HC Deb 17 September 2003 vol 410 cc53-6WS
The Secretary of State for Trade and Industry(Ms Patricia Hewitt)

The Government's long-term economic goal is to achieve high and stable levels of growth and employment. Regional policy is at the heart of our efforts to achieve this goal—ensuring that every UK nation and region fulfils its economic potential, that all parts of the country share in rising prosperity, and that economic disparities between our nations and regions are identified and addressed.

In March, we put forward for consultation a proposal to reform the EU Structural and Cohesion Funds through the establishment of an EU Framework for Devolved Regional Policy. We argued that this offered the best way to reform EU regional policy so that it supported the domestic regional agenda and responded to the challenge of EU enlargement in a fair and sustainable way.

Since then, we have received almost three hundred written responses, and I would like to thank everyone who has taken the time to engage in the consultation, either in writing or through the consultation events that we have held throughout the UK. Our overall conclusion, in the light of the responses received, is that the Government's proposed EU Framework for Devolved Regional Policy provides the best context in which to develop future arrangements for EU and UK regional policy, that it can be built on to address the key points raised during the consultation exercise, and therefore that it should form the basis of our negotiating position in Europe.

I am making this short statement today because I wanted to take an early opportunity to explain how the Government propose to move forward in the light of the consultation. Further work, in consultation with key stakeholders, will now be set in hand to flesh out the details of our proposal and to respond to questions and concerns raised in the consultation. This will be the subject of a more detailed statement on the EU Framework and how we see it operating after the recess.


The proposals we put forward in the consultation were based on the following key objectives: We want a EU regional policy that fully supports, and adds value to, the ambitious devolution, decentralisation and regional development agenda already being pursued domestically. We want significantly simpler and more flexible implementation and monitoring arrangements, which are proportionate to the amount of funding available and which allow integration with other policies. We want EU regional policy actively to support the EU's agenda set at Lisbon and elsewhere for higher productivity and employment and for developing human resources. While being in no doubt about the continued need for strong regional policy in all Member States, we believe that it is both fair, and the most effective use of funds, to concentrate the EU's limited financial and administrative resources on the poorest Member States, where they will add most value. And we must also ensure that expenditure on EU regional policy, as with other elements of the EU budget, achieves a fair budgetary deal for the UK taxpayer.

The responses to the consultation are being published on the DTI website today. The vast majority of those who commented on the overall aims for reform of EU regional and cohesion policy supported these key objectives. On issues such as the need for increased flexibility, state aid reforms, and reduced bureaucracy, the majority of respondents also agreed that these should be priorities for reform. Many also supported our view that, in the context of enlargement, current arrangements are unsustainable, and a number of respondents recognised that the UK cannot expect its current level of EU Structural Fund receipts to be maintained after 2006.

On our proposed EU Framework for Devolved Regional Policy, a small number of respondents expressed wholehearted support for the approach. Some others were firmly against it, and favoured an alternative approach in which Structural Funds would be retained in all Member States including the UK. But the great majority emphasised a desire for more information about the proposal and how it would operate in practice. The further work we are now setting in hand will respond to this.

More specifically, in consultation with others we shall be working to provide further information on: the structure and content of the EU Framework and how it would operate at Member State and European levels; the ways in which the Framework would complement our domestic regional policy agenda; how the Government's guarantee to increased domestic funding for regional policy would be met, in the event that the EU Framework approach is adopted, with more information on the scale and duration of the guarantee; possible delivery mechanisms for increased domestic funding, designed to ensure that the best aspects of Structural Funds are retained in a simpler and more streamlined system; the ways in which different domestic policy agendas, for example urban and rural regeneration and the need to continue to support activities in the National Action Plan for Employment, including priorities such as employability, skills and social inclusion, would be incorporated in the new approach; the relationship of the EU Framework approach to developments in other European policy areas such as reform of the State Aid Regime, the Common Agricultural Policy and the European Employment Strategy.

In addition to this work, officials will need to consider separately what the proposed approach should be to future PEACE funding in Northern Ireland.


The Government remain fully signed up to the objectives for European regional policy we set out in March. We welcome the support we have received for these objectives, and continue to believe that the EU Framework approach provides he best way forward to address them. We have concluded that the responses to the consultation exercise provide a basis for building on the approach set out so far, on which further work will now be taken forward. In the meantime the approach will now form the basis of the Government's position in forthcoming discussions and negotiations with our EU partners.

By responding to the challenge of enlargement, by focusing EU resources on the poorest member states, by agreeing EU-wide objectives and giving European regions greater flexibility within that framework, I believe we can achieve an outcome that is best for the new member states, for Europe, and for the nations and regions of the United Kingdom.