Exiting the European Union (Structural and Investment Funds)

– in the House of Commons at 3:17 pm on 19 February 2019.

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Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 3:17, 19 February 2019

I beg to move,

That the draft European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) Regulations 2019, which were laid before this House on 28 January, be approved.

When debating statutory instruments, we normally say how honoured we are to serve before the Chair, whoever he or she may be. This is the first time I have debated a statutory instrument in the Chamber, so I do not know whether I should say it is an honour to do so before you, Mr Speaker. If you took it as read, you would be entitled to do so. [Interruption.] The Opposition Whips are chuntering from a sedentary position, and they do themselves no credit.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

That is bordering on the scandalous.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Indeed so.

In a no-deal situation, this instrument will repeal the European regulations concerning the European structural funds, while ensuring that the funds can continue operating domestically. It will also repeal the regulations on the Cohesion Fund, for which we are not eligible.

The structural funds include the European regional development fund and its cross-border European territorial co-operation component, and the European social fund. The structural funds are shared management funds that support regional investment across the UK, and they are funded via the EU budget, with co-funding provided by project participants. Typical projects include the recently launched advanced engineering research centre in Sheffield, which supports economic development and upskilling in the local economy. Typical cross-border projects under the European territorial co-operation component of the structural funds include the intelligent community energy project on smart energy. Three UK universities and local small businesses are working in collaboration with French research centres and small and medium-sized enterprises to find local solutions to support low-carbon energy systems.

In a no-deal scenario, the United Kingdom is expected to lose access to European funding. To ensure that this regional funding continues in a no-deal scenario, the Government announced in 2016 that they would guarantee funding for structural funds projects signed before we leave the EU—that was extended last July to cover new projects signed after exit until the end of 2020. That guarantee covers UK beneficiaries and, exceptionally, all beneficiaries of the Peace programme in Ireland and Northern Ireland, and Interreg V-A in Ireland, Northern Ireland and Scotland. This is due to the Government’s continued commitment to support peace and reconciliation in Ireland.

This statutory instrument facilitates the domestic delivery of structural funds in a no-deal scenario. It repeals the European regulations for these funds, as they would become inoperable retained European law and therefore would not work, because the European regulations create a shared management programme between the EU and a member state. Keeping them would create obligations that the managing authorities of the funds could no longer meet after a no-deal exit.

The instrument also ensures that for European regional development fund and European social fund projects started before exit, current fund delivery rules would be upheld through existing funding agreements, without keeping redundant EU regulations. The powers to continue paying project beneficiaries in the UK already exist under our domestic law, so the instrument does not make provision for projects started after exit. Managing authorities for the funds will none the less continue to sign new projects under existing domestic powers and using existing delivery systems, with appropriate simplifications. So the main aim is to provide stability for beneficiaries, and the project rules will continue to be enforced through the same funding agreements. Hon. Members should also note that this instrument ensures that structural funds delivery remains a devolved matter.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

I will refrain from asking my hon. Friend’s opinion on a no-deal. Structural funds are there primarily to try to rebalance our economy, through regional investment right across the UK. Whether we are in the EU or out, and whatever state we are in afterwards, does he agree that it is hugely important that we spend a greater proportion of our investment on infrastructure and other economic development in the regions, rather than in the capital?

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I totally agree with everything my hon. Friend said, other than not asking my views were on no-deal. I think he knows those, and I hope most people in the House do.

Photo of John Redwood John Redwood Conservative, Wokingham

Will my hon. Friend just tell us what the dispute resolution procedure is?

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

If my right hon. Friend would bear with me, I will address that later in my remarks—I thought he was going to ask me the same question.

This instrument includes a transitional provision that enables the guarantee to be paid out to bodies involved in a European territorial co-operation programme. The power to fund beneficiaries of cross-border programmes currently comes from European law, and therefore needs to be continued in domestic law through this instrument to protect beneficiaries in a no-deal situation. That will enable the United Kingdom to continue to participate in cross-border European territorial co-operation programmes involving Northern Ireland, Ireland, and Scotland. Those programmes, known as Peace and Interreg V-A, support peace and reconciliation on the island of Ireland.

The EU has made special provisions to enable the United Kingdom to continue in both Peace and Interreg V-A in a no-deal situation, if the United Kingdom continues to pay for its share of those programmes. The transitional powers in this instrument enable the United Kingdom to make such payments to the EU to enable our continued participation in the event of a no-deal. That is consistent with our general commitments to Peace and Interreg V-A. In this arrangement, the European regulations do not need to be retained. The United Kingdom will sign an agreement with the EU to ensure that programme beneficiaries continue to follow relevant rules. The transitional provision to pay the guarantee to European territorial co-operation beneficiaries also ensures that beneficiaries of cross-border programmes other than Peace and Interreg V-A can be paid sums from the guarantee. Specifically, this provision gives Her Majesty’s Government and the devolved Administrations the appropriate powers to ensure that UK partners of such cross-border projects can receive the guarantee through domestic arrangements, to safeguard for all possible no-deal scenarios.

Among such scenarios, the House should note that in a no-deal, without further changes to the European Commission’s regulations, UK organisations would be unable to continue in the majority of European territorial co-operation programmes, other than Peace and Interreg V-A, as they would not have third country access to the programmes. This instrument is designed to enable UK partners to access funding in such a scenario. The EU has published a no-deal regulation that would allow the UK to continue participating in EU programmes in the event of a no-deal until December 2019. However, that would depend on the UK agreeing to continue to contribute to the 2019 budget as if we were a member state. This proposal is subsidiary and without prejudice to the EU’s specific proposal on Peace and Interreg V-A. The Government are currently analysing the Commission’s proposal, but hon. Members should rest assured that this instrument will allow the guarantee on European territorial co-operation programmes to be distributed in any scenario.

Without this statutory instrument, delivery Departments would not have the powers to pay out the guarantee to beneficiaries of European territorial co-operation programmes.

Without legislation, the United Kingdom would not be able to pay for its share of the Peace and Interreg V-A programmes involving Northern Ireland. That would mean we could not take part in these two important programmes, and current beneficiaries of those programmes would be at financial risk.

I mentioned briefly the separate legal provision being made by the EU for the UK to continue to participate in the Peace and Interreg V-A programmes. That provision is intended to enable continued access to the programmes in the event of no-deal, but it does not resolve the problem of payment powers. That is why we need both the EU regulation and this statutory instrument to safeguard these programmes and to ensure the continuation of their benefits.

Photo of John Redwood John Redwood Conservative, Wokingham

Before the Minister moves on from the money, will he explain how the money would be calculated, and whether we would have to make a contribution to the administration costs or just to the actual costs of the programme?

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

If I may, Mr Speaker, I will use this opportunity to answer my right hon. Friend’s earlier question about the dispute resolution. Any disputes in relation to how funding is spent are dealt with through the audit and default functions and the provisions set out in the existing funding agreements. As for his second question, I will have to give the matter some thought, as I must confess I do not know the answer. If I do not think of it in the next half an hour or so, I will certainly write to him with the answer on that. My memory is quite good and usually things come back in due course, as I know they do to you, Mr Speaker.

I mentioned that the EU is making separate legal provision for us to continue to participate in the Peace and Interreg V-A programmes. That provision is intended to enable continued access to the programmes in the event of no deal, but it does not resolve the problem of payment powers, which is why we need both the EU regulation and this statutory instrument to safeguard those programmes and to ensure the continuation of their benefits. Not having this instrument in force by exit would also prevent the Government and our devolved Administrations from paying out the guarantee to UK partners of other territorial co-operation programmes, risking their financial viability.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

I do not think anyone on the Opposition Benches objects to what the Minister is saying. In fact, I am sure that he and I agree about the catastrophe that could be a no deal. Will he care to expand on what would happen with the shared prosperity fund beyond any transition period and beyond any deal? Currently we seem not to know. The Minister is an honourable man, and it would be helpful if he could give the devolved Administrations some reassurances about how the prosperity fund will be managed and what funds will be available to regenerate communities in my constituency.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

As the hon. Gentleman—who, for the record, is also an honourable man—would expect me to say, that is not actually within the scope of this particular statutory instrument. I know, Mr Speaker, that in this case you do not have to rule on the scope of it, but the answer to the hon. Gentleman’s question is quite long, so I am happy to discuss it with him outside the Chamber, if that is acceptable to him.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I think I got away with that one, Mr Speaker, but I am not sure. [Interruption.] For now, Mr Speaker.

The House should note that this instrument is designed for a no-deal scenario. If there is a deal, the intention is to include a provision in the withdrawal agreement Bill to defer commencement of the regulations until the end of the implementation period. For that reason alone, I urge all right hon. and hon. Members to vote for the EU withdrawal agreement Bill. That deferment would mean that the regulations would come into force at that point, rather than on the date of exit.

In conclusion, in a no-deal scenario this instrument repeals redundant European law while ensuring that regional investment projects previously supported by the EU, including those supporting peace in Northern Ireland, are protected by the funding guarantee. For those reasons, I commend the regulations to the House.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy) 3:30, 19 February 2019

I thank the Minister for setting out the technical details of the statutory instrument so clearly. Here we have yet another statutory instrument that makes provision for the regulatory framework after Brexit if we crash out without a deal. The parliamentary recess has been cancelled because of the sheer volume of SIs to be dealt with before 29 March. Of the 442 laid since June, 269 have yet to be passed. Of the 20 SIs relating to the Department for Business, Energy and Industrial Strategy passed in 2019, only two had impact assessments available.

As many of my shadow ministerial colleagues have made clear, the volume and flow of secondary legislation on European Union exit is deeply worrying in the context of accountability and proper scrutiny. The Government have assured the Opposition that no policy decisions are being taken, but the establishment of a regulatory framework inevitably involves matters of judgment and raises questions about resourcing and capacity. In that light, the Opposition wish to put on record our deepest concerns about the process for the regulations.

Labour will not oppose the statutory instrument, given the importance of the European structural and investment funds to the United Kingdom. We recognise the necessity of ensuring that the requisite regulations are in place to allow the UK to manage such funding, but we have serious concerns about the scope of this SI and the Government’s complete failure to take effective action to reduce regional inequality in the UK. The Government have presided over the UK becoming the most regionally unequal country in the European Union. We are the second most unequal country in the OECD, with only Mexico ahead of us. We are home to the richest region in northern Europe—London—but we also have six of the 10 poorest regions. In London, disposable income per household is almost 60% higher than it is in Wales and in many regions in England. Transport spending per head is 15 times higher in London than it is in Yorkshire.

The Government have not only failed to tackle regional inequality, but increased it. Their local government finance settlement shows a party so beholden to ideology that they will willingly deepen the crisis in our councils, which have been

“gutted by a series of government policies.”

Those are not my words, but those of the UN special rapporteur on extreme poverty and human rights. European structural and investment funding plays a significant role in tackling just such economic and developmental disparities between regions. It is all the more important because of the impact of the past 10 years of Tory Government.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Lady refers to some figures that, I think, come from the Institute for Public Policy Research, saying that the spending in Yorkshire is 15 times lower than it is in London.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

Yes, but those figures are inaccurate. The contribution from central Government is pretty much on a par on a per capita basis. The difference comes when we add in local authority spending on transport infrastructure and private sector investment. It is about 3:1, which is still too great a differential, but it is important that we look at the figures in the round and factually, rather than at some of the headline figures.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy)

I thank the hon. Gentleman for his intervention. It is important that we look at the background to the statistics that we use. I can say to him very clearly that, for example, the statistics used by Transport for the North and other reputable bodies show consistently higher per head spending in London than in our regions, including in his and mine.

In the hon. Gentleman’s region, in my region and across the country, ESI funding supports our people, our businesses and our innovation. Those things are simply too important for us to leave questions about transition unanswered. Over the current 2014 to 2020 funding cycle, the European structural and investment funds are worth more than €19 billion to the UK, including €10 billion in direct investment. Wales alone, as one of the poorest regions in the UK, is receiving €2.4 billion in the current period. The impact of that funding is huge; the impact of losing it would be greater.

In the past 10 years, it is estimated that European Union investment has created more than 115,000 jobs and 25,000 businesses. In my constituency, funding from the European regional development fund supported the construction of The Core, part of the Newcastle Helix, and the growth of more than 800 local businesses through Supply Chain North East. Throughout the UK, EU funding has driven growth in the low-carbon economy, particularly through investment in research and innovation, and it has ensured that it is local economies that have benefited. It is not just income that the European Union funds provide: the security guaranteed by the seven-year funding cycle of structural funds allows economic planning in partnership across local authorities, the private and third sectors over a longer period than our domestic funding. That security is crucial to attracting the necessary match funding from donor partners.

The statutory instrument deals purely with projects that start before the Brexit exit day on 29 March and enables them to be administered according to pre-agreed frameworks. None the less, we need more clarity. Does that refer to projects that have been approved before 29 March, or just projects that have actually started, and how is started to be defined? What of projects started after exit? How are those to be administered?

We have been promised that funding for all projects up to 2020 is guaranteed and that projects will continue to be signed under the same terms until 2020. What we have not been told is anything about how these projects are to be run, how decisions are to be made and how funding is to be allocated. According to the instrument, these frameworks are still being drawn up. It states merely that delivery frameworks for future projects will be

“based on the pre-exit framework and the same investment priorities as have been applied for existing Structural Fund projects.”

Who will make these decisions, and how do the Government intend to replace EU structural funding in the longer term?

The Government have committed to a successor fund—the shared prosperity fund—and to holding a consultation on that fund by the end of 2018. In case the Minister has not noticed, it is now 2019. We are just 38 days away from 29 March, but we have yet to hear a single detail about how that fund is supposed to work. How do the Government plan to replicate the security of the seven-year EU funding period, and how do they intend to administer the shared prosperity fund? The Minister said that that was not within the scope of this statutory instrument, but I think that to give confidence in the ongoing funding and the decisions that the Minister is taking, it is necessary that we understand that there is a strategic vision for what will happen after Brexit.

EU structural and investment funding has traditionally been focused through regional and sub-regional bodies and aligned to regional priority programmes. That has given our local areas a strong degree of direct influence and control over resources and the ability to align them with other local and regional investment—an ability that is all too often missing in relation to central Government funding. Unfortunately, because the coalition Government chose to abolish regional development agencies, the current ESIF programme lost much of that local knowledge. Instead we have a national approach with regional allocations, and leadership and administration of funds moving from regional development agencies to central Government Departments. Despite the committed work of local enterprise partnerships and their partners working in the regions, the loss of regional control over funds has resulted in their being targeted less effectively and subjected to significant delay in approvals and delivery, as well as being less responsive to local needs and aspirations.

How does the Minister intend to make the right decisions for regions, given the lack of regional development authorities? We need clarity; we need details, not just empty promises, because real jobs, businesses and communities are at risk. This Government’s continued failure to address regional inequality is the hallmark of a Tory party that places narrow party interests above the good of the country.

The absence of any plans that deal with projects started after exit day and the deafening silence about the shared prosperity fund leave our regional economies in jeopardy. While we are not opposed to the statutory instrument, we want to know how the Government will do more to safeguard the future of our communities. Labour has committed to matching European Union funding for regional development for at least the next decade. Why will the Minister not follow suit? A Labour Government would invest £250 billion in a national transformation fund to meet the infrastructural needs of every part of our country, and create a network of regional development banks to ensure growth in the areas that most need it.

We need a viable plan for sustainable and equitable regional development—one that reflects the needs of the region, one that empowers local people and grows local economies, and one that can guarantee funding for all our communities. It is evidently one that only a Labour Government can provide.

Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland 3:42, 19 February 2019

It is a pleasure to speak in this afternoon’s debate and I warmly welcome the statutory instrument, which, as we heard from the Minister, preserves the effect of structural funds through to the end of the 2014 to 2020 period, whether we have a deal or no deal, in true Noel Edmonds style.

I very much hope that there will be a deal, and I underscore again my commitment to the Brady amendment, on which we voted on 29 January, and the Malthouse compromise, which is attached to that. However, if the EU is not disposed to be reasonable, then as a matter of law we will leave the EU with no deal. It is important and right that we ensure that at that point our law continues to operate and that important funding streams continue to be devoted to addressing the aims for which they have been set up. The EU structural funds are, of course, a very important source of funding.

I have always slightly objected to the concept of EU largesse that is implicit in the concept of structural funds. As the UK is, of course, a net contributor to the European Union, that is in effect our money being washed through the EU institutions back into our country. As we know, in a number of European nations the EU structural funds have been the subject of very considerable abuse over the years, which was one of the drivers of frustration with the EU in the first place.

In our country, where the money is generally well spent, there is nothing to fear. Moreover, once we have left the European Union we will be able to ensure that the money goes to our priorities. Of course, that is why the shared prosperity fund is so important. It is something the Prime Minister spoke about a week before the 2017 general election, in Guisborough in my constituency. She outlined her clear commitment to ensuring that the amount of money devolved through EU regional development funding will be matched by the UK once we have left. We warmly welcome that, because the north-east has been a net beneficiary of that funding, and my goodness, there is a lot that we could be doing with it.

We know that the shared prosperity fund will be used to drive the local industrial strategies that the Government quite rightly want to establish. I think that is working very well, and I am glad that it has not emerged as a continuation of the ’70s policy of picking winners. Instead, it is about empowering local devolution to make a real difference in supporting industry.

In the Tees Valley we have a really exciting proposition under our Mayor, Ben Houchen, who has a clear plan for projects such as the South Tees development corporation on the former Redcar steelworks site. Making sure that we have serious, sustained and long-term funding in place for such projects is essential if we are to continue to close the gap between London and the regions. That is something that all of us in this House support, and I am confident that, thanks not least to this SI, we will continue to be able to achieve it. Whether on transport, jobs or education and skills, there is a tremendous amount of work that can be done.

I do not think that there is anything to fear from leaving the framework of the EU and its structural funding. Instead, I think that this is a classic example of how taking back control can work for the benefit of the UK, and indeed of those parts of the UK that voted most heavily to leave in the 2016 referendum. It is worth noting that Teesside voted by two thirds to leave, and in some cases more, so there is real confidence among its population that we should indeed take control of this funding.

I am optimistic. I am grateful to the Government for putting in place a clear plan to ensure that there is no discontinuity on exit day, however we end up leaving. I am grateful to the Minister, because I know that he and I take a somewhat different view on some aspects of the debate, but he has none the less approached this work with great professionalism. He continues to deliver good, sensible legislation to ensure that, in all circumstances, our country should have nothing to fear.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society) 3:47, 19 February 2019

Like Chi Onwurah, we will not oppose this SI this afternoon, but we do share many of the deep concerns, particularly in relation to what exactly the UK shared prosperity fund will be and what it will mean. Of course, this SI would not be necessary if the Government would simply take the threat of a no-deal Brexit off the table. They could, if they so choose, remove that threat today, but instead they have decided—very cynically, in my opinion—that it is too politically useful to have as a tool in order to bludgeon MPs into supporting a deal that we have already rejected as the clock runs down towards 29 March. However, if the Government insist on preparing for the possibility of a catastrophic no-deal scenario, then yes, this SI does allow for the transfer of regulations in order to ensure the continued roll-out of the European agricultural fund for rural development and the European maritime and fisheries fund. The SI will continue to allow payments until their closure after the end of the current 2014-20 programming period.

It is worth pointing out the huge importance of those funds to communities right across Scotland, particularly in remote and peripheral areas such as my Argyll and Bute constituency. The EU structural funds in Scotland are worth up to €941 million across the EU budget period, for use in economic development. Over £500 million a year comes to Scotland from the common agricultural policy in the form of direct payments to farm businesses and rural development funding. The UK Government have provided short-term guarantees to replace most CAP funding until 2022 following Brexit, but no firm commitments have been given about replacing the CAP in the long term.

Photo of Simon Clarke Simon Clarke Conservative, Middlesbrough South and East Cleveland

It is important to note that the Agriculture Bill provides for ensuring that environmental incentives are aligned with good practice in agricultural management. I think that hon. Members of all parties want that. It will be a welcome change from the way in which the CAP simply rewarded the largest farmers.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

The hon. Gentleman makes the important point that we are discussing the SI before Report stage of the Agriculture Bill. I will come back to that. I do not necessarily defend the way in which the CAP is administered—the way in which every pound is allocated—but it is important to recognise the amount of money and support that the CAP gives UK agriculture, particularly those less favoured area support scheme parts of my west of Scotland constituency.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

My hon. Friend is making a great speech. On the lack of certainty beyond 2022, are not those in farming communities planning a long way ahead for what they intend to do with their land? Certainty beyond 2022 would help them in their long-term planning for their stewardship role as well as for trying to make money.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

My hon. Friend is right that it is vital that our farmers have the ability to plan into the future. At the moment, we enjoy that ability to plan long term, and the fear is that that is being taken away.

The common fisheries policy is co-financed in Scotland through the European maritime and fisheries fund, and Scotland is allocated 44% of the total UK figure, with £42 million—over 80% of the Scottish allocation—already committed to projects. Competitive funds are awarded directly by the European Commission to organisations, and that includes significant research, innovation and education exchange programmes. Since 2014, Scottish organisations have secured €533 million of Horizon 2020 funding, €65 million of Erasmus+ funding and €58 million of European Territorial Cooperation funding. Even since 2016, the European Investment Bank group has signed loans worth €2 billion for projects in Scotland.

These EU-funded programmes represent a vital source of funding to communities right across Scotland, but as I said earlier, they are particularly important to peripheral communities, which are in greater need of support. That is why, when the question was asked in 2016 whether we wished to remain part of the European Union, every single part of Scotland, without exception, urban and rural, said yes to staying in the EU. Our communities knew—and still know—the benefits of being a member of the European Union and the significant difference that that has made to their lives, economically, socially and culturally.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government)

My hon. Friend is making some great points. Is he aware that urban areas such as Glasgow have hugely benefited as well? Since 2010, regional selective assistance grants to businesses in Glasgow have provided more than £83 million of investment and created 7,292 jobs.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

It is absolutely remarkable that all 32 Scottish local authority areas—urban and rural, with the vast differences that exist between them—said with one voice that we as a nation wished to remain in the European Union. That cannot and should not be ignored. Its significance cannot be underplayed.

The loss of the funds I listed earlier could be absolutely devastating for our farming and fishing communities. As yet, there are no guarantees about the continuity of these funds beyond 2020. Here we are, a month from Brexit day, and there is still no certainty for our farming and fishing communities as they plan for the future.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

My hon. Friend is making a great point about funding. Does he share my concern that these communities will be hit doubly, because there will also be changes to immigration, which may mean they do not have access to labour? Given that some of our areas are suffering from depopulation, which we have worked very hard to counter, does he feel this is a double whammy that rural communities cannot afford?

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

My hon. Friend may well have been looking over my shoulder, because I was about to come on to that very point.

My constituency of Argyll and Bute is suffering from massive depopulation. We are losing population at a rate that we cannot sustain. We need to get people to come and live, work, invest and raise families in Argyll and Bute, and much of our plan is predicated on EU nationals coming to Argyll and Bute to fulfil that function. We are being denied access not only to funding, but to people. Unless we can find a way of squaring that circle, which I do not think is possible, then I fear for the future. That is why independence, with an independent Scottish Government being represented as an equal partner in the European Union, is without doubt the only way that Scotland is going to prosper.

It has been reported just today that the Environment, Food and Rural Affairs Secretary has told the National Farmers Union, in relation to UK farmers, that

“there is no absolute guarantee that we would be able to continue to export…to the EU” under a no-deal scenario. This is the chaos into which we have descended.

As has been said, the UK Government have of course promised to replace EU funds with a much-vaunted UK shared prosperity fund, but despite all the repeated promises, still no detail or definition has been given about how that new structure will operate. May I ask the Minister when we will find out the detail of this shared prosperity fund, and when will we know exactly what it will mean for people across the UK, including for people in my Argyll and Bute constituency?

Will the Minister tell me, post-2020, when the cycle of these current EU funds comes to an end, how the proposed new system will operate? What consent and control will the devolved Administrations have in relation to this future funding model? What consultation has been carried out to ensure that this new system will have the consent of and remain consistent with the devolution settlement? Will he explain why, as I said to Mr Clarke, this statutory instrument has come to the Floor of the House before the Agriculture Bill and the Fisheries Bill have even reached their Report stages in this place?

Given that the President of the European Commission has promised to support Irish farmers financially in the event of a no-deal Brexit, why have the UK Government not offered similar support to Scottish farmers? Finally, does the Minister agree that so much of this worry, angst and trauma we are being put through and putting other people through could all be prevented if the Government simply took no deal off the table.

Photo of Matt Warman Matt Warman Conservative, Boston and Skegness 3:58, 19 February 2019

I will not detain the House long, but I want to speak in support of this SI, which secures funding that is vital for some projects in my constituency. Overall, £41 million comes to Lincolnshire, of which about £500,000 is helping to secure a project that protects large amounts of farmland from flooding. This is an important measure from a Government who are taking sensible steps.

The broader but not lengthy point I seek to make is that while money did come back to Lincolnshire, the fact that Britain was a net overall contributor to the EU does mean that, when we set up the funds the Minister spoke about post our exit from the European Union, that will give us the opportunity to do two things. The first is to redress some of the regional imbalances mentioned by my hon. Friend Mr Clarke, which have a particularly extreme effect on regions such as Lincolnshire. However, I hope it will also give us a much more serious opportunity to win the argument around funding and what the Government are doing to seek to address regional imbalances. That is an argument the EU totally failed to win or even engage in, which is in many ways why, in a constituency such as mine, even when money came back to Lincolnshire from the EU, we saw no great love for the European Union. That was of course reflected, as it was in Middlesbrough South and East Cleveland, in the referendum result.

I therefore hope that the Government, in establishing these new funds, will seize the opportunity not only to redress these imbalances, which is very real work, but to get an advantage from being seen to do what all good Governments should do, which is to move some of these opportunities around the country—in my case, away from the south-east and into Lincolnshire. That is good, sensible work and good, sensible economics, and it will allow us to improve productivity and to grow our thriving agricultural economy.

However, that also needs to be sold to the public. As I said, the European Union encouraged huge antipathy for the European project, and we have enough trouble with people holding politicians in this place in contempt, so we need to sell the work we do to redistribute that money. That will go far further than investing in sensible infrastructure projects such as the drainage project I referred to, and will allow people to see that we do fundamentally good work in this place that addresses things our constituents want done. Ultimately, that is about not just economics but good democracy, which is why I will be supporting this SI.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 4:01, 19 February 2019

Welcome to the Chair, Mr Deputy Speaker. As I explained to the Speaker, this is the first SI that I have done in the Chamber, and I had not realised that this would be a general debate on the European Union. Most Members’ views on that subject are quite clear—many of us share the same views, while some of us disagree—but for the purpose of this statutory instrument, I will try to answer some of the questions people asked about the specifics, if that is acceptable to you.

My right hon. Friend John Redwood asked how the funds for the Peace and Interreg V-A programmes would be calculated—those are the funds our country would have to pay to the EU to get back. I can confirm that the UK would pay its full share of the Peace and Interreg V-A programmes, including—this is what he wanted to know—the administrative costs. If he would like further detail, I would be very pleased to try to answer more detailed questions.

I thank the shadow Minister for supporting the gist of the statutory instrument. She asked me quite a lot of questions, which I shall do my best to answer. A lot of them were to do with her views on regional inequality generally, which is slightly wider than the scope of this statutory instrument. However, I must say that I absolutely agree with her, having been brought up myself in the north of England and in a country where government was very centralised.

When I was doing my A-levels, I went to visit—I think this was in her constituency, but it was probably a long time before she was born—[Laughter.] One has to do one’s best to soften up the Opposition a bit, but that was actually true in her case. However, when I was a school student, I went up to visit the local National Economic Development Council, which was an offshoot of the Government. Well-meaning civil servants tried to give people Government money to, basically, invest in companies in the region. We were also shown the devastation caused by the end of mining and other things. That should be very familiar to the hon. Lady, and it is also familiar to me, coming as I do from Yorkshire.

Successive Governments—Labour and Conservative—have tried their best to deal with that issue. In some cases, they did that by pretending that the Government should not have an industrial development policy, which I have no truck with at all. Following that, there was a more centralised approach by the Labour Government, with the best intentions. Then there were different attempts to devolve, either through legislation, as in the case of the Scottish and Welsh authorities, or through regional policy, which I very much support, to try to have local delivery mechanisms. Local mayors are a very good example of that—irrespective of political party, the structure is a very good way to try to address the imbalance—alongside local enterprise partnerships and the northern powerhouse initiative.

The Opposition argue that that is fine, but a lot more money needs to go into the machine in the first place. That is always arguable: Oppositions always say they want to spend more money and Governments of whatever complexion say that they have to find the money from somewhere. Those are well-rehearsed arguments, but I would like to place on record that I fundamentally agree with the point, which was very well made, that devolution and more money to regions are absolutely vital.

The shared prosperity fund will invest in the foundations of productivity, as set out in our industrial strategy, to support people to benefit from economic prosperity. I fully accept that the Opposition and many other hon. Members—not just Members here today—want to know what it will look like. The written ministerial statement in July stated clearly that the fund is designed to tackle inequalities between communities, especially in those parts of the country whose economies are furthest behind. Brendan O'Hara argued that case very well. I will address some of his more specific points in a moment, but that point was very well made. The fund is there to invest in the foundations of productivity, which we put in our industrial strategy document: ideas, people, infrastructure, place and a business environment. It will be an integrated, simplified fund that operates throughout the UK, not with centralised decisions.

What are the Government going to do now? I accept the Opposition’s point, but it is always difficult if you are in government. You have to consult everyone and form an actual policy, otherwise one gets criticised—not you, Mr Deputy Speaker; you would not be criticised at all. Unless the Government consult they get criticised, through legal challenges and so on, for not consulting properly. There will be a proper consultation shortly to recognise that there are a lot of interested parties with different opportunities. It will inform our decisions on the composition of the shared prosperity fund, which will be taken at the spending review later this year.

I would like to set the record straight: the shared prosperity fund will respect the devolved settlements. We have made it very clear that we will continue to work in partnership with the devolved Administrations to ensure that the fund works for all places across the Union.

There have been calls for clarity and we are working on that. The Government are holding engagement events with stakeholders from a variety of sectors across the country, including devolved authorities. We have to discuss the lessons of the past and learn from them, as well as potential investment priorities. I believe that next year, when the spending review consultation takes place, we will be able to move a lot more quickly.

The Government have guaranteed funding for all structural fund projects signed before exit in the event of a no deal. The guarantee can also be used to fund projects started after exit. This will protect beneficiaries under the settlement and regional investment will continue as planned.

My hon. Friend Mr Clarke has said on a number of occasions, with his usual dignity and tact, that we disagree on certain matters. However, one thing that I absolutely agree on is the way he works so diligently to push the interests of his constituents and the importance of regional plans. He mentioned Mayor Ben Houchen and others. I really think that this is a model for the future. Whatever one’s views on other subjects—again, I apologise for talking about your views, Mr Deputy Speaker—I think everyone agrees that Middlesbrough South and East Cleveland could not have a better Member of Parliament representing its interests. He reiterated the importance of the shared prosperity fund to his constituency.

The hon. Member for Argyll and Bute, the SNP spokesman, also gave his views on Brexit generally. Rather than rehearsing those arguments, I would like to talk specifically on the point he mentioned about why the Government are taking a different approach in this statutory instrument to the agriculture and fishery funds. The European agricultural fund for rural development and the European maritime and fisheries fund share some regulations in common with structural funds, but this SI makes provisions only for the structural funds. There is a separate SI for the agricultural and fisheries funds, which will retain and amend the EU regulations in so far as they apply to those funds. That is why they are being treated differently, unlike the European regional development and the European social funds. He asked why this is happening before the Report stage of the Agriculture Bill. It is because this SI is designed to address structural funds. The DEFRA SI will deal with the agricultural fund, which this is not related to.

Finally, I commend the speech from my hon. Friend Matt Warman and thank him for his support. He made the excellent point—often not made in this House—that the distribution of funds should come with love as well as money. I am sure that he could be in charge of love in his constituency—actually, I am sure he is doing that very well at the moment. I have tried my best to answer the questions that were asked, and I commend this SI to the House.

Question put and agreed to.


That the draft European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) Regulations 2019, which were laid before this House on 28 January, be approved.