§ Mr. SawfordTo ask the President of the Board of Trade if she will make a statement on the recently published proposals by the European Commission for reform of the European Structural and Cohesion Funds. [43435]
§ Mrs. RocheThe draft regulations for the Structural and Cohesion Funds covering the operation of the Funds from the years 2000 to 2006 were published on 18 March as part of a wider Agenda 2000 package.
It is important that the Structural and Cohesion Funds be reformed to make them more effective and to provide better value for money. The Funds' procedures are in need of substantial simplification and the prospect of enlargement of the EU to include Central and Eastern European countries makes this reform vital in any event.
During the long negotiations ahead we will be striving to achieve three main aims for the UK and its regions—these are fairness, affordability and durability.
Fairness means that no Member State should receive more than at present. Regions which continue to be eligible under the reformed criteria should not see an increase in per capita receipts while others face cuts. The cost of enlargement must be shared fairly between all Member States. It is not clear that the Commission's proposals achieve fairness. The UK is willing to take its fair share of cuts but could not accept an obviously unfair allocation.
In order to achieve affordability and durability, the total budget for the Funds should be well below the 0.46 per cent. of GNP proposed by the Commission. It will be vitally important to reduce the cost and per capita receipts before accession in order to make enlargement of the EU affordable and therefore long lasting and durable.
The Commission has proposed that the current 7 Objectives be reduced to 3 new ones. The proposed Objective 1 eligibility criterion is 75 per cent. of average EU GDP. The Government agree that a cut off is needed. There should, however, be flexibility around this level to allow for statistical margins of error. We also feel that any special cases should be translated across the EU. For example, the Scottish Highlands and Islands Objective 1 area, with a population density of about 9 people per sq km, should receive the same treatment as similar areas in northern Sweden and Finland.
The special circumstances of Northern Ireland and the ongoing political developments there should be recognised. Northern Ireland should certainly receive treatment at least as good as the richer Republic of Ireland.
For the new Objective 2, the Commission is proposing using unemployment as the main eligibility criterion. The last-minute concession of safety net limiting the reduction of population coverage to one third is an improvement on the initial proposals. But in our view GDP would be the most equitable and transparent basis for distributing Funds between Member States and determining total eligibility in each Member State.
Regional unemployment and other factors are better used to allocate money within Member States. There is a far greater range and quality of deprivation indicators for 542W local areas available nationally than at EU level. The length of reference period is important; measures of unemployment should take account of business cycles.
Transition periods for those areas losing eligibility under the new regime should be of equal length for all Objectives—six years for Objective 2 and 5b, the same as for Objective 1.
The new Objective 3 would apply only outside Objective 1 and 2 areas. It would provide a policy framework for the development of human resources across the UK. We believe that Objective 3 must support Member States' employment strategies as set out in their National Employment Action Plans.
We support the objective of simplifying the Funds and making them more effective and better value for money. The Commission proposals are a good starting point. Administration must be improved, ensuring adequate appraisal monitoring and evaluation, and more subsidiarity should be introduced.
The Funds make an important contribution to economic development in the UK regions. The Government are consulting widely and will be working to ensure that the detailed arrangements for the allocation of the Funds take account of the UK's regional interests, and that they are fair to the UK as a whole. It is, however, too early to estimate the impact on individual UK regions. Publication of the Regulations marks the start of a long negotiation initially under the UK Presidency and continuing possibly into 1999. The Regulations will have to be agreed in the Council of Ministers and approved by the European Parliament.