Regional Policy

Oral Answers to Questions — Trade and Industry – in the House of Commons at 1:47 pm on 22nd January 1997.

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Photo of Dr Lewis Moonie Dr Lewis Moonie , Kirkcaldy 1:47 pm, 22nd January 1997

To ask the President of the Board of Trade if he will make a statement on the significance of the European Commission's first cohesion report for the regional policy of the United Kingdom. [10590]

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

To ask the President of the Board of Trade if he will make a statement on the impact of the European Commission's first cohesion report on regional policy in the United Kingdom. [10597]

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

As I informed the hon. Member for Wolverhampton, South-East (Mr. Turner) on 4 December, Official Report, column 696, the European Commission's cohesion report shows that the UK is one of the few EU countries where regional unemployment differences have decreased. It also shows that, since 1989, there has been a narrowing of relative gross domestic product per capita between UK regions.

Photo of Dr Lewis Moonie Dr Lewis Moonie , Kirkcaldy

How does the Minister explain the fact that, according to the report, the gap between the richest and poorest regions in the UK has widened over the past 10 years? Does that not betray the abject failure of his regional policy?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

I suggest that the hon. Gentleman rereads the report because it deals not with wealth and poverty but with differences in wealth. [HON. MEMBERS: "Oh!"] There is a difference, which I shall explain. If the UK experienced growth in every region but some regions grew slightly faster than others, it would be a matter for comment in the report. That has happened in many UK regions. The report is an interesting discussion document, but it ends in 1993 and does not take account of the recovery since then.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

Contrary to what the Minister says, the report also shows that the gap between rich and poor has widened and that the number of people living below the poverty line has increased. Given that the report fits in well with reports from the Institute for Fiscal Studies, the Joseph Rowntree Foundation and others, will the Minister not dismiss the report but admit that there is an urgent problem that must be tackled?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

I am not dismissing the report, which is a useful discussion document. I simply do not draw the same conclusions as do some Opposition Members. The report also shows that, in 1983, eight UK regions were among the 25 EU regions with the highest unemployment levels. By 1993, there was none, such has been our success in creating employment. The report also reveals that the long-term unemployed have shared in the UK recovery: the number is down by 500,000 since its peak in 1986.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

What effect would it have on regions in England, especially northern England, if employees in companies in the Scottish region were subject to additional personal taxation? Would not a tartan tax provide an unfortunate and unfair inducement to investment in England?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

My hon. Friend makes a good point. The tartan tax would have an effect similar to that of a minimum wage. It would mean that the most vulnerable people in work would be sacked.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

When considering the long-term implications of the report, will my hon. Friend bear in mind that the United Kingdom has, in comparison with many continental countries, done exceedingly well? If the momentum to greater prosperity in Britain is to be maintained, there is no point in the UK continuing to provide more and more taxpayers' money for a fund that, if successful, will lead to jobs being transferred from Britain to other parts of the Union.

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

I hear what my hon. Friend says. It is important that, across Europe, the British idea of reducing state aid is applied. That policy must continue. Once temporary problems have been sorted out, it is our policy to ensure that state aid in EU member states is reduced, and eventually eliminated. That is the way to secure long-term jobs that are based on the productivity, success and competitiveness of private companies.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley Leader and Party President, Plaid Cymru

Is the Minister aware that the gross domestic product per head in Wales has dropped from 92 per cent. of the European Union average 15 years ago to only 83 per cent. now? We were overtaken last year by the Irish Republic, which in the past 12 months has accelerated ahead to the extent that it now has a GDP per head 9.3 per cent. greater than Wales yet the Irish Republic is receiving all the benefits of the cohesion funds. Can the Minister ensure that the benefits from the European Union come to areas such as Wales which have a need in terms of GDP per head when the fund is renegotiated in 1999?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

Wales has done well in the recent past, but one of the problems that the cohesion report identifies is what happens to aid to EU member states when circumstances change. The report mentions Ireland as an example of where perhaps in the present circumstances a country should not receive the aid that it has received in the past. That is something that we shall want to see clearly dealt with in future discussions.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

Can my right hon. Friend confirm that youth unemployment in Britain is about two thirds of the European average? Is that not the most powerful reason for rejecting the job-killing social chapter so beloved of the Labour party? With its inflexibilities, the social chapter does so much to damage the prospects of the least well-off and most vulnerable in society.

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

My hon. Friend is right. Youth unemployment in the United Kingdom is only two thirds of the EU average. We need to do more, but the figures show that the number of 16 to 18-year-olds in education and training in the United Kingdom continues to rise. That is good news.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Trade and Industry)

What steps do the Government take to monitor where regional selective assistance and other Government regional aid goes? How confident is the Minister that, since the redrawing of the assisted areas maps, the Government's effort in the regions is going where it is wanted, unlike the sort of measures to which he has referred in his answers?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

The hon. Gentleman makes a fair point. We have a network of monitoring committees which assess the value of schemes which can apply for structural funds. From time to time, the Department asks for reports back on how the schemes have been implemented. That dialogue must continue so that we can ensure that we are getting value for money, and that structural funds go to the areas of greatest need.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Does the report make the point that, while in the 1970s unemployment in Scotland was much higher than in other parts of the United Kingdom, that is no longer the case? Is that not the most effective form of regional policy, which the hon. Member for Kirkcaldy (Dr. Moonie) should have had the grace to welcome?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

That is indeed the case. The report reveals that the United Kingdom has more of its working-age population in work than any other large EU country. In the United Kingdom, the proportion is more than 68 per cent. In France, it is only 60 per cent. and in Germany, it is only 65 per cent.

Photo of Geoff Hoon Geoff Hoon , Ashfield

The EU Commission's cohesion report highlights Britain's relatively poor national and regional economic performance over the longer term in comparison with other EU member states. Does the Minister agree with the report of the Commission on Public Policy and British Business that that is the result of a disproportionately high number of underperforming British companies—underinvestment—insufficient high quality training and education—unsteady government policy"? If the Minister, like the Deputy Prime Minister, cannot bring himself to agree with the conclusions of that independent report produced by some of Britain's most distinguished business leaders, does he agree with his Government's third competitiveness White Paper, which concludes that The same factors mean that Britain has a much larger proportion of poor company performance than France, Germany or Italy"?

Photo of Greg Knight Greg Knight Minister of State (Energy and Industry)

I certainly do not agree with the conclusions of the socialist think tank report. Employment is the key issue which runs through every page of the cohesion report. What is clear from the report is that here in the United Kingdom we are winning on the employment front. We are winning on youth employment, employment for women and getting the long-term unemployed back to work. That is what matters.