EU REGIONAL POLICY LINKS

UK REGIONAL POLICY LINKS

PRESS COMMENT ON THE FUTURE OF EU REGIONAL POLICY :
FINANCIAL TIMES(UK)ON-LINE

Brown calls for EU aid funds to be 'repatriated' By Andrew Grice, Political Editor 06 March 2003 TIMES UK

Britain will call today for the European Union's annual €30bn aid programme for the EU's poorest regions to be handed back to its 15 member states. The proposal to "repatriate" the regional and structural funds is bound to provoke criticism from the European Commission and claims that Britain is seeking to opt out of a key plank of EU policy. British ministers fear the aid programme will balloon by up to 50 per cent when 10 new member states join the EU next year. They say the EU's efforts should then be redirected to the East European countries where the money will be most needed, allowing the 15 existing members to take control of their own regional policy. At present, Britain contributes an estimated €3.6bn (£2.5bn) and receives aid payments worth about €2bn. Ministers admit Britain would still have to pay some money into EU coffers to ensure the East European nations receive aid. But they want to assume responsibility for payments to Britain's poor areas. The Government's policy will be announced in a consultation document published today by Gordon Brown, the Chancellor, John Prescott, the Deputy Prime Minister, and Patricia Hewitt, the Trade and Industry Secretary. The ministers believe the Commission's plans are unsustainable because they would preserve current aid policies. Spending is already due to rise to €40bn by 2006 and the British paper will warn that another huge rise will be needed because of economic problems in the new member states. Regions which benefit from the Brussels funds fear the EU's expansion will result in them suffering cuts in their aid. In an attempt to allay their fears, the Government will promise to maintain payments at their current levels unless the areas become richer. The main beneficiaries are Merseyside, South Yorkshire, Cornwall, west Wales, the Welsh valleys, Northern Ireland and Scotland's Highlands and Islands. Britain will answer its EU critics by saying such a policy would be in line with the principle of "subsidiarity" under which decisions are devolved to member states where possible. A fierce debate is looming inside the EU over the future of its aid programme. Mr Brown has already clashed with Brussels over his calls for economic reform inside the EU and his criticism of the European Central Bank. The programme aims to correct economic imbalances between the wealthiest and poorest regions of Europe. In Greece, Portugal and Spain, the average gross domestic product per head is 80 per cent of of the EU average, while Luxembourg exceeds the average by more than 60 per cent. The spending takes up about a third of the EU budget and funds projects such as job creation inareas hit by industrial decline and rural development.

**********

An odd way to announce a new policy

Leader Friday March 7, 2003 The Guardian UK

A radical new British government policy on European Union regional spending was announced yesterday by Gordon Brown in a newspaper article. The event raises several issues, of which the policy itself, important though it is, is only one. Another is the continuing wretched precedent of making such an announcement in a newspaper. You might have thought, by now, that Labour would have learned not to do things in this essentially underhand way. Isn't the government supposed to have renounced spin? Where do media games like this leave the credibility of that policy? It would surely have been better to have held a proper open public launch or, best of all, to have announced the policy to MPs in parliament. A further problem is that it was Mr Brown who led the launch. The responsibility for regional policy in this government lies with the Office of the Deputy Prime Minister, not with the Treasury. Both the DTI and the Foreign Office have a legitimate stake in the policy as well. So why did John Prescott not make the announcement yesterday instead of the chancellor? The suspicion is that Mr Brown has annexed yet another area of policy for the Greater Treasury, and is now bending it to his own purposes. Since the policy involves Europe, a subject that brings out the worst in Mr Brown, this is a move that should be watched with some anxiety. Regional policy may be a glaze-over subject for many people, especially when there is a war in the offing. But regional aid is massively important and full of wider implications, especially in the European Union context. With the exception of the common agricultural policy, redistributive regional aid is the biggest budgetary item in the whole EU. Over the past quarter century no single policy has done more to lift the poorest nations of the EU to the level of the richest. It has helped make Ireland, Spain, Greece and Portugal into modern nations and lifted up other areas. It has been one of the EU's most visible and admirable achievements. To repatriate the bulk of the regional aid budget to the EU nations is not the sort of policy change which Britain, a net payer in this redistributive process, should adopt without the fullest thought. This is not to say that EU regional policy can remain where it is. The accession of 10 new nations, most of them poor, many of them emerging from one-party rule, places demands on the existing transfer formula, and on the overall regional aid budget, which would be unsupportable without radical change. A hand-up on the scale of that offered to the southern Mediterranean nations a generation ago is not on offer. To bring the new nations up to a level even close to that of the existing 15 would involve major sacrifices not just for Britain (whose own needy regions might lose out in the change) but for countries which have hitherto been net payees (this is one reason why Ireland, for example, has been so reluctant until recently to sign up to expansion). Inequality between the UK regions is large. Compared with average per capita GDP across the EU, we range between Merseyside's and west Wales's 70% and the 130% in Berkshire, Buckinghamshire and Oxfordshire. But the national average in Greece and Portugal remains only 68% of the EU average, while in Poland, largest of the applicant nations, the national average is a mere 39% of the EU figure. The UK government has not yet made the case that the only or best solution to these disparities is to repatriate the regional aid budget to the nations, as Mr Brown decreed yesterday with such unfortunate peremptoriness.

**********

Chancellor lobs grenade at Europe

Daily Telegraph UK 9 March 03 Bill Jamieson

WHAT is to be the future of Europe? Who will shape it, and with what resources? Into the debate that will transform the European Union as we know it, Gordon Brown has tossed a fizzing grenade: an attack at the heart of its funding system. The way the EU controls and distributes regional aid and structural funds is, the Chancellor declared last week, over-centralised, inflexible and in urgent need of wholesale devolution, not just to national, but to regional level. The sums involved are colossal. The overall EU structural and cohesion fund budget for the years 2000 to 2006 is 213bn (£146bn). There is also an additional allocation for new member states in the latter two years of this period of 21.7bn. The combined total of 235bn is equivalent to the gross domestic product of Latvia, Slovenia, Slovakia, Lithuania, Romania, the Czech Republic, Hungary and Poland combined. This gives Brussels enormous log-rolling power at the centre where the funds are administered and disbursed. Of the straight total of 213bn, 195bn comprise structural funds. This money is allocated by Brussels to achieve three main objectives. Objective 1, for regions where GDP per head is less than 75% of the EU average, gets 70% of all structural fund money. Objective 2 - "supporting the economic and social conversion of areas facing structural difficulties", gets 12% of the budget. Objective 3 is an exotic catch-all of political good intention - or, for the sceptical, a slush fund. Its disbursements are to support "the adaptation and modernising of policies and systems of education, training and employment." Over this period the UK will receive some £10bn of EU structural funds. Objective 1 projects account for just under one third of this allocation and cover just 9% of the population. This allocation is lower than the EU average as the UK regions have a GDP per head towards the top of the scale. The four Objective 1 regions in the UK are Merseyside, South Yorkshire, Cornwall (and the Scilly isles) and West Wales and the Valleys. ‘The money is spent, not as the UK, but as Brussels, decides’ Brown declared last week that Britain, not Brussels, should decide how the UK’s money is spent. "We’ve got to get away from the idea that you need inflexible, centralised rules coming out of Brussels. What you actually need is local freedom, local discretion so that we can make the right economic decisions in our own localities." Far from this being a private or passing whim of the Chancellor’s, last week’s statement carried supporting quotes from John Prescott, the Deputy Prime Minister ("the future of control of regional economic policy is moving from Brussels to London") and Patricia Hewitt, the Trade and Industry Secretary. Just to make sure the point was not lost up north, Helen Liddell, the Scottish Secretary, declared: "decision making power and funding for regional policy should be moved from the EU to the UK. We will cascade it onwards to the nations and regions." So what lies behind this sudden hunger for cascading? It could be seen as a splendid piece of political camouflage to disguise an agreement by the UK to cough up yet more money for the EU budget and the coming loss of regional funds for the UK. As matters stand, the UK is set to lose much of its current structural fund support due to enlargement and the stronger performance of the UK economy relative to the EU. Current Objective 1 regions (with the possible exception of Cornwall) and many Objective 2 regions would no longer receive aid, although there may be some transitional support. The UK would retain Objective 3 and Community Initiative receipts, although not at their current level. This reform agenda arguably gives the Chancellor a bargaining tool and a means of offsetting some of the political damage inevitably suffered. Whatever the Chancellor’s real objectives here, his critique calls into fundamental question the logic of having a centralised regional fund assessment and disbursement system at all. This is the system, after all, by which the EU sells itself to applicant countries and to the poorer regions - as a supranational agency of wealth and resource redistribution. Economic efficiency, still less overall enhanced performance, have little to do with it. As Andrew Marr, the BBC’s political editor summed up the implications last week, "To suggest taking it away, repatriating it back to the countries, is immensely provocative. And that’s just the start. "Gordon Brown is also hugely critical of the ideas for the future of Europe being put forward by the Convention [on the future of Europe] and is going to be making more speeches about all the problems inside the EU.

**********

The future of regional policy Making the most of Structural Funds in an enlarged EU

EIS/LGIB November 2002

Jon Bloomfield Head of European and International Division, Birmingham City Council

The debate on the future of EU regional policy is already beginning to bubble away. In early 2001 the Commission produced its second Cohesion Report. Since then, on a number of occasions, Commissioner Barnier has stressed how important it is to the future of Europe that a coherent, comprehensive regional policy is maintained after the Union is enlarged to 25 Member States. He has also indicated that the share of the Union's GDP devoted to regional policy and Structural Funds will need to rise. In a speech in London in November, Commissioner Neil Kinnock reemphasised this outlook. Referring to existing EU Member States, he said, "Economic transition will be continuing long after 2006 and the UK and other governments in current Member States will want to retain and will retain support for areas going through those changes… Monetary unions require fiscal transfers - including economic development support to facilitate stability and broad growth. The European Monetary Union is no exception to that. Regional development funding will therefore continue to be a necessary component of monetary union long after the present budgetary arrangements end in 2006." These views are in contrast to a number of strands of political and bureaucratic opinion who wish to minimise and downgrade both the importance of European regional policy and the funds attached to them. They claim that they add little value at a European level and that the resources devoted to these activities should be a matter for national Member States rather than for the European Union. The drive for 'renationalisation' has advocates within the British government and appears to be a main motivating factor in a draft report prepared for the Department for Trade and Industry on the future of the Structural Funds. These sentiments chime in with those of neo-liberal economists and politicians who want minimal government intervention and, with the enlargement of the EU, see no case for the continuation of any significant Structural Fund support in the existing 15 Member States. At present, EU regional policy meets a number of key needs. Most importantly it has helped, and continues to help, economically backward and lagging regions to undertake economic and social renewal. Furthermore, the funds have specifically helped address the problems of economically deprived urban areas where there have been additional concentrations of poverty and discrimination.Less consistently, they have given added value by encouraging the development and transfer of best practice across the whole range of regeneration activities and have begun to help the Union stave off the worst effects of unbalanced, lop-sided development. The desire to ensure balanced polycentric development across the Union as a whole - the preservation of green belts - requires a continuation of strong regional policy.It is clear that all these needs will still have to be met in a post enlargement era. At the same time, there are two new crucial elements which reinforce and reinvigorate the case for a Europe-wide regional policy. Firstly, the EU is going to have to respond to the introduction in people's pockets of the euro. The overall beneficial effects of the economic introduction of the euro, in terms of transparency of prices and lowering of costs, will have differing effects across the Union. This will require the EU to have fiscal instruments available which will enable it to make appropriate focused interventions to help adversely affected regions. Secondly, there is also no doubt that in an era of globalisation, significant population movements are here to stay. They are already having a major impact on the big towns and cities of Europe. The EU is about to introduce common immigration and asylum policies. Alongside these it requires structured, social support mechanisms to ensure the effective integration, with minimal disruption, of migrants, refugees and asylum seekers in the towns and cities of Europe. Thus, here are two key growing needs that will require intervention to fulfil the Union's twin objectives of sustainable economic development combined with social justice.Given these needs there is a clear, resounding case for the continuation and development of an EU regional policy. As at present, it should touch all parts of the European Union. However, needs differ in different countries. In an enlarged Union there will need to be more than just three Objectives to respond to the differing scale of needs.To achieve this a strong myth must quickly be dispelled. Within the current financial ceilings allocated by the Council of Ministers, there are still significant resources available after 2006 to ensure a strong regional policy which addresses both.

**********

Collision course set over EU funds

06|03|2003 LGIB/EIS

The Government’s call for EU regional funding to be renationalised will set it at odds with delegates and speakers at a Local Government International Bureau conference taking place today who will argue that the EU adds value. Ministers fear that the EU’s Structural Funds, which are aimed at Europe’s poorest regions, will swell by up to 50% when ten Central and Eastern European countries join the EU next year. The next round of funding is due to begin in 2007. Though the Government recognises that the UK should still contribute towards ensuring that the new Member States receive aid, they would like for the current 15 members to take over responsibility for payments to their own poor areas. They argue that this would fit with the EU’s commitment to subsidiarity, that is, taking decisions to the most appropriate level, closest to the people they will affect. It is an open secret that most of the UK’s most deprived areas will lose their entitlement to the most generous form of EU funding, Objective 1, after 2006. Their disqualification comes because, to be eligible for Objective 1 funding, areas must have a Gross Domestic Product of below 75% of EU average. Based on current economic figures, when new countries join the EU from Central and Eastern Europe, the effect will be to push up UK regions’ GDP against the new, lower average, with the result that Merseyside, West Wales and the Valleys and South Yorkshire would no longer qualify. Only Cornwall would retain Objective 1 status. The Government's policy will be announced in a consultation document published today by Chancellor Gordon Brown, Deputy Prime Minister John Prescott and Trade and Industry Secretary Patricia Hewitt. Contributions are welcome until 4 July. The announcement is at odds with the Local Government Association’s view on the future of the Structural Funds and of cohesion policy. Its second annual cohesion conference, held last year, strongly supported the case for a continued European regional policy. “Renationalisation or repatriation of regional development policy back to Member States is not desirable because the longer term strategic approach offered by European programmes would be lost,” said Cllr David Sparks. Without an EU approach, networks, structured sharing of experience, frameworks for balanced development, human resource development and harmonisation of standards (such as the mutual recognition of equivalent educational qualifications) would be in jeopardy. “They are as much an expression of a common purpose as actual financial transfers and should play an essential role in delivering cohesion policy,” he said. Today’s third annual conference will help produce an update to that position, which will feed into a European Commission report, expected by the year, setting out future cohesion funding for the enlarged EU.

**********

REGIONA AND RENEWAL March 20 2003 Experts think Brown is playing games with aid

Whitehall’s bid to drag control over regional aid back from Brussels is a political bargaining chip born of the Chancellor’s frustration with the European Commission (EC). That is the view of key regeneration commentators, who feel that Gordon Brown’s proposal to renationalise European structural funding may be designed to jostle EC chiefs into relaxing state aid rules and moving toward a fairer, slimmed-down Common Agricultural Policy (CAP). The plan has financial attractions for the UK, which faces giving away virtually all its £2.5 billion regional aid contribution to the ten nations joining in 2004. But the Eurocities group, which represents the 14 largest cities in the UK, opposes the move on the grounds that would harm European cohesion. A spokesman for the group this week added that the move may be further designed to show the EC that the UK will act in its own interests if other member states insist on doing the same. He said: “It was the preferred position of the UK Government that only with the reform of CAP could they afford to take on ten new countries. However, France and Germany suggested transitional arrangements which largely helped France and Germany. I can well see why the Government would take this stance – it is almost saying: ‘Sod you then, you aren’t playing ball, so we aren’t going to play ball.’” A senior regional source agreed, adding that the move was devised to erode EU resistance to slackening state aid rules, which the Chancellor feels are hampering UK regeneration. “[Brown’s policy document] mentions state aid quite a lot,” he said. “It must be a positioning statement.” Consultant Dominic Williams, who has been involved with the campaign to change state aid legislation, said: “The rest of us have been frustrated with the difficulties of dealing with the EC over the years… and Chancellor Brown is getting quite angry as well.” A Treasury spokesman said: “I don’t think there’s any suggestion that we are willing to trade one thing off with the other.”

**********

Search for the Album or Artist of Your Choice! Artist Album Title Song Title