European Social Fund

HC Deb 03 March 1986 vol 93 cc109-23

10 pm

The Parliamentary Under-Secretary of State for Employment (Mr. Ian Lang)

I beg to move,

That this House takes note of European Community Documents Nos. 7711/85, a Commission Decision on guidelines for the management of the European Social Fund in the financial years 1986 to 1988; 9901/85, a Commission proposal to amend Council decision 83/516/EEC and Regulation (EEC) No. 2850/83 on the tasks of the European Social Fund, in view of the accession of Spain and Portugal; and 9854/85, Thirteenth Report from the Commission on the activities of the European Social Fund (financial year 1984), and welcomes the contribution to employment and training schemes made by the European Social Fund. I should like to begin by thanking the members of the Select Committee on European Legislation for having provided us with the opportunity to debate the activities of the European Social Fund. The last time its activities were debated at length in this House was in 1983, and we should clearly have been remiss had we allowed much more time to elapse before we debated the fund again.

We shall, of course, want to consider during the debate the specific Commission documents set out in the motion before the House, which cover the fund guidelines for 1986 to 1988; the amending regulation following the accession of Spain and Portugal; and the Commission's own annual report on the fund's activities in 1984.

Before doing so, however, it would perhaps be as well to remind ourselves why the fund is in existence and what its objectives are. It was established in 1957 under article 123 of the treaty of Rome, which defined its main purposes as: to improve the employment opportunities for workers in the Common Market and to contribute thereby to raising the standard of living … by rendering the employment of workers easier and … increasing their geographical and occupational mobility. The fund is thus essentially concerned with employment and training measures and provides financial support for schemes to help people who are unemployed, threatened with unemployment or under-employed.

There can be little doubt that those activities can never have been more relevant than they are today. In our debates in the House there is often a tendency to believe that unemployment is a uniquely British phenomenon. In fact, if we look — as we must tonight — at the Community as a whole, we see that it is a problem that besets the entire Community. Unemployment in the member states has risen from 2.4 per cent. in 1973 to 11 per cent. today. Indeed, since 1980, unemployment in the Community has doubled, reaching 13 million in 1985 — or 16 million if Spain and Portugal are included. Within these overall totals both youth and long-term unemployment have continued to increase. Between 1981 and 1983 long-term unemployment in the Community increased as a proportion of total unemployment from 25 to 39 per cent.

It is true that if we look at employment as opposed to unemployment we see a slightly more encouraging picture. In 1984 — the last year for which complete figures are available—there was an increase of 0.3 per cent. in total employment within the Community. In the United Kingdom in that year the increase in employment was 1.7 per cent. and our overall employment has continued to rise since then, as the House will be aware.

Mr. John Prescott (Kingston upon Hull, East)

Does the Minister accept that in the 1950s, 1960s and 1970s, Britain's unemployment was always the average of the Organisation for Economic Co-operation and Development European level? Since 1979 it has risen to about 2 per cent. above the average, which is equivalent to 1 million more people unemployed in this country due not solely to the world recession.

Mr. Lang

The hon. Gentleman will have to bear in mind that the work force in Britain has been growing at a faster rate than in most European countries and the percentage of unemployment in the past four years has increased by less in the United Kingdom than in France, Spain or Germany. It is also worth pointing out that the United Kingdom has 65 per cent. of its working age population in work. That is 7 per cent. above the OECD average.

Clearly, no fund can hope to solve the problem of unemployment in Europe. That problem has too many deep-seated causes for it to be capable of being removed simply by more spending—whether that spending be at Community or national level. The reality is that for too long all over Europe we forgot that jobs are created only when businesses produce goods and services that people want at prices they can afford. That in turn requires a stable economic framework in which both inflation and public expenditure are kept under sustained control, not least so that business can plan with confidence in the future. It also requires a concerted attempt to introduce greater competition; to encourage enterprise and remove unnecessary burdens; to reshape our education and training policies to ensure that they are relevant to tomorrow's world; and to work towards a more flexible labour market that encourages small firms, the self-employed, part-time and temporary work and the removal of outdated working practices. It is now very notable how those priorities are shaping the policies not just of the United Kingdom Government, but of the Community and the member states as a whole.

Within that overall framework, however, it is clearly necessary at the same time to take more direct action to remedy the immediate and pressing problems of unemployment. The European social fund is a major instrument to that end, and I should like, without the slightest hesitation or qualification, to express the Government's appreciation of the contribution that the fund has made for some years past to both Government and non-Government programmes of employment and training in this country.

Last year the United Kingdom's total allocation from the social fund was some £300 million — that is approaching 25 per cent. of the total funds allocated in that year.

Mr. Eric Forth (Mid-Worcestershire)

Is my hon. Friend yet able to tell us what he estimates will be the impact on the United Kingdom's share of the social fund of the accession of Spain and Portugal to the Community? He may recall that during the debate on the accession no one was able to give an estimate of that impact. Is my hon. Friend now able to tell us how he believes our share of the social fund will be affected by the entry of the new members?

Mr. Lang

There is no doubt that our share is likely to decline, not just because of the entry of Spain and Portugal, but because several other countries are making increasing applications to the fund. However, the fact remains that we have derived substantial benefit out of proportion to our contribution to the Community over the past few years, and we continue to do so.

The United Kingdom is thus among the leading beneficiaries of the fund, and it is one of the most clearest and tangible benefits of our membership of the Community.

Among the major programmes to which the fund made a substantial contribution last year were the youth training scheme, the training opportunities scheme, the community industry scheme and training programmes for the disabled and for women. As from this year, as a result of decisions taken at last December's meeting of the Heads of Government of the Community, the fund will also be helping us to expand the enterprise allowance scheme— which, as the House will know, is proving enormously successful in encouraging the unemployed to set up new small businesses or to become self-employed.

At a different, but no less important, level, the social fund administration last year approved applications from the United Kingdom for support in respect of 1,500 projects being run by local authorities, charities, training institutions and private companies. There is no doubt that, without that support, the many programmes and projects in question would have had to be drastically curtailed and, in many cases, abandoned altogether.

So the importance of the fund to the United Kingdom is clear. It will be obvious from what I have said that the United Kingdom Government are naturally concerned that we should continue to secure the substantial benefit from the fund in the future that we have obtained from it in the past.

Of course, no situation is ever static, and the entry into the Community of Spain and Portugal — which we greatly welcome—means that there are now two more countries with major problems of unemployment bidding for the available funds. That is as it should be, for the fund is there to help alleviate problems of unemployment in all member states. Nevertheless, it is extremely important that the fund should continue to reflect the clear and undoubted needs of the older industrial areas of northern Europe alongside those of the Mediterranean regions when it comes to setting priorities for its future support.

I would also hope that the fund might be able to give a somewhat higher priority in future to the needs of the long-term unemployed. As I said, long-term unemployment in the Community — by which I mean those people who have been unemployed for over a year — has risen dramatically throughout the Community in recent years. In most member states of the Community it is now more than a third of total unemployment and in many it is closer to, or even above, 50 per cent. In the United Kingdom, some 40 per cent. of those unemployed have been without work for over a year. That is roughly in line with the Community average.

It is now, I think, generally accepted that the longer a person is unemployed the more difficult it becomes for him or her to get back into employment. That is why I should like to see a somewhat greater degree of priority given within the rules of the fund to support for measures in member states which are helping the long-term unemployed, whether through work experience, training or participation in work of benefit to the community.

As a Government, we should also like to see—as we have made known to the Commission—some redrawing of the priority areas boundaries which effectively set which areas of the United Kingdom are likely to benefit most from the fund. As with all decisions on boundaries, inevitably some arbitrary lines have to be drawn. There are, none the less, some clear anomalies, such as the exclusion of Powys and the Western Isles from the list of priority areas, which we should like to see the Commission look at again. We shall continue to urge the Commission to re-examine its present guidelines in this respect.

I turn now to the specific documents which the Select Committee has drawn to our attention. The first concerns the Commission guidelines for the management of the European social fund in the financial years 1986 to 1988. As the Committee noted in its report of 23 October last year, there is no doubting the importance of the activities which the fund supports which are in turn largely determined in any one year by the fund guidelines. The guidelines, adopted annually for a three-year programme, say which types of scheme will be given priority in different regions of the Community. I should make clear at the outset that they are adopted by the European Commission on its own responsibility, though the Commission naturally takes account of such views on the guidelines as member states may put forward.

Because of the heavy demands on the fund, the Commission proposed stricter limits on the types of scheme to be given priority in 1986. In slightly more detail, the guidelines gave priority to substantial training schemes involving at least 200 hours training. They also required training to contain an element of introduction to new technology, recognising the vital importance of this to people's future work prospects. Priority was also given to training in small firms adapting to new technology, and the existing priority for schemes for women, migrant workers and the disabled was reaffirmed.

The second Community document before the House contains the Commission's proposals for accommodating the needs of Spain and Portugal within the fund's budget following their entry into the Community. Before their entry, 40 per cent. of the fund was devoted to a number of regions within the Community judged to have special priority status. These included the whole of Greece and the Republic of Ireland, the mezzogiorno region of Italy and the whole of Northern Ireland. The Commission proposals were to extend these special priority areas to include the whole of Portugal and a number of regions of Spain. The Commission also proposed an eventual increase from 40 per cent. to 44.5 per cent. in the proportion of the fund allocated to these special priority areas.

At the December Social Affairs Council, which was attended for the United Kingdom by my right hon. Friend the Paymaster General and Minister for Employment, there was pressure from a number of countries to raise the percentage of the fund devoted to these areas to 50 per cent. While mindful of the needs of Northern Ireland, we were at the same time also conscious of the needs of the rest of the United Kingdom, and I am pleased to say that the eventual decision to raise the percentage of the fund to 44.5 per cent. but with immediate effect, was one which we judged to be a fair balance between the differing interests involved.

The third document before the House — the Commission's annual report for 1984 — has inevitably become a little dated with the passage of time. This was the first year of operation of the fund after the 1983 review. It was a particularly good year for the United Kingdom, since we secured some 32 per cent. of the available commitments, and 38 per cent. of the payments made were to our schemes. We cannot expect to do so well every year, but the outline of the type of projects supported makes it clear that, as a nation, we are both imaginative and persistent in the variety and scope of the schemes we are putting forward to help the unemployed. The United Kingdom is very much in the lead on this aspect of Community policy, and we are pleased to see other countries following our example and getting support from the fund for similar programmes.

One statistic that emerges from the report is the increase in the applications to the fund—an increase of about 90 per cent. in 1984 compared with 1983—to a total of about 3,300. That figure rose again in 1985 to nearly 4,800 —a further increase of about 40 per cent. It is fair to say that the fact that this volume of applications is processed within the Commission by relatively few staff is a considerable compliment to those concerned in the Commission. At the same time—as they will know only too well—the continuing increase in applications has heightened some of the administrative problems associated with the fund's operation — not least the fairly long delays that can occur between applications and payments. These are matters which my Department continues to take up with its counterparts in the Commission with a view to identifying ways in which the administrative process might be made easier, and I hope that some useful changes may emerge as a result.

I hope that I have said enough to demonstrate the importance that the Government attach to the European social fund and to the clear benefits that it has brought to the United Kingdom. As well as leading to numerous local initiatives, it has helped us to mount at Government level several major programmes—such as YTS—which have much to offer not only within the United Kingdom but, by way of example, to the Community as a whole. At the same time, it is clear that the social fund, in attempting to ameliorate some of the worst problems of unemployment in the Community, has an especially valuable role to play as a positive expression of the Community's commitment to many of the less fortunate members of our society. Therefore, I welcome tonight's debate and I look forward to listening to the views of other hon. Members.

10.15 pm

Mr. John Evans (St. Helens, North)

As the Minister said, it is almost three years since the House debated the European social fund. That shows that the Government do not wish to debate the many problems that exist in Britain and the rest of the European Community. The social fund was designed as part of the strategy to correct the regional imbalances of the EC. Originally, it was a two-pronged attack, with a regional fund to stimulate the growth of employment in the underdeveloped and depressed regions, and the social fund to assist with vocational training, and retraining for the young, the under-25s, the long-term unemployed — those who have been unemployed for more than 12 months — the disadvantaged, women, ethnic groups and the handicapped. No one denies that it was a fine principle—the idea of a Common Market in which the rich nations and regions would contribute to the well-being and welfare of the poorer nations and regions.

However, what has happened in practice? Has the gap between the richest and the poorest regions widened or narrowed? In 1975, when the European regional fund was established, the gap between the richest and the poorest regions could be measured on a ratio of 5:1. The poorer regions were five times poorer than the richer. In 1975, Britain had 1.25 million people unemployed and our trade in manufactured goods with the EC was roughly in balance. Since then, unemployment in Britain has trebled and the gap between the poorest and the richest regions has widened to a ratio of 7:1 or 8:1. The richer regions have become richer and the poorer regions, including much of Great Britain, have become poorer. Britain's deficit in manufactured goods with the EC has increased to an incredible and frightening £9 billion. That is a measure of what has happened to Britain since it became a member of the EC.

Mr. Forth

Does the hon. Gentleman agree that the increasing disparity between richer and poorer regions is a fairly widespread phenomenon? For example, Athens is much richer than the rest of Greece, while Milan and Turin are much richer than the mezzogiorno in southern Italy. Is not the disparity a fairly constant phenomenon in every Community country? Therefore, does the hon. Gentleman agree that any Community wide attempt to reduce the disparities will run up against the fundamental laws and effects of economics?

Mr. Evans

That is the phenomenon of capitalism.

Mr. Forth

Yes, absolutely.

Mr. Evans

That is why the Labour party is opposed to the phenomenon of capitalism and to allowing capitalism to run rampant, so that the richest regions develop and grow rich whereas the poorer regions decline. The original concepts of the regional and social fund were to attempt to stem that tide. It has failed abysmally and later in my speech I shall give some of the reasons for that failure.

The backdrop to the debate is the massive growth of unemployment in the EEC. In the original 10 member states—we are now 12, of course, and we will discuss the accession of Spain and Portugal and its impact— there are more than 13 million people unemployed, 11.1 per cent. of the total work force in the original 10. With the advent of Spain and Portugal, the figure is over 16 million. I am sure the Minister will agree that one has to be cautious about the statistics issued by the various EEC countries. I have great difficulty in believing unemployment figures which tell me that the total in Greece is 5.8 per cent. whereas in the Netherlands the figure is 15.2 per cent. I suspect that the Dutch include everything in their unemployment statistics, whereas the Greeks are apparently measuring something else altogether.

Britain can hardly complain about figures and the way they are used, because the Government have repeatedly fiddled the unemployment figures and they are currently under-measuring the figure by about 750,000 people.

Mr. Colin Moynihan (Lewisham, East)

Nonsense.

Mr. Evans

The hon. Gentleman says it is nonsense, but I wonder how he would describe the fiddles which the Government have got up to over the past six years, the effects of which have been to under-measure unemployment by 750,000.

The amount of EEC money that is spent on the social fund is a relative pittance. It is also a pittance for the regional fund. According to the statement on the 1985 Community budget presented to the House in October 1985 by the Minister of State, Treasury, the payments for the social fund were £832 million and the expenditure on the regional fund was £950 million. That is the two-pronged attack on correcting the regional imbalances in the EEC — £832 million, when we have unemployment levels of over 13 million. It is hardly surprising that the social fund has had virtually no impact on ameliorating the problems of unemployment.

The figures and the categories that are covered by the remit of the social fund show that more than 5 million of the 13 million people were under 25 years of age. More than 4 million were classified as long-term unemployed—the very categories that the social fund was designed to do something about. As the Minister has pointed out —though not in the way that I would look at it—the applications for aid from the social fund far outweigh the funds available. In a debate of this nature it is always worth while to compare expenditure on the social fund to the expenditure under the common agricultural policy.

In 1985, the expenditure on the social fund was £832 million. The expenditure on the CAP was 12.148 billion. I put it to the hon. Member for Mid-Worcestershire (Mr. Forth) that that is one reason why the social and regional funds have had no impact on the distribution of wealth and prosperity in the EEC. The CAP has certainly succeeded in extending and expanding the wealth of the EEC but generally to relatively few pockets. The EEC spends 14½ times more money on growing food that nobody wants than on assisting and training the unemployed.

In that context, it is worth looking at the statement of the then Minister who is now the Prime Minister's PPS. Referring to the amount spent on the social fund as opposed to the CAP, he said: This situation provides further vindication—if any were necessary—of the Government's firm view that there should be a shift in Community spending away from agriculture and towards activities meeting other needs of high priority such as are covered by the regional and social funds." — [Official Report, 28 April 1983; Vol. 41, c. 1071.] Those words mock today's unemployed, because there has not been a shift of a penny from the CAP towards either the social fund or the regional fund.

What of the future? From a British point of view it is somewhat bleak. Document 7711/85 gives the guidelines for the management of the social fund and document 9901/85 relates to the accession of Spain and Portugal. Document 7711/85 outlines three categories of regions or areas that will qualify for assistance under the social fund. The first relates to "absolute priority" areas. The second relates to the "industrial and sectoral restructuring" of certain areas, which mainly relate to areas in which there has been considerable rundown and redundancy in coal and steel, and these are assisted by the ECSC.

The third relates to areas of high and long-term unemployment". In that context, about half of Britain qualifies. It is a depressing list of the areas that now qualify for assistance under the social fund—areas that have been decimated because of the Government's policies over the last six years. They are: "Central, Cheshire, Cleveland, Clwyd, Cornwall, Derbyshire, Dumfries and Galloway, Durham, Dyfed, Fife, Greater Manchester, Gwent, Gwynedd, Hereford and Worcester, Highlands, Humberside, Isle of Wight, Lancashire, Lincolnshire, Lothian, Merseyside, Mid Glamorgan, Northumberland, Nottinghamshire, Salop, South Glamorgan, South Yorkshire, Staffordshire, Strathclyde, Tayside, Tyne and Wear, West Glamorgan, West Midlands, West Yorkshire; Workington (Cumbria), Coalville (Leicestershire), Corby (Northamptonshire). That is a measure of what has happened under this Government. Those once-prosperous areas now qualify for payments under the social fund.

But a different picture emerges from document 9901/85, which amends Council regulation No. 2950/83 on the tasks of the social fund. That document relates to the accession of Spain and Portugal. As we are all aware, these two largely impoverished Mediterranean countries have very high unemployment, and they have been added to the list of "absolute priority" areas. That applies to much of Spain and the whole of Portugal.

None of us would quarrel with that. Those areas have substantial problems, and in my view they will have a lot more now that they are in the Common Market. I welcome the advent of Spain and Portugal to the EEC. It just might help to bring the CAP crashing down around the ears of those who have benefited from it over a long period. That would be very good. If absolute priority areas are extended, that must be at the expense of other areas. The rate of assistance paid to absolute priority areas has been raised from 50 to 55 per cent. There has also been an accelerated rate of depreciation in the cost of training centres. The amount of assistance paid to projects that qualify under the social fund will be raised from 50 to 55 per cent. The amount available to the regions from the social fund will be increased from 40 per cent. to 42.5 per cent. in 1986, to 43.5 per cent. in 1987 and to 44.5 per cent. in 1988.

Mr. Forth

I am trying to follow the hon. Gentleman's logic. If his party supports Spain and Portugal's accession, which he says it does, and if his party believes in the redistribution of wealth to the less well-off, which I believe it does, will he support the redistribution of wealth from a country such as ours to Spain and Portugal? Does he agree that, with that very accession, the likelihood of reforming the CAP and reducing the share it takes of the EC budget becomes less likely? While welcoming the accession of Spain and Portugal, the hon. Gentleman and his party have reduced the opportunity to reform the CAP and reduced the take from the social fund for Britain.

Mr. Evans

I was a member of the European Assembly for three years and I have spent the past 12 years listening to 'stories about how we will reform the CAP. I have yet to see it happen, in spite of all the fine talk from a variety of sources. I said that the accession of Spain and Portugal might have the welcome side effect of bringing the CAP crashing down because of the contradictions that have been built into it.

If there were a substantial increase in the social fund, we would be able to meet the commitments which I assume that the hon. Member for Mid-Worcestershire wants to achieve as much as me. The Commission has stressed the importance of keeping the right balance between relatively underdeveloped regions and those with serious unemployment. The words are fine, but where does the money come from to ensure that areas such as Spain, Portugal, Greece and the mezzogiorno receive help? It must come from areas such as St. Helens, which I represent, and Merseyside, although the problems there are growing almost weekly because of the Government's policies.

Page 36 of the 13th annual report tells us about applications under point C1 of the fund, which covers young people leaving full-time education. It says: In the case of the other regions in the Community, the United Kingdom obtained over 67 per cent. of approvals (61.84 per cent. overall) followed by France with 14.51 per cent. (14.21 per cent. overall). The Youth Training Scheme (YTS) accounted for the lion's share of United Kingdom approvals under point C1. Four applications presented by the Manpower Services Commission made up the entire amount requested (423.49 million ECU). Priority was accorded to three of these (232.97 million ECU and 309,000 beneficiaries) of which one bore the whole of the entire weighted reduction for the United Kingdom". What impact will the reduction in the social fund moneys to Great Britain, flowing from the accession of Spain and Portugal, have on youth training scheme funding? Will the EEC provide less funding for it? Has the EEC responded to the new proposal for a two-year YTS? I understand that no agreements have been reached on funding from the Commission, but I would be grateful for information because it will affect the viability of the scheme as many employers are unhappy about signing people on for a two-year scheme.

Page 35 of the 13th annual report refers to certain types of practical training, such as that given by the Übungsfirmen or practice firms in the Federal Republic of Germany, or in the information technology centres, the ITECs, in the United Kingdom, which are regarded as work experience. I have an excellent ITEC in St. Helens, and I hope that the Minister can assure us that in future ITECs will get a fair share of whatever funds are available from the social fund.

I read a newspaper report about questions raised by a former colleague, Mrs. Barbara Castle, who for many years served in the House with such distinction. She asked at the European Assembly many questions about the social fund which require answers from the Government. Apparently, there was little response from the Commission. According to Mrs. Castle, the social fund is facing bankruptcy, and unless more money is allocated to it from member states, it cannot meet its commitments. There is considerable danger that the social fund will scrap assistance to such important groups as voluntary organisations that deal with the mentally and physically handicapped. Is there to be a supplementary budget? According to the report, a commissioner has said that that may be necessary. If there is a supplementary budget to ensure that the social fund has the correct amount of finance, what will the Government's attitude be? Even if that solves the crisis, will it not simply recur every year?

At present the common agricultural policy takes up 72 per cent. of the Community budget. Apparently, the CAP budget is growing remorselessly, and will grow even more because of the agricultural problems of Spain and Portugal. I have listened for 12 years to people saying that they would reform it, but it goes marching on. If we withdraw from the CAP, it will release hundreds of millions of pounds which we can spend on solving some of the problems in our regions relating to unemployment, training and retraining.

The vast majority of the British people can see no merit in spending so massively on crazy agricultural policies, while at the same time spending so little on employment and social policies which have merit and are worthwhile. The British people are right.

10.40 pm

Mr. Richard Livsey (Brecon and Radnor)

We welcome the debate on the European social fund. It is an important subject, which addresses itself to the problems of managing a mixed economy. The Europeans have more faith in the running of a mixed economy than the Government, who have tended to follow monetarist lines and neglect the public sector. We must achieve a balance between the public and private sectors, and in the new fund there is bias towards public sector and small and medium-sized undertakings. That is a good mix for improving the economy not only of this but other European countries.

The objectives of equipping the work force and reducing regional imbalances in the labour market must be regarded as extremely important, and recruitment and wage subsidies are indicative of job creation. We know that geographical mobility is difficult to achieve, with many people not prepared to move from their communities. However, with services of advice and job creation, there are great opportunities within the European social fund to improve our economy.

As we have already heard, unemployment is a major problem that confronts us all, and particularly the hard-hit regions of Europe, not least those of Britain. In welcoming Spain and Portugal into the Community, we must not forget the problems in northern Europe. It is significant that the post of Commissioner for the social fund has been transferred from an Irishman to a Spaniard. This may have some influence on the policies operated in the social fund, which may concentrate more on the Mediterranean regions.

Mr. Forth

Is it not interesting to observe that Socialist Spain has an unemployment rate that has just gone up to 22 per cent.? One is left wondering what contribution a Spanish Commissioner, coming from a Socialist country with such a high level of unemployment, can make to improve the employment position in the community as a whole.

Mr. Livsey

Although Spain has such a high unemployment rate, it has suffered over many years from the ravages of dictatorship and Fascism. The accession of Spain will assist greatly in helping its stability and will create more co-operation in Europe and less likelihood of extremism in that country. I am not entirely convinced that Socialism will solve the problems —I agree with the hon. Gentleman there—but, none the less, it is a vast improvement that Spain is in the Community.

The authorities in the United Kingdom involved in the European social fund are the, local authorities, the Welsh and Scottish Development Agencies, in my part of the world Mid-Wales Development and the MSC. It is interesting that, where the latter operates, there could be competition between the MSC and the local authorities where there is not enough agreement about the types of schemes that are adopted.

However, it is worrying to note that some journalists who observe the scene believe—it can be seen from the figures—that there is an austerity drive in the European social fund and there may be a crisis in its funding, too.

It is believed that the new rules could hit Britain hardest. Concentration upon new technologies is very important, but in some of the poorer regions the new technologies have hardly blossomed. A very great effort is needed to introduce schemes of that type in those areas. The previous Commissioner, Commissioner Sutherland, said that the European social fund is ill-equipped and inadequate for achieving its objectives. More resources are required overall, yet the new guidelines are more restrictive.

About half of the United Kingdom is affected by European social fund aid. I ask the Government to give special priority status to regions other than Northern Ireland. Scotland, Wales and the north of England are areas of extreme deprivation. They should be included on the same basis as Northern Ireland. Since 1979 there has been an increase of 95,000 in the unemployment figures for Wales. In addition, together with Italy, Portugal and Spain, we are at the bottom of the incomes league.

Mr. Forth

And Greece.

Mr. Livsey

Yes, I take the hon. Gentleman's point. We are very poorly off, compared with the richer members of the European Community. Additional funding is needed. Efforts are being made to assist redundant workers through the urban aid programme. In-company training schemes are being provided in the textile industry. However, the old mining areas face a huge problem. Large numbers of miners have lost their jobs in the last 15 to 18 months. In south Wales alone during that period 6,000 miners have lost their jobs. I trust that the European social fund will be used to try to overcome some of the massive problems that have been created by these redundancies.

The Parliamentary Under-Secretary of State for Employment referred to the fact that there are delays in receiving moneys that are due. This has caused some cash flow problems for firms that benefit from the European social fund. I make no excuse for mentioning my own area, Powys, which has been excluded from the European social fund. Reference has already been made to many of the areas that surround Powys. Powys is an island that does not receive aid from the European social fund. It is the only Level II region that has been excluded, even though it faces severe regional problems.

Phoney statistics have been used. Separate data were provided for the unemployment and gross domestic product figures. According to the Central Statistical Office, they were not officially available. In fact, they were not reliable. Powys and Dyfed were combined for GDP purposes. The result was that areas of south Powys were not included in the statistics, in particular those for unemployment. This has caused severe problems for Powys.

I hope that the Minister will look carefully at the problems faced by Powys. Since the last application in 1984, the Powys data show an increase in unemployment of 2.1 per cent. which means that unemployment in Powys is higher than the United Kingdom average. A study is being undertaken covering Dyfed, Gwynedd and Powys which might lead to integrated action under the European social fund for those areas. Wages in rural areas in Wales stand at 86.9 per cent. of the average wage for Wales as a whole. That is a very low figure in terms of British and European wage levels. That again underlines the need for special consideration to be given to Powys. It is a travesty that Powys and the poorer regions of Britain should not be included. They should undoubtedly have priority status.

10.49 pm

Mr. Don Dixon (Jarrow)

My hon. Friend the Member for St. Helens, North (Mr. Evans) covered most of the points that I wished to raise, but I wish briefly to follow the comments of the hon. Member for Brecon and Radnor (Mr. Livsey) about high priority areas.

It is disgraceful that the northern region is not a high priority area, as it has the highest unemployment in mainland Britain. I shall not give percentages because these are people who are unemployed. In Tyne and Wear 100,582 people are unemployed, of whom 46,000 have been unemployed for more than 12 months and 20,767 for more than three years. That is the extent of unemployment in my area under the Conservative Government, so goodness knows why it is not a high priority area for the European social fund. I hope that the Minister will put the northern region forward as a high priority area.

My hon. Friend the Member for St. Helens, North referred to the CAP. It is nonsense to compare the social fund with the CAP. Most male unemployment in Tyne and Wear is in heavy industry such as shipbuilding. Yet farmers are being paid to grow produce that no one wants. The Conservatives always complain about subsidies to the mining, steel and shipbuilding industries, but never about the huge subsidies to farmers under the CAP. It is like telling the Tyne's shipbuilders to build as many ships as they like because as soon as they get out of the Tyne we can scuttle them and build some more. That is how the CAP works for the farmers. That is the kind of nonsense that we get from the EEC. I hope that the Minister will deal with the points raised about that by my hon. Friend the Member for St. Helens, North and that he will take forward my plea that the northern region be a high priority area.

In Jarrow, one in three of the male population is out of work. The last ship repair yard closed two years ago, the last pit was closed more than three years ago and the last steel plant is being phased out this year. That is the level of unemployment faced in Jarrow this year, the 50th anniversary of the Jarrow march when 200 men marched to London to bring the problems of the regions to the notice of central Government. I do not like to use percentages, but I have to take this figure from the history books. At that time, unemployment in Jarrow was 79 per cent. Those 200 men marched to London not to get a crust of bread and a bowl of soup but for the right to work— the basic right of people in this country to go out and fend for their families and to have the dignity of a pay packet. It is a pity that we cannot get it through the thick skulls of Conservative Ministers that people want to work— they do not want to dodge it or run away from it. They want to do a useful day's work to fend for their families. That is what it is all about.

The Minister talked about training, but the Government closed the skillcentre at Killingworth, so there is now no skill centre north of the Tyne until one gets to Edinburgh. The Government say that we get more training under the social fund, but a great deal of the social fund money that comes to this country is used to substitute for money that the Government are taking away from the regions.

I hope that the Minister will take on board the points that I have made in this brief contribution.

10.55 pm

Mr. Lang

I have listened with interest to the points made by hon. Members during this short debate. Whatever problems there may be, the House is, if I do not put too high a gloss on the remarks of the hon. Member for St. Helens, North (Mr. Evans), agreed on two things. The first is that the considerable support given by the European social fund to schemes of various kinds is valued and appreciated, and the second is that we must continue our efforts to secure support for those schemes in future.

We need to play our part in ensuring that the fund is an effective means of helping unemployed people throughout Europe. At the same time, no one can pretend that this type of support will solve all the problems that face us. It has a part to play but we will not help the unemployed by spending more than we can afford as a Community on such help. That is why it is vital to concentrate help where it is most needed. That is recognised within the Community but the problems arise when the hard choices have to be made.

The hon. Member for St. Helens, North agreed with the two priorities that I emphasised in my opening speech, that of youth unemployment—which is now falling in the United Kingdom — and that of the long-term unemployed. That, too, is an important priority which we have emphasised to the Commission. The hon. Gentleman will be aware of the many initiatives that we have recently introduced to try to help the long-term unemployed make their way back into work, particularly the Community programme and the introduction of the job start scheme.

The hon. Gentleman made the comparison between the money spent on the common agricultural policy and the social fund. We are working towards eliminating the costly surplus under the agricultural policy and we want to see a higher proportion of funds contributed to the social fund. However, if we had been in the Community earlier on in its formative years and had the support of the Labour party for membership at that time, we might have been in a better position to influence the development of the Community during those earlier crucial years.

It is churlish of the hon. Gentleman to underrate the importance of the European social fund which brings benefit to many hundred of thousands of people.

Mr. Evans

Will the hon. Gentleman accept that I did not underrate the importance of the European social fund? Will he accept that I have tried to get across that I would like to see the expenditure reversed and more being spent on the social fund than on the CAP?

Mr. Lang

I am grateful to the hon. Gentleman for making that clear.

The hon. Gentleman welcomed the entry of Spain and Portugal to the Community, but again I was sad that he did so in the hope of bringing the CAP crashing down. That is a somewhat negative approach to the matter. It might have been more appropriate to have welcomed the entry of those two countries, not just because they provide us with a larger market for our goods, but because we see the entry of two ancient European countries which are now two developing democracies and which deserve to be welcomed into the Community in their own right.

The hon. Gentleman asked about YTS funding following the entry of Spain and Portugal. The Commission has yet to make a decision on that or funding for other schemes for 1986. We expect that it will continue to get a good level of support in this, the first year of a two-year scheme. The support expected is taken into account in setting levels of funding for the scheme as a whole. At the same time, that does not mean that other small schemes such as information and technology centres cannot be funded. If a small scheme gets priority it will still be fully funded despite more of the budget as a whole going to Spain and Portugal.

The hon. Gentleman makes a fair point when he says that any increase in the proportion of spending going to the special priority areas will reduce the total proportion of the funds available to other areas but it is equally the case that within the special priority areas is the whole of Northern Ireland and we should acknowledge that the United Kingdom stands to benefit from both sectors of the fund.

I also took note of the special points made by the hon. Member for Jarrow (Mr. Dixon) in pleading the case of the north-east.

We have discussed tonight the current priorities of the fund as set out in the management guidelines, its record as shown in the latest annual report and the new demands which will come with the accession of Spain and Portugal. The decision on how to allocate the limited resources will not become any easier. The Commission has a difficult job in trying to balance all the interests concerned. We may not always agree with all of its decisions but we recognise the pressures and difficulties which it faces.

If we look at the fund's priorities it is clearly right that a large proportion should go to the worst-off areas both in terms of under-development and unemployment and structural change. It is right that some of the available resources should go to projects in the less hard-hit areas for the purpose of helping especially disadvantaged groups.

The hon. Member for Brecon and Radnor (Mr. Livsey) suggested that more parts of the Community should be designated as special priority areas apart from Northern Ireland. I am sure he understands that that is a matter for the Commission. I would merely say that if there are too many special priorities, the benefit of being one and the advantages that ensue are diluted.

I am in complete agreement with the remarks of hon. Member for Brecon and Radnor about Powys. The 1983 gross domestic product and the unemployment figures at that time were the bases on which the Commission drew up its boundaries. I believe that they were wrong and that inadequate consideration was given to boundaries and some low-population areas. I assure the hon. Gentleman that the Government will continue to press the interests of Powys and those of the Western Isles. We believe that they deserve a better rating than that which the Commission has given them.

It is important that the fund should try to target support on measures that encourage change and growth rather than on the bolstering of inefficiency. We welcome the present emphasis on training for new technology and small firms. Tonight's debate has served to reinforce the view, which I expressed earlier, that there is scope for a higher degree of priority to be accorded within the fund to the long-term unemployed, who represent throughout the Community an increasing proportion of the unemployed. The fund could do much to encourage the provision of programmes for them as it has encouraged programmes for the young unemployed.

We are pleased to have support from the fund for programmes such as the enterprise allowance scheme for those who are setting up on their own. Almost every other member state is following Britain's lead in this direction. Support from the Community has been a major factor in enabling us to develop these programmes on their current scale. I am sure that the same is true for many projects at local level.

The European social fund represents one of the most tangible and visible benefits to the United Kingdom of our Community membership. We shall continue to press on behalf of all hon. Members and those whom they represent, for efficient and adequate support from the fund for schemes to encourage employment. The issues which have been raised in this debate will help us to ensure that we do so effectively. Meanwhile, I hope that the House will agree to take note of the documents.

Question put and agreed to.

Resolved, That this House takes note of European Community Documents Nos. 7711/85, a Commission Decision on guidelines for the management of the European Social Fund in the financial years 1986 to 1988; 9901/85, a Commission proposal to amend Council Decision 83/516/EEC and Regulation (EEC) No. 2850/83 on the tasks of the European Social Fund, in view of the accession of Spain and Portugal; and 9854/85, Thirteenth Report from the Commission on the activities of the European Social Fund (financial year 1984), and welcomes the contribution to employment and training schemes made by the European Social Fund.