ACCOUNTING FOR GRANTS FROM EEC FUNDS (Hansard, 21 October 1975)

§ Mr. Teddy Taylor
I beg to move, That the clause be read a Second time.
The Government will appreciate that they are losing the sympathy of the House. The last Division showed that the voting is going very much against 320 them. For that reason I hope that they will be reasonable in accepting an amendment which I think is an eminently reasonable one.
It relates to the Common Market, a subject which received a considerable amount of attention during the recent referendum campaign. We are not in relation to this clause trying to debate the whole question of the Common Market. It has been made clear, as the Secretary of State indicated, that it may be some time before we see the advantages claimed for the Common Market, such as the improvement in our balance of payments, the improvement in our living standards, the strengthening of sterling, and the availability of food at reasonable prices. It would be wrong to have a debate on the extent to which the Common Market in the past two and a half 321 years has been helpful to our nation or has hindered it.
I am seeking simply to provide that, in the event of the agency receiving grants from the Regional Fund of the Common Market, or any other fund of the EEC, for any of its purposes and functions, the Agency shall be obliged to account for these funds and expenditures separately within its annual accounts—in other words, showing the money from the Government in one column and the money from the Common Market in another. This is perfectly clear. It may be that this would be done in any event, in view of the Government's later amendment concerning the use of sound financial or commercial practices in accountancy. I hope that the Government will make it absolutely clear that this will be done.
I raised this matter in an oblique way in Committee, on two grounds. First, I suggested that it was important to know whether the SDA would get money from the Common Market. My second ground was that there was doubt at that time about the whole question of additionality.
It was argued during the referendum campaign by members of my own party, by members of the Labour Party, and by people in the Government at the present time who supported the Common Market, that the Regional Fund would ensure that more jobs would be made available, particularly in areas like Scotland. It was consistently stated by the Commission and by the Council of Ministers that the Regional Fund would be undermined if used other than as an addition to the grants made available by countries in their own regional development programmes.
Since we discussed this in Committee on 22nd July there has been a dramatic and fundamental change in the Government's policy in this matter, for they announced during the recess that, instead of Regional Fund money being an addition to the regional aid programmes of the Government, as in other member States, the money would simply be used as a substitute for money which the Government would otherwise spend. If, for example, the Government were proposing to spend £100 on regional development next year, and expected to get £20 from the Regional Fund, under the new policy the Government expenditure would be reduced by £20. There would be £80 provided by 322 the Government plus £20 from the EEC. I understand that that has been objected to by the EEC Commission. Is it the Government's intention that the regional fund money will be extra money or will simply be taken off what the Government were intending to spend on regional development?
7.30 p.m.
The second argument for the new clause is that it is desperately important that we should know precisely how much money the Government intend to spend on regional development through the Agency. We have pressed them on several occasions today to give an indication of what cash will be available. We have merely received the comment from the Minister of State that we shall soon learn about it from the public expenditure White Papers. At a time when Scottish unemployment is rising at the rate of 1,000 a week, it is not good enough for the Government to say that they do not know how much money will be made available. The only indication in the Bill is that £200 million is the limit before the Government must come back to the House, but we have no indication of the amount for next year, the year after or the year after that. There is a profound suspicion that, because of the restraint on Government spending, only a very limited sum will be available to go ahead with the work of the Agency.
Thirdly, there is now no doubt that the Agency will get some money from the regional fund. In Committee, the Minister of State said: Clause 3, which includes a power for the Agency to accept grants, will cover the Agency's accepting grants from the EEC as well as from other sources."—[Official Report, 22nd July 1975; First Scottish Standing Committee, c. 495.] It is important that we should know how much money the Government are putting into the Agency and how much is coming from other sources—what is new Government money and what is regional fund money.
Since I tabled new Clause 4, the matter has been overtaken by the Government's decision on additionality. It was a body blow to the regions, many of which, although being concerned about the Common Market, had accepted it because of the promises of the regional fund, to hear that they were not going to get money from the fund at all. To 323 that extent, the drafting of the new clause may have to be changed, but the Government have an obligation, because they took the opportunity of announcing their decision in the recess, to explain why they took it when they had said that the regional fund money would be extra, to provide for jobs in Scotland and other development areas, and when the Commission had said repeatedly that the regional fund should be extra money and that it would undermine the purpose if it were not so used.
We have now had the first indication of the use of the regional fund. We are told that some of the money is being put to an advance factory building programme which the Government had already decided should go ahead, with the Government spending taxpayers' money for that purpose. Now, the regional fund will be used for it. This is a further indication that there will be no direct additionality, and it is a serious matter. If we had known about this before, the new clause would have been in a rather different form.
It is important that the Government should indicate why they have decided to deprive the regions and Scotland of any direct benefit from the regional fund, about which so much was said during the referendum campaign and before, when membership of the EEC was a live issue, when the Secretary of State for Scotland took an active part, although we were deprived of much of his comments during the campaign. I hope that the Minister of State will at least now give an assurance that he will accept the new clause and ensure that we know thereby how much of the cash reaching the Agency comes from the Government and how much comes from other sources, including the EEC. I hope that the Minister will give us a clear answer and indicate the reason for the remarkable decision of the Government on additionality. Did the Secretary of State support this policy change?

§ Mr. Millan
I do not know what would have been in new Clause 4 if it had been drafted in a different form at a different time by the hon. Member for Glasgow, 324 Cathcart (Mr. Taylor). It is no doubt an interesting speculation, but I have to deal with it as it is. The new clause does not deal with the wider issues; it deals only with the question whether any funds received by the Agency from the EEC should be separately identified in its accounts. Sums so received will be identified separately in the annual accounts. There is therefore no need for a separate clause to provide for that event.
We already have power in Schedule 2(8) to prescribe the form of the accounts. Later tonight, we shall move an amendment to provide that the accounts shall conform to the best commercial standards. I give an assurance that we shall prescribe the form of the accounts in a way which will enable any sums from the EEC to be separately identified. Therefore, the purpose of the new clause will be met, and I cannot recommend a separate clause in the Bill to deal with the matter. It is unnecessary.

§ Mr. Taylor
I thank the Minister of State for his clear assurance that there will be a separate account for the sums obtained from the regional fund or elsewhere, but it is extremely unfortunate that, given an opportunity to justify an astonishing decision made by the Government during the recess—a decision in which there must have been Scottish Office involvement, and one which will cause damage and perhaps extra hardship and unemployment to Scotland and other development areas—the Minister has chosen to say nothing.
In Committee, we pressed the Government to say whether they accepted additionality. We have had no statement of any sort from any Minister on that score. Although I am grateful to the Minister of State for accepting the simple point of the new clause, it is shameful that he has dodged the issue of trying to justify a decision which is bad for Scotland and for the regions, and will do no good to the country as a whole.
I beg to ask leave to withdraw the motion.