§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]
9.37 am§ Mr. Tony Colman (Putney)I shall first declare an interest. I am a former director of Greater London Enterprise, and I am still the chair of Greater London Enterprise development capital on a pro-bono basis. I am a former leader of Merton borough council and vice-chair of the Association of London Authorities, a member of the leaders' committee of the ALG and a director of the London First centre.
I am pleased to have an opportunity to debate the current and future position of the EU structural funds for London. The United Kingdom's presidency of the European Union has just finished, and I am keen that the House should have an opportunity to hear from my hon. Friend the Minister about her progress in the past five months on achieving a good deal for the UK and particularly for London. She is, of course, a London Member.
Agenda 2000, which set this matter in train, led to the publication of new regulations governing the reform of the funds. They were published by the EU Commission on 18 March and cover the period 2000–2007. I understand that agreement on the overall structural funds budget is due at the Vienna summit in December and that final adoption of the regulations will take place at the German summit in June 1999. Therefore, the timing of the debate is helpful in ensuring that the London case is put in time.
Already, hon. Members in all parts of the House have been putting the case for their constituencies. A recent example of that was on 15 June when my hon. Friend the Member for Clwyd, West (Mr. Thomas) had an Adjournment debate on the subject in the context of Wales. All hon. Members would wish to support Northern Ireland's quest to continue its objective 1 status. The continuing sad news from Northern Ireland underlines the need to ensure that the Commission allows Northern Ireland to retain that.
I pay tribute to the various organisations that have, over recent years, been part of making the case for London. Greater London Enterprise has been foremost in that. It has a specialist team working on that case, but it was important that, some four years ago, London house was made available by Greater London Enterprise to ensure that there was a base for London to be able to lobby the European Commission. Before 1994, other regions had already set up lobbying organisations. Perhaps they were ahead of London in realising the importance of having a visible presence in Brussels.
The next grouping that I commend to the House is the Association of London Authorities, the London Boroughs Association, and the Association of London Government, as it became in 1995. I particularly pay tribute to my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell), who, as secretary of the ALA and ALG, led the drive to ensure that London was not left behind in terms of ensuring that structural funds were available. I pay tribute to the current secretary, Martin Pilgrim, and to the assistant secretary, 991 Madeleine Williams, the person in charge, for the work that she and her department do to ensure that London is properly represented.
I commend also the work that has been done on the London study, which was presented to my hon. Friend the Minister for London and Construction at a meeting on Monday to demonstrate a way forward. That study was part funded by the EU, by London boroughs and by many organisations in London, and sets the backdrop to a strong claim for objective 2 status for London in the negotiations that are coming up.
I obviously commend the work that has been done within the Committee of the Regions by our representatives on the committee, Councillor Peter Bowness, who has now been translated to another place and who, I think, was the first member of the committee, Councillor Toby Harris, who is shortly to be translated to another place, Councillor David Williams from the Liberal Democrats and Councillor Sally Powell. I know that other councillors have also done excellent work on the committee, but, at a key time, when it was so important to put the case for London in the committee and the European Commission, they were the four people who led the charge.
I mentioned the work of the London First centre. There was a tremendous need, which was clearly identified, for London to have its own development agency. On a basis of shared funding between the Department of Trade and Industry, the borough of Westminster, London Docklands development corporation, the Corporation of London and the business community, over the past three or four years, there has been a lively and successful inward investment agency for London, albeit working on rather limited funds compared with what is available for, say, Scotland, which has a similar population, or Wales, the population of which is significantly smaller.
As I develop my theme, hon. Members will see that London's needs are perhaps as great as those of Wales and Scotland combined, so it is important for the Minister to take back to the DTI the need to ensure that the funding for the London First centre and successor bodies is adequate.
Obviously, I commend the new shadow London development agency. That will help to bring together much more strongly the work of the organisations that I have mentioned. It is important that the Greater London authority—the elected mayor and assembly—has a clear view from the business community, from the social partners in London and from elected representatives in London of the way in which the GLA should support the way forward for EU structural funds and for the future of London.
I pay tribute to Members of the European Parliament who have spearheaded this work, including, obviously, Pauline Green, as chair of the socialist MEPs, and my own MEP, Anita Pollack, the MEP for London South West London, who has done sterling work in looking after that area.
As hon. Members will realise, Putney is not in an objective 1 or 2 area. Wandsworth council, with the local training and enterprise council, AZTEC, of which I was formerly a director, and the local regeneration partnership, the Wandle Valley Partnership, has been extremely 992 successful in obtaining funds through objective 3, the European regional development fund, the European social fund, Adapt, Horizon, Social Exclusion, Youthstart, Life, Pacte, PHARE and Ecos Ouverture.
I have listed those EU programmes in full because I am concerned that virtually all the programmes will be subsumed within the new objective 2 and 3 status. It is important that areas in London that suffer from high unemployment and deprivation, such as Wandsworth and parts of Putney, should still be able to apply for and to receive EU funding.
I commend to the House the work of the Wandsworth economic development office, under Mike Brook and Judith Roscoe, in ensuring that those funds have been won fairly. One hears in the House, correctly, that there has perhaps been a tilting of the playing field, in favour of the standard spending assessment for Wandsworth, but, in this area, I commend Wandsworth council for its work to ensure that funds are available for unemployed people and others who can benefit from those programmes. It has won its case fair and square with Brussels, with the Government office for London and with Whitehall.
The vast majority of current EU London funding goes to the Lea valley and east London. I know that my hon. Friends from some constituencies in those areas wish to take part in the debate to do their own advocacy. Those areas will receive in 1997–99 some £80 million; that is 102 million ecu. That is 4 per cent. of the UK total of objective 2 funds. The London share of the UK unemployed is 18 per cent. and its share of the long-term unemployed is 25 per cent. London has more unemployed than Wales and Scotland put together; their share of the UK's unemployed is 15 per cent. London receives only 4 per cent. of objective 2 resources, compared with Wales and Scotland, whose share is 29 per cent. North-east England receives 15 per cent. of the resources and has only 7 per cent. of the unemployed. The west midlands receives 18 per cent. of the resources, but has only 9 per cent. of the unemployed.
I have no wish to denigrate other regions or countries within the British Isles about their share of those resources. I wish to ensure only that the London case is put. I believe that those comparisons have not been put to the House before. That clearly shows a lack of interest in London by the previous Government when it came to EU resources. I and fellow London Members want to ensure fair treatment for London for the next period—2000–07. I do not criticise the single regeneration budget division of resources, which more accurately reflects the needs of London, but it is remarkable that the EU share-out does not.
I have used comparative unemployment levels, which were the key indicator used for objective 2 for the last round. However, things are changing; the Minister will advise us of that. In terms of Agenda 2000, the amount of money that can be accessed is being reduced—the share of the EU population that benefits is reducing from 50 per cent. to between 35 and 40 per cent. There is a new way forward, which particularly takes account of EU enlargement in coming years.
I understand that, to maximise the UK overall take, the key criterion that should be used is gross domestic product; the UK has the fourth lowest GDP in Europe. However, while I would support that, other indicators should be looked at when considering the split of 993 EU resources within the United Kingdom. I understand that 50 per cent. of the indicators come from Brussels and the other 50 per cent. from the UK.
The Association of London Government proposes criteria that relate to
areas with substantial rates of unemployment in excess of the EU average which have recorded substantial industrial job losses since 1985.Greater London has lost 382,000 industrial jobs, representing 50 per cent. of industrial employment, since 1984. In east London and the Lea valley, 51 per cent. of industrial jobs have been lost—77,000 down to 40,000—with a further loss of 10,000 jobs in the service sector. It is a difficult area and it needs every penny it can get. It is important that the current £80 million funding is sustained, if not increased.
§ Ms Oona King (Bethnal Green and Bow)It is important to stress that 70 per cent. of Britain's most deprived wards are in the capital, which people often do not realise. Although my constituency has been fortunate to receive funding, in some wards unemployment is now rising. In addition, no structural funding money hit the ground until 1996, whereas every other British ERDF area has had funding over a much longer period. It is critical that we do not lose the objective 2 money, and that other areas of London are able to benefit from it.
§ Mr. ColmanI agree with my hon. Friend; I was about to discuss the wider indicators that need to be taken into account.
The partner of my hon. Friend the Member for Hammersmith and Fulham (Mr. Coleman), Councillor Sally Powell, has fought successfully within the Committee of the Regions and the EU generally to ensure that "urban areas in difficulty" qualify under objective 2. The criteria should include the points made by my hon. Friend the Member for Bethnal Green and Bow (Ms King)—first, a high level of poverty, including precarious housing conditions; secondly, poor housing conditions; thirdly, a degraded environment; and fourthly, a low level of education. All those criteria are met in a number of wards in the constituencies of my hon. Friend the Member for Bethnal Green and Bow and other London Members, especially those representing the Lea valley and east London. It is important that my hon. Friend the Minister remembers that.
The London research centre-Peabody Trust document "A Capital Divided", prepared in February last year, gave information at ward level which clearly showed the needs of London.
Under the draft regulations for objective 2 funding, the particular strand covering "urban areas in difficulty" is seen as applicable to only 2 per cent. of the population. I urge my hon. Friend the Minister to convince her colleagues that the urban industrial reconversion strand should be significantly increased, if possible up to 10 per cent., which is the level of the other strands. My hon. Friend the Member for Bethnal Green and Bow made that point well.
I listed a number of new areas that Wandsworth had been able to access and those areas outside objectives 1, 2 and 3 that will not be available. There is particular concern that the urban initiative will be cut. While the funding for that initiative is modest—£12 million for the 994 period 1994 to 1999—the benefits have been real. In evidence to the Select Committee on Trade and Industry, the Local Government Association endorsed the continuation of the initiative.
The proposals for Community initiatives outside objectives 1, 2 and 3 will now have to be extremely limited. I understand that there are just three, of which only one is directly relevant to London—although it is highly relevant: the new initiative on transnational co-operation to fight discrimination and inequality preventing access to employment. I commend that initiative to my hon. Friend the Minister. I know that not just London but many other areas will want to have a strong say in it.
The new proposals around objective 3 are very much needed for London. The divide in London between those who are out of work and those who are in work is widening. Those who do not have the right skills—the new deal provides a way to acquire them, and I applaud the fact that the scheme has now been widened to include the over-25s—can fall further and further behind. It is specifically a London problem.
§ Mr. Jimmy Hood (Clydesdale)Structural funding is meant to help regions and economies through difficult times. It is intended to help economies to pick up and for the regions to benefit from that. The problem is that the more successful the scheme is, the greater is the risk of those regions losing continued support. Regions that already get funding argue to hold on to it, while others argue their need also to benefit from it. That is one of the problems with enlargement of the EU. Our Spanish colleagues are arguing against enlargement because they do not want any institutional reforms that would threaten their structural funding.
§ Mr. ColmanI agree with my hon. Friend. However, one piece of good news that we received last March was that Commissioner Kinnock had proposed a safety net, under which no areas would face a funding reduction of more than one third. That may be cold comfort to the Spanish, but it is important to UK regions in terms of their success compared with London.
In the 1970s and 1980s, London was booming while other regions were undergoing major industrial decline. London's nemesis came in the late 1980s, so we have had to face that problem later than other regions. It is important for those in areas such as Clydesdale, which my hon. Friend represents, to realise that the success that that area has achieved needs to be replicated, in particular, in the Lea valley and east London.
We need objective 3 to deal with retraining. We want London to get its full share, especially for areas that promote social inclusion, lifelong education and training, facilitation of economic change and, in particular, improving the participation of women in the labour market. London should be accessing those areas under objective 3. I know that other hon. Members will explore these issues in their speeches and will be urging the case for London.
995 For the remainder of my speech, I want to deal with NUTS. I am not insulting the House with that acronym, it stands for the nomenclature of units of territorial statistics—
§ Madam SpeakerOrder. It is nice of the hon. Gentleman to spell it out.
§ Mr. ColmanNUTS provides a single uniform breakdown of territorial units for producing regional statistics across the whole of the European Union. Almost all the sub-national statistics collected and disseminated by Eurostat are based on the NUTS structure of regions. The statistics deal with topics such as population, birth rates, employment, unemployment, gross domestic product, transport and energy. I am sure that they also deal with other matters.
Since 1988, NUTS regions have formed the geographical basis for determining distribution of structural fund expenditure. Currently, objective 2 funding is based on NUTS level 3 regions.
On 29 June, the Chancellor of the Exchequer answered a written question from my hon. Friend the Member for East Ham (Mr. Timms) about the new United Kingdom NUTS map. I know that some changes, such as splitting Cornwall and Devon at level 2, have been welcomed on both sides of the House. That change may help to ensure that Cornwall receives its fair share as an objective 1 area. However, it seems strange, at level 2, to divide London into inner and outer London, and the borough groupings at level 3 seem stranger still.
The statisticians seem to have no appreciation of the sub-regional partnerships that have been developed in recent years with the help of the Government office for London. The partnerships include the Lea valley partnership, which stretches up to Enfield; the east London partnership; the Park Royal corridor; and, in my case, the Wandle valley partnership, which covers Wandsworth, Merton, Sutton and Croydon. The partnerships of boroughs, and of the business and social partners in those boroughs, have been recognised in the past four single regeneration budget rounds and are increasingly successful in delivering solutions to areas with considerable industrial decline in those parts of London.
NUTS also do not relate to TEC areas. I therefore ask again whether the classification system will be re-examined. Alternatively, could each borough be designated a NUTS level 3? I remind the House that current objective 2 funding is agreed on the basis of NUTS level 3. Moreover, the population of individual borough often exceeds the population of other NUTS level 2 units. The population of some London boroughs, for example, is greater than that of Cornwall. A re-examination of the system is necessary.
As my hon. Friend the Member for Bethnal Green and Bow said, the current objective 2 map is drawn at ward level. I think that level 4 should be composed of wards within boroughs, rather than—as at present—of boroughs. As hon. Members will know, some wards—of which I have examples in my constituency of Putney—have a very high deprivation level, whereas others do not. It is extremely important that the objective 2 status map should 996 deal with that fact. I believe that the NUTS classification system proposed on 29 June is not helpful to London, and perhaps not to other parts of the United Kingdom that share the same problem. I look forward to the Minister confirming that the matter will be re-examined.
In Putney and at Wandsworth council, we are concerned about the need for support in making objective 3 bids. It has been possible in previous years to make them, but it has been a problem this year. We want to ensure, first, that areas such as Wandsworth that have been successful when operating on a level playing field and on a case-by-case basis are not squeezed out.
Secondly, we have to ensure that as much pressure as possible is brought on Brussels to operate a more positive urban policy—which, as I said, would reflect London's priorities.
Thirdly, it is important that we work to decrease bureaucracy and simplify the approval process. Currently, there are many criteria assessment processes. Whereas some bids are approved directly from Brussels—via GOL—others are approved via Departments. We need clarity in the matter. We need quicker decision making and prompter payments, and greater emphasis on outcomes and outputs rather than—as currently—on inputs.
London as a whole has lost out on the Euro-gravy train of the past 18 years, during which the previous Government ignored the pleas of local government leaders and of the community of London. The fact is that 18 per cent. of the United Kingdom's unemployed live in London, but they receive only 4 per cent. of the EU resources provided to deal with the problem here.
Once the Greater London authority is established, we will have a doughty fighter to ensure that London's voice is clearly heard. Meanwhile, I ask the Minister—who is a London Member—to discover how that great economic injustice can be righted, and to ensure that the right thing is done for London, so that we receive a fair share of resources.
§ 10.4 am
§ Mr. Edward Davey (Kingston and Surbiton)I congratulate the hon. Member for Putney (Mr. Colman) on putting the case for London so well, and on pointing out that we have large unemployment problems in the capital and that we will have to ensure that London's case on the reshaping of structural funds is made.
I should like to make a few comments on reform of objective 3 funding—especially as it relates to the European social fund—which is particularly germane to London. As the hon. Member said, regional—even sub-regional—definitions can miss out areas of concentrated poverty, which are, by their very nature, quite wide. As he also said, London is likely to miss out not only on objective 1 funding but on much of objective 2 funding. In the worst case scenario, none of London's areas will be given objective 2 status. Therefore—particularly because of the regional definitions—it is important for areas such as London that overall objective 3 funding is well resourced.
As the hon. Member said, London has concentrated areas of poverty that are not revealed in the nomenclature of units of territorial statistics definitions. Those areas have to be able to share in support from Europe. If that 997 support will not come from objective 2, we will have to ensure that objective 3 is well resourced so that it can back us up.
Administration of objective 3 funds is another issue which must be addressed. Although the hon. Member touched on the issue, I should like to make a couple of major points. Hon. Members will have read the Trade and Industry Select Committee's recent report on the reform of European structural funds, which makes two telling points on reforming administration of the European social fund. The first deals with the complexity of current administrative arrangements.
At the back of the report, there is a submission from the Leader II network in England, which describes current administrative arrangements for the social fund as "Kafka-esque" and says that the number and complexity of forms render it incredibly difficult for many organisations to apply. As a consequence of the complexity, simply to apply for funds, political lobbyists have to become involved in the process, and special posts have to be created. That is not an efficient way of running such a system.
Administrative complexity creates barriers for, and limits the number of, organisations that would otherwise apply. It is almost as if the funds were being rationed by complexity. We want a much more open, simple and transparent process in which many more people and organisations can apply.
A second aspect of the administrative arrangements that requires reform—which also was highlighted by the Select Committee—is to push down administration of large pots of money from Brussels to the national and regional tiers. Such reform would help to improve the fund's administrative efficiency, would inherently simplify administration and would provide a much more targeted focus in allocating funds.
The Liberal Democrats welcome the Government's proposals for regional government in London. The development of regional government and regional development agencies may well produce tiers of government to administer the pots of money that come from Europe through objective 2 or objective 3 status and ensure that they are more efficiently administered; the byzantine processes of the current system seem to miss many areas of need.
If we do not have better and simpler administrative arrangements that follow the principle of subsidiarity, we will miss out on money being channelled to some of the most severely deprived districts in the country. As the hon. Member for Putney said, some areas of London are severely deprived. The top four areas in the index of deprivation include London boroughs.
My constituency is normally considered to be one of the more prosperous boroughs, but some wards suffer severe deprivation. Norbiton, for example, has a higher Z score than almost any other ward in outer London and is on a par with the poorest areas of central London. The need to ensure that money goes where it is most required is urgent, and one of the best ways to achieve that is to reform the administrative processes.
§ Mr. Andrew Love (Edmonton)I join the hon. Member for Kingston and Surbiton (Mr. Davey) in congratulating my hon. Friend the Member for Putney 998 (Mr. Colman) on securing today's important debate at such an appropriate time and commending him for focusing on London and correcting the mistaken impression of many right hon. and hon. Members and the wider public that London escaped the recessions of the 1980s and 1990s.
Londoners have not magically overcome or avoided the deprivation that affects other cities and regions. Indeed, there is enormous disparity between those who are very wealthy and those who are very poor. Greater London includes some of the poorest areas in the country, and is affected by poverty, deprivation and social exclusion.
This is an apposite time to be discussing structural funds for London. There are 13 objective 2 areas in the United Kingdom, covering 31 per cent. of the population and spending 30 per cent. of the objective 2 structural funds from Europe. However, as was said earlier, London receives only 4 per cent. of the UK allocation. That cannot be a fair distribution. Indeed, London has only one objective 2 area—east London and the Lea valley—which is programmed to spend about £132 million by the millennium.
Many have pressed the case for London over an extended period; several organisations were mentioned earlier. They include Greater London Enterprise and the Local Government Association, but I should like to pay particular tribute to the London Members of the European Parliament who campaigned for a long time, despite the scepticism of their colleagues and the opposition of many bureaucrats in Europe, but finally won through to secure a bridgehead for London and recognition of the multiple deprivation that is suffered here.
East London and the Lea valley objective 2 area combines great need and significant opportunity. The need exists across the entire area, but it is concentrated in the central and eastern parts—in Tower Hamlets and Newham. There are also significant development opportunities in the upper Lea valley where there are more than 200 hectares of underdeveloped and derelict sites waiting to be developed to provide opportunities.
The London TEC Council, recently produced a report entitled "Skills and Sustainable Development", which identified six distinct local economy profiles within London. They range from the global city core, which I do not need to describe, to the regeneration economy. The report states:
A regeneration economy requires comprehensive long-term economic, social and physical development to compete successfully for investment, jobs and resources.That is a description of east London and the Lea valley. All the indicators show that the area suffers significant deprivation, poverty and social exclusion. Tower Hamlets, Hackney and Newham would appear at the top of any list from any statistician. Indeed, parts of Haringey, Waltham Forest and, in my constituency, Enfield also appear high on the list of deprived areas.Of course, the problems in the Lea valley have been exacerbated in recent years. There were 26,000 jobs losses between 1984 and 1991, and the area has failed to benefit from the wider new industries that have been attracted to the regional economy in Greater London. Perhaps most significantly, local people have been unable to maximise the opportunities that are available because they lack the skills to tap into the job market. The objective 2 bid was originally made in order to tackle some of those deep-seated problems.
999 East London and the Lea valley has a population of just over 500,000. The area has a significant level of need, which is illustrated by one statistic that has been used by European statisticians. Unemployment there is two and a half times the national average. There are many deprived communities, especially black and ethnic minorities, who represent 36 per cent. of the total population, and, according to all the indicators, suffer significantly greater deprivation and unemployment than the norm. A recent survey carried out of the Bangladeshi community showed that only 44 per cent. were engaged in the real economy.
There have been a number of successful projects that will benefit local communities and have a significant impact on the development of the objective 2 area. I shall mention three of them briefly. First, a science park is being developed in northern Enfield on 45 hectares of derelict land. There are three partners: Middlesex university, Thames Water and the London borough of Enfield. The lead agency on the site is building 60 incubator units to foster new and high-technology businesses. It is a very exciting business called the Lea Valley Business Innovation Centre and it does tremendous work. It was set up using regional development funding and is one of 12 such developments across the United Kingdom and one of 150 in the European Community. It promotes innovation by providing support and advice, and early-stage finance, should that be needed for the development of the business. Since it was set up three years ago, it has supported more than 1,000 business ideas. In its first year, it helped to establish 22 new businesses, creating 44 jobs. It is a very exciting development.
I should also like to mention the Tottenham Hale transport interchange, which provides a one-stop service to either Stansted airport or central London. There are excellent connections on the London underground, and the road network is connected directly to the M25 and central London. The interchange will open up an entirely new and, until now, fallow area of the Lea valley objective 2 area for development.
I turn briefly to the impact that Agenda 2000 and the Government's negotiations will have on objective 2 funding for London. First, I accept that enlargement of the European Union will necessarily mean a refocusing of funds on new member countries of eastern Europe, although the Government's acceptance that that will lead to reductions in the overall structural fund does not sit easily with their commitment to regeneration. Indeed, in a recent consultation document in which the Government outlined the features that should underpin their future regeneration policy, they concluded that
policies must be aimed at addressing social exclusion and need. Our cities will not be competitive unless opportunities are extended to everyone who lives in them. There is nothing more corrosive than the existence of disaffected or disadvantaged groups who feel they have no stake in their city's decisions and prosperity.Achieving such aims require continued funding of objective 2 areas and the Government to address poverty and deprivation in many parts of London.Secondly, concern has been expressed at the use of unemployment as the principal criterion for the designation of new objective 2 areas. That would be to the advantage of east London and the Lea valley—and, 1000 indeed, as has been said, of Greater London. I accept—and I think that London would accept—that, given that different countries are at different stages of their economic cycles, the use of such a criterion does not make sense and may not be the most appropriate basis on which to divide spoils among member states. Unemployment is only one of many indicators and will not, by itself, give an accurate picture of local need. Below the national criteria, some form of assessment of deprivation or social exclusion based on national and regional criteria would be favourable and a sensible way forward. After all, local people know best what is happening in their area.
Thirdly, there must be flexibility of implementation to allow member states both to decide on the new criteria for objective 2 designation and to draw the boundaries of new areas, taking account of the situation on the ground. For example, many deprived areas may be concealed in a larger and much more prosperous region. Such a problem is far more prevalent in Greater London than in other parts of the country. We need to take on board local experience and local knowledge in evaluating the criteria on which we want to operate.
Fourthly, I should like to address the issue of the safety net, which has been mentioned. According to recent estimates, before the concept of a safety net came forward, only a third of the current eligible population under objective 2 status were likely to be covered under the new criteria. A safety net that allows us to drop only a third of the coverage marks significant progress. The Government—and Commissioner Kinnock, if he was involved—should be congratulated on that.
However, there is still a difficulty. I understand that part of the EU's policy on objective 2 funding states that it will be limited to 18 per cent. of the population of any country. Such a limit could adversely impact on objective 2 funding in London. I ask the Minister to consider that carefully.
Fifthly, we must protect existing investment. East London and the Lea valley achieved objective 2 status only in 1995. Projects and programmes will have been running only for a maximum of four years by 1999. Continuity of funding is therefore necessary to deliver the regeneration that was called for when the objective 2 area was set up. That is important if we are to replace jobs lost through industrial decline, and train the local work force so that they can take jobs that are becoming available not only in the Lea valley but across London. The investment that has already been made in east London and the Lea valley area should not be put at risk by the phasing out of objective 2 status after 1999. Such status has contributed to a reversal of economic decline in the area.
To take up a point made by the hon. Member for Kingston and Surbiton, there is growing awareness among local groups and voluntary organisations—even the private sector—of the benefits that an area can accrue from structural funding. It is important that we maintain that interest and focus. If that is lost through the phasing out of objective 2 status, it will be difficult not only to maintain such interest but to set up the partnerships that will be critical to the future success of the area.
The new arrangements for Agenda 2000 should attempt to achieve several other things. They should reduce the complexity of the system. The EU has already gone some way towards that; it has reduced the number of objectives to three and the number of initiatives from 13 to three, 1001 greatly simplifying the structure. The Trade and Industry Committee suggested that funding arrangements for four or five different funds should be simplified and brought together in one straightforward fund.
We also need to consider how we can simplify the process for people at the other end of it. If we do so, we shall achieve significant benefits. We need to reduce bureaucracy. To how many agencies do people who have received European structural funds have to report? How many do they have to keep in touch with? How many forms do they have to fill out? The situation is ridiculous; we need to simplify it and ease the process for organisations and partnerships that are trying to achieve the objectives that we have set them.
We must simplify form-filling. One needs a degree in the subject simply to understand the complex forms. Indeed, the complexity of EU forms is legendary. Everyone who has attempted to contact the bureaucracy in Brussels has to complete an exceptionally complex form. That has become a major impediment to new groups coming forward, and it has meant the failure of groups that could have delivered on the objective 2 criteria if that hurdle had not been placed in their way.
We need arrangements to increase transparency. No one understands how Europe operates; I am still trying to find out. The reality is that we end up with consultants, political insiders and people who know how the bureaucracy operates earning a living doing that rather than contributing to the objectives. There should be opportunities to simplify matters for those filling in forms and trying to create local partnerships.
We need flexibility, a greater say for local agencies and the involvement of non-statutory organisations to help ensure that we target the funds more efficiently. That will be essential if we are to maintain public support for an effective programme of regeneration into the 21st century.
§ Mrs. Teresa Gorman (Billericay)I congratulate the hon. Member for Putney (Mr. Colman) on securing the opportunity to debate the needs of London in relation to the European Union. I congratulate him also on his stoicism, as he appears to understand the bureaucracy and the nonsense related to accessing those funds.
I was surprised to hear him describe his constituency of Putney—where I was born and raised—as having pockets of severe deprivation. That must be a triumph of rhetoric over reality. I have toured all around Putney all my life, and to compare it with parts of other cities seems a slight exaggeration.
§ Mr. ColmanI was referring to the Roehampton estate. Perhaps since you left Putney—
§ Mr. Deputy Speaker (Sir Alan Haselhurst)Order. The hon. Gentleman should remember to address other hon. Members in the third person. His remark appeared to be directed to the Chair.
§ Mr. ColmanI apologise, Mr. Deputy Speaker. May I, through you, remind the hon. Lady that Putney has several parts to it, including Roehampton, which is seen within the Z scores laid down by the Department of the Environment, Transport and the Regions as being an area of significant deprivation?
§ Mrs. GormanThe hon. Gentleman has no idea which part of Putney I lived in. The old Roehampton estates 1002 were the jewel in the crown of the old GLC and were greatly desired by people moving out from the innermost parts of London, who regarded them as almost a rural retreat. As for the other parts of Roehampton and the appalling tower blocks overlooking Richmond park, they were a triumph for the gerrymandering of Labour Governments after the war. I deplore the blocks, but they are still much more pleasant places to live than many parts of our cities.
I wish to support, and not repeat, the remarks of the hon. Member for Kingston and Surbiton (Mr. Davey) about the rabbit warren of regulations and the regiment of bureaucrats through which one must manoeuvre to get to the pot of gold—gold which has been enormously contributed by the British taxpayer. We are, after all, accessing our own money as we go through the European rabbit warren. It is slightly more difficult than accessing lottery funds—perhaps not much more.
I wish to correct the image of London given by the hon. Member for Putney in his quite understandable pursuit of European money. I have lived almost all of my life in London, and I have represented parts of London on a council. That has given me an intimate view not just of central London, but of many of the parts of London that he described.
I have had a lot of contact with businesses that were driven out of London. The problems that they experienced were largely made by their own councils—most particularly with the rates, which went up and up through the roof until the roof came off and the businesses had to move out of town. People may not realise that local authorities often demanded from £10,000 up to £100,000 in rates from small high street shops, which made it impossible for them to function. All the small furniture factories in the east end and areas such as Hackney and Haringey—which sustained an enormous number of valuable jobs—were driven out by the nature of the local councils.
We cannot lay the blame for the depredation at the door of central Government. If the problem exists, bringing in European money will not necessarily solve it. The costs of running small businesses will still exist.
We hear about the 18 per cent. unemployment in London. That figure beggars belief. It can be difficult to find a Londoner working in some industries—particularly the service industries. The other evening, I had the great pleasure of going to dinner at the Norwegian embassy. We were served by young women from the Philippines, the butler who handed round the drinks was Spanish and I am not sure of the nationality of the person who opened the door for us.
The point is that there are massive opportunities in London to work, particularly in the service industries. We have one of the largest tourism industries in the country, which provides many opportunities for us to solve the problems. If there is unemployment, we should look at legislation that impedes employers from taking on English workers, or we should study the nature of the councils—many of which are under Labour control. It is for a council to decide how to utilise the funds that are available. Whether they wish to give funds to the society for sustaining three-legged dogs or to the useful business of keeping the rates down for shopkeepers is a matter for them.
1003 I have lived in London long enough to see parts of Wandsworth that were deprived turned into desirable areas, with lots of new industries, under the stewardship of my hon. Friend the Member for Christchurch (Mr. Chope). It is a question of management and leadership. Battersea is another part of central London which used to be considered run down. I am sure that the hon. Member for Putney would have described it as a deprived area, yet that, too, was resurrected—not by structural funds from Europe, but by the good management of Conservative councils. I urge the Minister to remember that we have in our hands the powers to restore the pockets of deprivation in London.
I read in the newspapers recently that a great many Indian restaurants are crying out for staff because of a staff shortage. Perhaps some of the unemployed Bangladeshis in London could find jobs if they looked for them a little harder.
§ Mr. Christopher Chope (Christchurch)We have had a good debate, ably introduced by the hon. Member for Putney (Mr. Colman). My hon. Friend the Member for Billericay (Mrs. Gorman) shares with me the privilege of having been born in Putney, so this is very much a debate about Wandsworth and London as a whole.
The hon. Member for Putney's conclusion that London had lost out on the Euro-gravy train over the past 18 years rather ignores the facts. The 1998 edition of "Regional Trends" shows that gross domestic product per head in London is over £13,000, compared with £8,700 in Northern Ireland and £8,900 in Wales. By 1996, disposable household income in London was 16.4 per cent. above the average for the rest of the UK, compared with 12.8 per cent. above the average in 1992. Things were getting better in London between 1992 and 1996, yet the hon. Gentleman tried to paint a picture of things in London getting worse.
In Wandsworth, and in Putney in particular, Wandsworth council has been able to deliver improved services, which have received massive endorsement in local elections. The hon. Member for Putney, intervening on my hon. Friend the Member for Billericay, described the Roehampton estate as an area of significant deprivation, but it will not have escaped his notice that, in May, for the first time in many years, the electors chose three Conservative local councillors, whom they believed would more properly represent them. That is a reflection of the success of the Conservative council in Wandsworth.
We should consider the structural funds in context. Figures from the Government office for London show that, last year, this year and next year, £25 million per annum have been and will be allocated to London through all the EU structural funds. The revenue support grant for London, which comes from the taxpayer, is £4.4 billion, which is in addition to Government capital grants. To debate structural funds in London—which are only £25 million a year—for one and a half hours, while ignoring the much larger sums of money that are being spent on London, is to fail to see the wood for the trees.
1004 The hon. Member for Putney argues that small EU-funded programmes in Wandsworth should be preserved, but, this year, the Labour Government substantially reduced the revenue support grant to Wandsworth. Surely Wandsworth council is in a better position than remote officials in Brussels to judge the needs of the local community. If he believes that there are pockets of deprivation in Wandsworth that need assistance, he should be arguing for a larger revenue support grant funded from our national taxes; he should not be trying to use a complicated structural arrangement through which a proportion of the money that we give to Europe returns to us after myriad committees have determined how it should be spent.
The leader of Wandsworth council stated in the foreword to the most recent annual report:
These are exciting times in Wandsworth. The local economy is more robust than at any time in the last decade while confidence has returned in a spectacular way to the housing market…the council's economic development office helped to create more than 600 new jobs for local people… The value of construction activity last year topped £200 million—almost double the previous year".That is the role that a local council can play in developing the local economy. With the greatest respect to the bureaucrats on the continent, I do not think that they are in a position to second guess local judgment.I hope that the Minister, in winding up, will explain how, in what seems to be a new anomaly, the 14 new electoral areas that the Government want to set up for the Greater London authority will fit in with the five new NUTS regions for London, given that local authority and other electoral boundaries are supposed to be linked to the NUTS system.
There is also a problem with the lag in statistics. The allocation of EU resources between 2000–07, meagre as they are, will be based on average gross domestic product in 1993–95 and will be subject to a safety net to reduce the number of losers in the change from the previous system. Despite the unwieldiness of the system, that will allocate, at most, some £500 million. It would be much better if we left the Brussels bureaucracy out of it and kept the £500 million ourselves, so that Parliament could decide how the money should be allocated to individual regions or even wards.
A number of hon. Members mentioned subsidiarity. I understand that, as a result of a £90,000 European regional development fund grant allocated to the Banglatown area of Tower Hamlets, 10 historic buildings, 2 km of footpaths and one environmental area have been improved and one permanent and 300 temporary jobs have been created. Surely those matters should properly be dealt with by the local council—probably by the local councillor—rather than by highly paid bureaucrats in Brussels. One can only speculate about the amount and cost of the bureaucracy needed to allocate that one grant.
At a meeting of the Select Committee on Trade and Industry, the Minister rather wriggled when she was asked whether she thought that individual member states were in the best position to decide the needs of their communities. I hope that, in responding to the debate, she will be more robust and say that, yes, she thinks that local councillors and Parliament have a better idea of the needs of individual parts of the United Kingdom, and that it would be much better if we kept the money and allocated it according to our wishes.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mrs. Barbara Roche)I congratulate my hon. Friend the Member for Putney (Mr. Colman) on bringing the needs of London to the attention of the House. As he rightly said, I am a London Member of Parliament, so I share his interests. However, as the Minister in the Department of Trade and Industry with responsibility for the co-ordination of structural funds issues for the United Kingdom as a whole, I have to take a wider view of the process and the factors that have to be taken into account.
Many good points have been made in the debate, especially on the need to tackle bureaucracy—something that the previous Government failed to do. The hon. Member for Christchurch (Mr. Chope) said much in his speech, but little about the reform of structural funds. Perhaps he will give a more considered response when he has had his brief a little longer. It will not surprise the hon. Member for Billericay (Mrs. Gorman) to hear that I did not agree with everything that she said in the speech that the House is used to hearing from her, although she made a good point on the need for simplification, as did my hon. Friends the Members for Putney and for Edmonton (Mr. Love).
Since the publication of the draft regulations on 18 March, we have, under the UK presidency, taken forward the negotiations on structural funds with the Commission and other member states. Throughout the negotiations, the Government continued to emphasise the overarching principles of fairness, affordability and durability. As we head into the discussions in the autumn under the Austrian presidency, those principles will remain as important.
The desire for fairness has dominated the lobbying position of the Government—and of local organisations—in Brussels with the Commission and with other member states since the publication of the Agenda 2000 communication. As I have said on a number of occasions—I have no compunction about repeating it now—fairness means that the costs of reform should be shared fairly between all member states. However, the Government do not believe that the current proposals will achieve that. We believe that, if we are to agree fair and affordable reforms, all member states must be prepared to accept cuts.
We are not prepared to bear disproportionate cuts in United Kingdom coverage. On the strength of our lobbying before publication of the proposals, we secured the last-minute concession of the safety net in the draft regulations, limiting the loss of coverage for objective 2 and 5b areas to no more than a third. That could certainly prove to be an important achievement in several areas in the UK.
In addition, the Government will continue to press for flexibility, both in the objective 1 gross domestic product cut-off and in the new objective 2, in which we are keen to ensure that funds are targeted within member states, using national and local indicators that accurately reflect the areas of greatest need. It has also been said that member states have the ability to know where their areas of deprivation are, and we shall seek the maximum flexibility on objective 2. Those points were well made by my hon. Friends the Members for Putney and for Edmonton, as well as by the hon. Member for Kingston and Surbiton (Mr. Davey).
1006 In the negotiations to date, the UK presidency has been able to secure agreement on some of the general principles that support the universally agreed aim of simplification of the funds, making them more effective and better value for money. That is an important first step, and we are proud to have played our part in it.
Reference has been made to the agreement on changes to the UK NUTS boundaries announced last week by my hon. Friend the Economic Secretary to the Treasury, who has responsibility for the Office for National Statistics. The structural funds reform negotiations are entirely separate from the issue of NUTS boundaries.
The Government supported the Government statistical service's proposals, sent to Eurostat last summer, which were the result of a general consultation early last year. We asked the Commission to encourage Eurostat to produce a rapid and satisfactory result. Ultimately, as the House will be aware, this has been a statistical exercise, subject to Eurostat's decision, and we welcome the fact that agreement has now been reached.
The European Commission has proposed that NUTS II and III areas be used to draw up the new European Union structural funds map. The Government expect that the new UK NUTS boundaries will be used. However, all those issues depend on the content of the final structural funds regulations and on the data for individual areas. We cannot at this stage predict with certainty what might be the implications for individual areas.
One of our goals in our presidency was to leave a solid framework for continuation of the work into the Austrian presidency, which began last week. All member states have very distinctive views on issues affecting finance and eligibility criteria. Most, including the UK, have difficulties with the proposals as they stand. The issues will begin to be tackled in earnest under the Austrian presidency. The discussions are likely to take place from the autumn and will continue into early 1999.
The Cardiff meeting last month set a deadline of March 1999 for the Agenda 2000 discussions. Reform of the structural funds is one of the most important elements in the process. It is certainly one of the most visible benefits of the European Union to local people, and I warmly welcome the emphasis in this debate on the local nature of the funds.
Many local representatives have put their case to me for objective 2 status, and I am sure that they will continue to do so. The eligibility criteria for the various strands within objective 2, and the distribution of funds, will not be clear until the final structural funds package has been decided. Neither will we know how much flexibility we shall have at member state level in determining the eligibility of areas. I am certainly aware that people feel strongly on those points, which is why the Government will press for maximum flexibility.
I think that we all welcome the proposal to target a number of non-industrial urban areas under objective 2. The extent to which we can do so is a matter for consideration and discussion. We would welcome the ability to home in on pockets of deprivation.
From various parliamentary answers, and the recent Adjournment debate through which I was able to bring the House up to date, hon. Members may know that the focus of our presidency has been to a large extent on simplifying the administration of the funds, which means attempting to reduce the bureaucracy wherever possible and to increase the involvement of local people.
1007 I am delighted to say that we have achieved a great deal of consensus among member states. At the informal meeting of EU regional policy Ministers in Glasgow last month, chaired by my right hon. Friend the President of the Board of Trade, there was universal agreement on a number of principles: the importance of job creation, employability and regional competitiveness; the value of effective partnership between the Commission, national Governments, and regional and local organisations, with a clear definition of the role for each; and bringing decision making as close as possible to the people affected. All hon. Members will welcome more regional and local control over the funds' delivery.
The UK has a reputation in Europe as a good manager and administrator of European funds. That has been earned through the hard work of those involved in the partnerships and on the monitoring committees throughout the country, including in London. The House has learnt today about some important projects.
I have been able to observe the development of some of the projects: for example, the business innovation centre in the Lee valley, which does excellent work with small businesses, and especially those looking for expertise in new technology. That is why I attach so much importance to ensuring that we engage those involved in the day-to-day administration of the funds and feed their views into the relevant discussions.
I spoke at the national simplification conference in May, where we discussed, among other matters, ways of improving administration and regional partnerships. We have heard about the important issue of community initiatives in London, such as the urban initiative in Park Royal. Some of those initiatives have helped to form useful local and regional partnerships, such as the urban partnership groups, which have involved local residents, community groups and voluntary organisations in the strategy for tackling social exclusion. My hon. Friend the Member for Bethnal Green and Bow (Ms King) spoke about some of those important partnerships.
I am aware that the programmes can be complex to administer, especially given the small amounts of funding involved, and often fragment the strategic approach to the very issues that they are designed to address. It is important that community initiatives should add value to the mainstream programmes. They should certainly not duplicate or cut across other programmes. Since there must be a close relationship between the community initiatives and the main objectives, we can take a view on particular initiatives only once the framework for the main objectives is clear.
We should remember that this is merely the starting point in a long and complex set of negotiations. A great deal more work needs to be done to achieve
fair criteria and transparent systems—a phrase that we used time and again for all the objectives. I am grateful to those hon. Members and their local groups who have lent their support to our efforts in the structural funds discussions so far and also to all hon. Members who have come to see me. We have a long way to go, but, by working in the common interest in the United Kingdom, we can have a fair and just solution.
§ Mr. Deputy SpeakerOrder. We must now move on to the debate on disadvantaged areas in Wales and to the right hon. Member for Caernarfon (Mr. Wigley).