Economic Regeneration Funding

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 8 December 2005.

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Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell 10:30, 8 December 2005

What progress has been made on Government proposals to repatriate economic regeneration funding from the EU.

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

The Government's approach to the reform of structural and cohesion funds for the period 2007–13 has called for greater focus on new member states, more freedom and flexibility for structural fund spending within member states, and a greater focus on the Lisbon agenda for productivity and growth. That approach is set out in the negotiating box tabled by the Foreign Secretary on Monday 5 December, which reflected the views of all member states.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat, Truro and St Austell

Before the general election, the Chancellor pursued a policy of getting billions back from the European Union to the UK by repatriating regeneration funds. Since the general election, it seems that the Prime Minister has been pursuing a policy of giving away billions of pounds to the EU by giving up part of our rebate. What is the Treasury view on this apparent U-turn in policy?

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

We do not accept that that analysis is accurate. The negotiations are ongoing, and we cannot make commitments on specific regions. Under the UK proposals, which were tabled this week, receipts would be the same as those under the previous proposals from Luxembourg. It is important to recognise that three quarters of regional funding is already provided domestically. This year, the South West of England Regional Development Agency has a budget of £153 million to invest in the economic development and regeneration of Cornwall and the wider south-west region.

Photo of Andrew Love Andrew Love Labour, Edmonton

When my hon. Friend considers the future of structural funding, will he take into account the decision by my Conservative-controlled local authority to turn down £1 million of economic development funding because it does not want to match fund, which will affect the most vulnerable and deprived in my community? Is that not an early example of the hypocrisy and double standards of the Conservative party?

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

Of course, I agree with my hon. Friend. However the Conservative party tries to rebrand itself, it will always stand for the same ideology and philosophy, which does not involve using resources to help some of our more disadvantaged communities. Any decisions that we make in the future will take account of that local authority's failure to provide the right local leadership.

Photo of Adam Price Adam Price Spokesperson (Economy and Taxation; Education & Skills; Miner's Compensation; Regeneration; Trade & Industry)

In the proposals set out on Monday, the Government are offering more flexibility on the timing of expenditure and the required level of match funding in return for a 10 per cent. cut in the structural funds compared with the Luxembourg proposals Will the Minister confirm that that new flexibility will be available to convergence fund regions in the UK such as west Wales and the valleys as well as to the EU 10?

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

As I have said, the most important difference that we make involves the money that we spend in the United Kingdom on regional policy. We will take account of the concern expressed by the hon. Gentleman.

Photo of Chris Bryant Chris Bryant PPS (Rt Hon Lord Falconer of Thoroton, Secretary of State), Department for Constitutional Affairs

The Minister knows that because of the extraordinary success of this Government's economic policy, Wales in particular has strode ahead economically, so much so that we may no longer qualify for funds that are available to regions because of poverty. Will he guarantee that whatever happens in the EU negotiations over the next two weeks, he will continue to work with colleagues in the Welsh Assembly to make sure that the economy in the south Wales valleys continues to be regenerated?

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

I agree with my hon. Friend. A combination of macro-economic stability and labour market intervention through the new deal to create new jobs has been at the centre of the Government's policies on social justice and economic growth. Those policies will continue, and we will continue to work with elected representatives in Wales to ensure that the prosperity that is developing continues to grow into the future.

Photo of Richard Spring Richard Spring Shadow Minister, Treasury

In his Mansion house speech, the Chancellor talked about the necessity of EU economic reform, and the Prime Minister has subsequently discussed budgetary reform. Could the Government ever have imagined that issues such as economic regeneration funding would inflame the new member countries and have the French running rings around us over the common agricultural policy? Given that our EU presidency has been marked by isolation, incompetence and lack of preparation, will the Minister take this opportunity to apologise for both the lack of reform and our national humiliation?

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

That contribution demonstrates why the Conservative party will never be fit to be in government. We are in the middle of the most sensitive negotiations and hold the EU presidency, and Her Majesty's Opposition are seeking to undermine the Government in those negotiations. The only change on abatement occurred because we believe that we should pay our fair share of the costs of enlargement. Does the Conservative party believe that we should pay our fair share of the costs of enlargement?

Photo of Keith Vaz Keith Vaz Labour, Leicester East

Of course the Minister is right that the first duty of any Government in negotiations is to protect Britain's position but, as he also said, there is a cost to enlargement. The Conservatives supported enlargement, as did the whole European Union. It would be completely unfair to hamper the new member states because they do not have the funds fully to integrate into the European Union. I wish my hon. Friend well in the negotiations and ask him to remember that the future of Europe depends on our ability to treat all nations equally, which means giving the necessary funds to new member states.

Photo of Ivan Lewis Ivan Lewis The Economic Secretary to the Treasury

I entirely agree with my hon. Friend, who has a lot of expertise in this area. The changes that we have made to the negotiating position so far are about ensuring that this country pays its fair share of the costs of enlargement. I assume that the Conservatives would believe that to be the correct policy. We will be willing to make other significant changes in terms of the rebate only if the French radically change their position on the common agricultural policy. That has remained this country's position throughout the negotiations.