PN160708A

Embargo: 00:01 Wednesday 16 July 2008

Contact: Owen Williams 020 7219 8659

GOVERNMENT RIGHT TO PUSH FOR CHANGES TO EU REGIONAL POLICY DESPITE LOSS OF REVENUE TO UK REGIONS - LORDS EU COMMITTEE

The House of Lords European Union Committee has today backed the Government's position in calling for reform of the EU regional policy and has estimated that the proposed reforms would mean the UK giving up around ‚904 million per year in EU regional funding.

The Committee support moves by the Government to end EU regional payments to relatively prosperous regions in wealthier member states. They argue that development investment in wealthy regions should be done by the national governments, and EU regional development funds should be focused on the poorest regions of the EU, often found in the newer member states of Eastern Europe.

Currently 80% of EU regional policy funding goes to the poorest regions of the EU - areas which include West Wales & The Valleys and Cornwall. Approximately 20% of the funds go to the remaining, richer, areas under a policy known as the Regional Competitiveness and Employment Objective. The Committee support the Government's position that all money should go to the poorest areas in Europe - including the poorest regions of otherwise rich Member States - but add that this change must come in the context of a money saving reform of the Common Agricultural Policy.

In their proposal for the changes the Government have not provided a figure for how much less the UK would receive under a new allocation of regional funding. The Committee found that based on current prices the UK would receive ‚6,336 million less between 2007-2013, an average of ‚904 million a year. The Committee argue that adequate support for the poorest regions in the Europe is vital to achieve the economic cohesion aimed for by the EU. They also point out that providing more investment in the poorest parts of Europe will open up opportunities for British business.

Other recommendations on EU regional policy include:

  • EU regional policy is not excessively expensive to administer.
  • There should be more innovation in administering regional funds including the use of loans rather than grants in some incidences.
  • There should be better monitoring and measurement of the inward investment created as a result of regional funding.

The Committee also consider the role of the Common Agricultural Policy for Rural Development in supporting underprivileged rural areas and argue that the 2008/09 EU Budget Review should shift much of the CAP expenditure from agricultural price support to increased support for the European Agricultural Fund which focuses on rural development rather than payments directly to farmers and land owners.

Commenting Baroness Cohen, Chairman of the House of Lords EU Committee on Economic and Financial Affairs, said:

"It is increasingly clear that EU regional policy is in need of reform. The funds should be focused on the poorest regions of Europe that need it most.

"It makes no sense for significant regional funding to continue to be ploughed into rich regions of more wealthy member states like the UK, France and Germany when even the richest regions of member states such as Bulgaria and Romania fall well below EU averages of GDP per head.

"We found that, on the whole, the funds are spent well on infrastructure improvements in the poorest regions. It is only a lack of administration capacity that stops them from being able to handle further funds. At the same time, we are confident that assistance for richer regions such as Greater London or South East England can be administered by the Government.

"The changes proposed by the Government will lead to ‚904 million less coming to the UK regions from Europe but we insist that fundamental revision of the CAP is a pre-requisite for any change. We may find that by providing adequate investment in the poorer regions of Eastern Europe we open up significant opportunities for British business in the future."

Notes To Editors

1. The report The Future of EU Regional Policy, is available form The Stationery Office, House of Lords European Union Committee Sub-Committee on Economic and Financial Affairs and International Trade, 19th Report of 2007/08, HL Paper 141.

2. The report will be available online shortly after publication at: http://www.parliament.uk/parliamentary_committees/s_comm_a.cfm

For copies of the report or to request an interview with Baroness Cohen, please contact Owen Williams, Head of Press and Media, House of Lords on 020 7219 8659.

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