HC Deb 10 June 1999 vol 332 cc877-84

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. McGuire.]

6.51 pm
Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I am pleased to be able to follow the wide-ranging debate that the House has just had on the important issues on defence in the world. I make no apologies for trying to refocus the attention of the House on the important issues facing the Scottish borders in relation to the distribution of the next programme of European Union structural funds. It would be difficult to exaggerate how important that is to south-east Scotland.

Before I embark on the main body of my remarks, I state my hope that, if my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) catches your eye, Mr. Deputy Speaker, you will allow him to contribute briefly to the debate.

This is an appropriate day for a debate on European funding because we are having a European election, and the importance of the European Parliament in distributing structural funds in future is an essential part of the political argument that has been raging—or not, as the case may be—in the campaign.

Will the Minister say a few words about the consultation process that has been undertaken in recent weeks? Will that process continue? I fully understand that he may not be able to say as much as he would like because the consultation process has to be concluded, and we look forward to that. I heard a rumour, however, that there were early indications of proposed lists that might be published in the next few weeks. Will the Minister comment on that, if he can? I do not seek state secrets, although if he would like to reveal any state secrets, I should be quite happy to hear them. If he has any advance information about that consultation process, it would be good if he could put the Government's position on record.

If the Minister has an opportunity to have constructive meetings with colleagues, then no doubt colleagues not only from south-east Scotland but throughout the world will be beating a path to his door. Such meetings would be useful, and my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale and I would like to underline the earlier request for a meeting that we made in a letter.

As I said, it is difficult to exaggerate the importance of this issue to the future economic well-being of the Scottish borders region. The next programme of European funding will run from 2000 to 2006. Before I turn, briefly, to that programme, I shall, even more briefly, refer to the situation in the remainder of the current funding year.

The Scottish borders is coming to the end of a very constructive and important period of objective 5b funding. I would argue that the money that we have received since 1994—a crucial £24 million or £25 million—has been put to very good effect. The benefits are there for all to see. I hope that, in the remaining months of the current period, we will be able to make the best use of what money there is, and, in the dying days of the existing programme, construct a bridge between it and the new programme, which will take us into objective 2 territory once the reforms are implemented on 1 January next year.

The Secretary of State and, indeed, the Under-Secretary, have said that they will use their good offices to divert at the last minute any unallocated funds from other parts of the country. A carefully worked out and detailed programme in the borders would put any unallocated funds that the Under-Secretary might be able to find to very good use. Ministers promised to do their best. I understand that the task is not easy, but anything that the Under-Secretary might be able to say about the process would be extremely valuable to local people, who would then know whether the projects on which they have worked will be confirmed and can proceed. That would be a very valuable bridge from the current programme, as it winds down, to the new one.

We all know that, under the new set-up, objective 2 funds are designed to try to deal with a process of conversion in areas of the European Community that are suffering difficulties. They are supposed to address difficulties in areas facing economic change in manufacturing or service industries, or changing social backgrounds. Declining rural areas are particularly mentioned as targets for objective 2 work over the next six years, and—appositely for the coastal communities in Berwickshire that I represent—depressed fishing areas are specifically referred to as deserving help. Such factors are important and all applicable in diverse ways to south-east Scotland, which puts us in a good position to qualify for objective 2 help.

In passing, I again congratulate the Government on the cushion of the safety net, as a result of which the amount of money available under the current objective 5b status may be reduced only by a maximum of one third. That is a valuable cushion, of which I hope we shall make very good use.

As the Under-Secretary will know, any area of the United Kingdom cannot automatically or easily meet the core criteria. To that extent, the deal was bad for the UK. There is no automatic eligibility for areas such as south-east Scotland, although I would argue that the Scottish borders area has a very good case in many respects. However—I underline this—we need central Government support. Co-operation at ministerial and official level between the Scottish Office and our professionals in the local enterprise company and the local authority has been excellent, and we are grateful for that, but we need some political support from the Government—and we need it now.

I have two or three further points to make—none of them will be new to the Government or the Under-Secretary because they are well aware of the case that has been submitted. I endorse the excellent written submission made by the local enterprise company and the local authority. I shall highlight one or two points of the submission in reinforcing the case.

I should like the Government to look particularly at the new work being done by the Centre for Educational Sociology at Edinburgh university, because it has identified something that I did not realise. The reason why local unemployment is artificially low is that such a high proportion of young people leave the area just after leaving school. Given that many would not find jobs if they stayed in the area, unemployment would be higher than the Scottish average if such people were added to the count. That important factor is argued at some length in the official submission.

Secondly, I draw attention to the part of the submission about difficulties facing agriculture, given that 33.3 per cent. of businesses in south-east Scotland in 1996 were based on the primary sector. That is a crucial factor for us.

My hon. Friend the Member for Tweeddale, Ettrick and Lauderdale and I spent Monday afternoon with people from our local National Farmers Union, and they reinforced the fact that was clearly shown in the local authority survey conducted earlier this year—that the agricultural sector in south-east Scotland is having a very difficult time.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. McGuire.]

Mr. Kirkwood

I have only one more point to make, and I was trying to get it in before 7 o'clock, but I failed.

I want to draw attention to fisheries, because the new objective 2 schemes provide us with a new opportunity to help distressed fishing areas. According to the figures that we have worked out locally, between 10 and 15 per cent. of the Berwickshire travel-to-work area depends on fish landing and processing, and the ancillary sectors.

I know that the Minister is an expert on some of the relevant issues, and realises how important fishing is to coastal communities. Landings of fish at Eyemouth have slumped in the past 10 years from 8,000 tonnes to 5,000 tonnes, according to figures produced in the past few months. That is a worrying trend, and I think that objective 2 funds could address the problem constructively if we use them properly.

The Scottish Office working party report did valuable work in identifying what needs to be done, and came to the conclusion that, in terms of trying to deliver that programme for the future, it was important that continued access to European structural funding should be continued in some way and at some level into the new programme.

Objective 2 status for the whole of the Scottish borders is a crucial target for us, and I hope that we can count on the Government's support in trying to achieve that end.

7.1 pm

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale)

I thank my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) for inviting me to contribute to this short debate, and I also thank the Minister for agreeing to my participation.

Most of the key points have already been made by my hon. Friend, and I shall reinforce some of them. In particular, I must emphasise the grim couple of years that we have had in the borders, with thousands of job losses and the widespread collapse of farm incomes, which affects nearly every significant sector of the local economy.

We have had many responses from the local enterprise company, the council and the Government—a contribution that my hon. Friend and 1 have been more than willing to acknowledge in the past, and I am happy to acknowledge it again. The partnership between the different political parties and the different agencies has worked, and we are keen for it to continue.

It is evident to all of us that we need to continue with the diversification of the borders economy and ensure long-term support both for new industries and for the many successful continuing businesses in key sectors such as textiles. In that context, the continuing availability of structural funds for the borders, and winning back assisted area status, will be critical.

My hon. Friend mentioned the borders working party report, which was published as recently as March. It is a solid document with real proposals and good pointers for the future. I want to draw the Minister's attention to two or three of those. On page 7 it is acknowledged that

The availability of European money has been extremely important to the Borders over the past few years. The report continues: The Government is … committed to reallocating unused European structural funds for use in the Borders. Like my hon. Friend, I hope that the Minister will—if not this evening, soon—be able to respond to our concerns and perhaps honour the pledge made to the borders in that respect.

The most important section in the working party report states: The Working Party believes that the availability of European new Objective 2 funding will be crucial to the rebuilding of the Borders economy and any reduction or removal of European funding could have a serious adverse effect on the timetable for carrying forward initiatives and achieving the objectives"— that is, the objectives of the new economic strategy.

The report puts things clearly and eloquently, and I endorse what it says.

A number of the factors that will be difficult for us have already been mentioned and I do not want to repeat too much of what my hon. Friend has said. One such factor is the migration of young people. We have a growing population, but that is accounted for largely by the commuter belt around Edinburgh and by the increasing numbers of retired people, who are welcome in the borders but are masking the underlying trend of young people leaving the area.

We hope that the Government can continue to support our case and will recognise that, with our rurality—ours is the second most sparsely populated area in the United Kingdom after the highlands and islands—and our industrial dependency, which, paradoxically, is the second highest in Scotland, and with 2,500 jobs lost already in the past couple of years, matters are serious and need to be addressed.

My hon. Friend the Member for Roxburgh and Berwickshire and I will go to Brussels on Monday to speak to the European Commission about these very issues. We hope that we take with us Government support and can be assured of on-going efforts on their part to secure new objective 2 status. We have seen already that the Government have recognised the problems of the borders and we hope that, in on-going representations to Europe, they will support us in seeking some of the solutions.

7.6 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Calum Macdonald)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing the debate. I also congratulate both him and the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) on their contributions to consideration of the important matter of European structural funds and the borders. It is not the first time that we have debated the subject. I pay tribute to the way in which both hon. Gentlemen articulated the interests of their constituents in what is obviously a difficult time for the borders area.

As has been said, structural funds have played their part in contributing to economic development in the borders and in Scotland. The benefits are already clear across the whole of the borders area, and we can expect further benefits to flow over the next few years as projects mature and as their longer-term aims are realised.

Both hon. Gentlemen raised two principal concerns—the current borders objective 5b programme and whether additional funding can be found for that, and the prospects for the area in the next round under objective 2.

Structural fund assistance was introduced to the borders as a result of the previous reform, way back in 1993. At the time, the programme partnership, which includes all the local agencies, was unanimously of the view that the level of EC resources provided for the borders programme was inadequate to meet the needs of the area. Although strong arguments for additional resources were then advanced, nothing was done. All eligible areas had been allocated funding based on an agreed set of criteria already used for disbursement of objective 5b funds.

In recognition of the serious impact of recent job losses in the area, the new Government made a commitment last year to try to find unspent EC resources to allocate specifically to the borders, and we intend to deliver on that commitment. On the basis of the Government's commitment, the borders objective 5b partnership drew up a mini-programme, as the hon. Member for Roxburgh and Berwickshire mentioned, based on immediate and longer-term need, with the expectation that additional EC resources would be made available at some stage before the end of 1999. The necessary processes take time, and they are still continuing as I speak.

Officials in the Scottish Office Development Department approached various project sponsors towards the end of 1998 and again in February of this year, to establish precisely what the projected spend profiles would be in their various projects. The exercise involved a review of the forecast financial uptake of projects approved to date, together with an accurate assessment of what was likely to come forward for structural fund support during the remainder of 1999.

That exercise concluded that £2.2 million could be reallocated for use by the borders to advance the projects approved by the programme monitoring committee as contained within the mini-programme, and I am pleased to be able to confirm the Government's intention to reallocate that funding.

The process of transferring funds will take a little time as it has to be cleared by the European Commission, although we do not have any reason to suspect objections or difficulties with what we propose. In the meantime, the borders project sponsors will be allowed to proceed with those projects approved subject to the availability of funds, but at this stage it must be at their own risk, given that final approval is in the hands of the Commission.

I have no doubt that the additional EC funds to be made available to the borders, together with an equivalent amount of co-finance from the various public sector authorities, which together amount to a package of more than £4 million, will be of significant assistance to the area. As the hon. Member for Roxburgh and Berwickshire said, the Government promised to find the money last year in recognition of the special problems of the borders. We are sticking by that promise and are well on the way to delivering.

Let me deal with the future of structural funds after the current programme period finishes in December. Briefly to set the context, member states largely signed up to the Commission's broad aims of concentration, simplification and preparing the way for a much-enlarged European Union. However, although we accept that concentration inevitably means reduced coverage for existing member states, we were determined that that should be achieved in a fair and even-handed way among all member states.

For the UK, as has been pointed out, that presented a particular challenge. At the time of the last allocation of structural funds, in the early 1990s, UK unemployment was extremely high and the UK was in the grip of a serious recession. As a consequence of that high unemployment and other factors, the UK received extensive coverage under objective 2.

The picture in the late 1990s and as we head into the next century is very different. The new Government have achieved the lowest levels of unemployment in 22 years. Low unemployment would inevitably mean dramatically reduced coverage of objective 2, unless the UK could negotiate an alternative. That is why the Prime Minister proposed and pushed so hard for a safety net. Securing that safety net in respect of objective 2 was a priority every bit as great for the Government as getting a good deal on the highlands and islands, although it may have received less press attention.

The Prime Minister won his argument on the safety net at the Berlin summit at the end of March. The safety net delivers for the UK as a whole much larger coverage of objective 2 than would otherwise have been available. It doubles the population coverage that we would otherwise have got, from 6.5 million to 13.5 million people.

Having secured the safety net, we must allocate that coverage fairly within the UK, and in a way that is acceptable to the Commission. The first step in that process has been to engage in wide public consultation, as has been mentioned, on objective 2 coverage. That consultation finished on 25 May, and we have been considering carefully the range of submissions received.

The next step is for the Government to propose a list of areas to the Commission. It is intended that that should be done in July, but it is likely to take three or four months before final agreement is reached between the Government and the Commission on the list of designated areas.

As soon as there is a definitive list of eligible areas, decisions can be taken by Ministers in the new Scottish Executive on the mechanics of operating the new programmes. Clearly, the final level of eligibility will be significant in determining programme areas and committee structures.

In the interim, however, time will be used constructively. Plan teams in Scotland have been established and have met regularly since the beginning of March to do the preparatory work needed for drafting new programmes. Although the eligible areas obviously remain unknown, it is still possible to undertake much of the economic analyses and priority setting in advance, particularly as all areas currently eligible will receive transition funding at the very least.

Again, it is thanks to the Prime Minister that we shall have six years' transition for all areas losing eligibility, instead of the four years proposed by the Commission for current objective 2 and 5b areas. That will allow all areas the opportunity to develop strategies over a reasonable time scale, even if they fail to qualify for full funding in the new round.

Given the future realities of enlargement, it is important to remember that these may well be the last available structural funds for most of Scotland, whether in transition or fully eligible, and that future eligibility will be concentrated on the areas in greatest need. All partners must accept that, in view of the future concentration, there will inevitably be areas that lose eligibility. With reduced funding available to a smaller population, the emphasis must be on targeting the most deprived areas.

I understand how the borders area is placed, and how the eligibility criteria in the regulations affect its relatively high dependence on the industrial sector, the discernible decline in industrial employment, the sparse population, the out-migration that was mentioned, the high proportion of agricultural employment and the fisheries dependency around Eyemouth or the Berwickshire coast. As has been said, those factors are well brought out in the case submitted by Scottish Borders council.

I appreciate the fact that partners in the borders, along with many others, are concerned about the likelihood of future funding under objective 2. Obviously, I cannot give any assurances at this stage in the process, but I can promise that careful attention is being given both to the cases submitted by areas and to the data available to the Government. The Government will look carefully and hard at the relative and respective merits of the cases put forward and will use open and transparent criteria for the final selection.

Finally, I emphasise the importance of the role of the partners in the borders, and any other area in Scotland which is pursuing objective 2 funding. They know the local priorities and local problems best, and it is for them to develop and implement exit strategies accordingly. It is for the partners to ensure that they make the best possible use of whatever funding they secure, be it objective 2, objective 3, transitional or rural diversification funding.

I hope that what I have said has been helpful to the hon. Members for Roxburgh and Berwickshire and for Tweeddale, Ettrick and Lauderdale and their constituents, and that this evening's announcement will be positively received in the borders.

Question put and agreed to.

Adjourned accordingly at sixteen minutes past Seven o'clock.