European Union Budget

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 10th March 2005.

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Photo of Ms Joyce Quin Ms Joyce Quin Labour, Gateshead East and Washington West 11:30 am, 10th March 2005

What recent discussions he has had with the voluntary sector concerning his Department's negotiations with EU partners about the future of the EU budget.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

Treasury Ministers regularly meet representatives of the voluntary sector. Discussions have covered United Kingdom calls for reform of the European Union budget, including our call for its stabilisation at no more than 1 per cent. of EU gross national income.

Photo of Ms Joyce Quin Ms Joyce Quin Labour, Gateshead East and Washington West

As my hon. Friend knows, in areas such as the north-east the voluntary sector has been very successful in tapping into European funds, but faces financial uncertainty because of changes in that funding as well as in lottery and single regeneration budget funding. Given the huge contribution that the voluntary sector makes to economic and social regeneration throughout the country, will my hon. Friend undertake to consult the sector and listen to its views in order to safeguard its vital work for the future?

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

Yes, I shall certainly want to listen to the views of organisations in the voluntary and community sector. I agree with my right hon. Friend about the importance of their contribution in the north-east—she has spoken to me about the Invest 2006 campaign—and elsewhere in the country, including work funded partly by European structural funds. Three quarters of the money, however, currently comes from the UK Government rather than the EU. For every pound of structural fund money that we receive, we pay out £1.60.

I think my right hon. Friend will agree that there is no value in rich EU member states merely swapping regional funds among themselves. We want structural funds to go to poor member states; but we have given a guarantee that if our proposals are accepted, we will increase UK funding so that the UK nations and English regions do not lose out. We will certainly want to take full account of the views of organisations in the voluntary and community sector when we do that.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs), Shadow Minister (Transport)

In the light of the Minister's answer to the question from Joyce Quin and the Chancellor's rather emotional outburst in Brussels this week, does the Minister accept that member states should decide how to raise taxes and spend EU funds? Is there not a remarkable distortion of the system at present, in that nearly all the structural funds are being spent in Labour-controlled constituencies?

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

The hon. Lady must know that objective criteria are used, and always have been.

We see a pressing need for reform of the structural fund system. At present, substantial sums are effectively being swapped between rich member states. They should be being used to support the less well-off member states: that is where they could do the most good. The Government's commitment to regional funding remains very strong.

Photo of David Cairns David Cairns PPS (Malcolm Wicks, Minister of State), Department for Work and Pensions

I represent a Labour-controlled constituency in which industry was decimated in the 1980s and poverty increased. We are extremely grateful for the assistance that has come to the constituency from European funds, and for the massive extra investment that has come directly from the Government. Does my hon. Friend accept, however, that there is still uncertainty in the voluntary sector and elsewhere about what the future holds, and that it is important to discuss with voluntary organisations ways in which they can address themselves to the new reality and the increased funding that will come through central Government and the Scottish Executive?

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

I do agree with that. The Luxembourg presidency aims to conclude the budget discussions by June this year. We shall have to see how it gets on, but it is important for everyone who is affected to be given the information that they need as soon as possible.