and Pensions (DWP) as the managing authority for the European Social Fund programme in England, to consider. No final decision has been made about any financial recovery, and we will continue to work with the DWP and Aid and Assist to agree a way forward."