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Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): My hon. Friend is making a powerful point, which can be
equally well illustrated by the situation in south Wales. Economic inactivity rates--which reflect hidden mass unemployment--are also extremely important, and male economic inactivity rates in my area are of grave concern to us. I hope that my hon. Friend the Minister will press that point hard in negotiations about the criteria.
Mr. Ennis: I thank my hon. Friend for his comments. Again, I look forward to hearing the Minister's response.
I would like to say that Barnsley is unique. It would certainly be in the town's interest for me to do so, thereby indulging in a spot of special pleading. I cannot say that, however. It must be said that Barnsley's circumstances are replicated, to a greater or lesser extent, in other traditional industrial areas throughout the nation. In making our case to Brussels for continuing aid after 1999, we could all be scuppered on the same misleading grounds, unable to demonstrate the existence of large-scale job losses in recent years and unable to show the true level of joblessness. I am enraged by the position and--as has been demonstrated by the interventions that we have heard--others share my sentiments. Brussels must not be allowed to walk away from a job that in our areas is only half done.
What should we do? I am closely associated with the alliance for regional aid, which was set up specifically in response to fears about European regional aid. The alliance represents virtually every local authority in the older industrial areas of the United Kingdom that currently qualify for objective 1 and objective 2 regional aid. In total, 130 local authorities make up that alliance, so it has a powerful voice. It has been working on this issue for some months and has come up with proposals that I and many other hon. Members fully endorse.
It is essential for the Commission to adopt eligibility criteria that reflect the true situation in Britain's industrial areas. The true picture is not shown by information on recent job losses and official unemployment figures. The thrust of the Government's negotiations must be to modify those criteria.
I urge Ministers seriously to consider three proposals. First, the Commission currently uses the International Labour Organisation's measure of unemployment, which profoundly disadvantages the United Kingdom by excluding people who have given up looking for work and those who are supported by benefits, such as incapacity benefit and income support, that do not require them actively to seek jobs. A broader definition of unemployment that embraces all those out of work who want a job would be a truer reflection of joblessness. Those figures are available Europewide, so such a definition could be adopted.
Secondly, GDP figures are used as objective 1 criteria. Their adoption as objective 2 criteria would assist the United Kingdom's case enormously. Most UK industrial areas have a lower GDP than similar areas in France and Germany, so such a step would benefit us greatly.
Thirdly, the Commission must be persuaded to take a long view, possibly as far back as 1980 when the United Kingdom's industrial restructuring began. If it adopts a base date in the 1990s, most UK industrial areas will not qualify. It is of paramount importance that the Government urgently and successfully negotiate adjustments to the criteria in those three critical areas.
Furthermore, informed, reliable guidance shows that the Commission is minded to designate up to 50 per cent. of objective 2 areas across the European Union on the basis of proposals from member state Governments using national data. That would greatly assist our case. The Government must grasp this opportunity, because it would open the door for objective 2 aid to be directed at areas where it is needed by allowing European Union-wide criteria to be supported by criteria set at national level and based on national data.
Indicators that measure social exclusion and competitiveness could be brought into play. That would substantially strengthen the United Kingdom's bid for continued funding. I ask the Government to consider including in the calculations three measures of social exclusion: income support, incapacity benefit and level of earnings. I am confident that close examination of those three indicators would reveal those areas of the United Kingdom that most urgently need help, and that should be recommended to the Commission for objective 2 assistance.
The Minister for Competition and Consumer Affairs (Mr. Nigel Griffiths):
I congratulate my hon. Friend the Member for Barnsley, East and Mexborough (Mr. Ennis) on securing the debate. As a former leader of Barnsley metropolitan borough council and as founder and chair of the Barnsley economic regeneration forum, which is a private-public partnership, he brings great local and national experience to our discussions. He has shown his expertise by setting out the case not just for the Barnsley area, but for the whole of the United Kingdom.
I am glad to see a good attendance by Labour Members at this first economic debate on regional aid--in contrast to the vacant Conservative Benches. Not one Conservative Member is present and there is no Conservative spokesman. Where is the shadow President of the Board of Trade, the right hon. Member for Wokingham (Mr. Redwood), or any of his deputies? No wonder they were recently described by a Conservative supporter as nonentities. They are not present because they do not know about the problems and do not care.
As my hon. Friend acknowledged, European structural funds make an important contribution to economic development in many regions of the United Kingdom. On 16 July, the European Commission published its suggestions for the reform of the funds in its communication "Agenda 2000". We expect detailed legislative proposals in the spring of next year, so this short debate is topical.
Current structural fund programmes run until the end of 1999: 30 programmes operate across the United
Kingdom. My hon. Friend's constituency is covered by the Yorkshire and Humberside objective 2 programme. Our short-term aim is to maximise the effectiveness of those programmes. So far this year, elected members from local authorities have played a strong role in programme monitoring, new financial systems have been introduced in England to accelerate payments, and we have brought social partners, such as representatives from employers' and employees' organisations, into local partnerships to support those programmes.
I am pleased to tell my hon. Friend that we have also nominated to the Commission 10 UK pilot projects for territorial employment pacts, including one in Barnsley. In England, we have put new arrangements in place for administering structural funds. We want to give local partnerships more responsibility through an action plan approach. Action plans will provide a real opportunity to improve the administration of structural funds. They will allow partnerships to bring together individual projects so as to reflect regional priorities, to tackle issues in a co-ordinated way and to streamline bureaucracy.
Circumstances vary across the country and between regions, so we are not seeking to impose a uniform system. It will be for each programme monitoring committee to decide to what extent it wishes to adopt the new action plan approach. We will aim to do more in the next two years to improve effectiveness further.
I realise that the interests of all my hon. Friends go beyond 1999. The European Union will face significant changes over the next decade, particularly if it is to be enlarged to include new member states from central and eastern Europe. The common agricultural policy should be reformed and its structural policies should be adapted to the changed circumstances.
On the key question of reform of the structural and cohesion funds, the Government believe that the new arrangements should be fair to all member states, especially to the United Kingdom and its regions, and should be affordable, durable, simpler and more efficient.
The United Kingdom is the second largest net contributor to the European Union's finances. We are net contributors to the cost of these development funds. That is why we are paying close attention to the total cost of the funds and to our receipts.
The accession of poorer countries will have significant implications for EU finances. As the overall EU budget must be contained within its current share of GDP, enlargement will mean that the structural funds will have to stretch further. All existing member states will have to accept significantly lower receipts in the next century. The United Kingdom's net contribution, like those of many other countries, will rise on enlargement. We accept this as the necessary price for bringing these countries into the EU, but we cannot accept that the UK's net contribution should move even further out of line.
The fundamentals of reform for the structural and cohesion funds should be as follows. First, the overall cost of the structural and cohesion funds should be contained below 0.46 per cent. of European Union GDP both before and after enlargement. Secondly, existing member states should expect cuts in their receipts if costs are to be contained. Thirdly, while we recognise that there will
be a drop in receipts, the new regime should and must be fair to the UK in comparison with other member states. Fourthly, the reform of the funds should be durable and fair to acceding member states. Fifthly, the effectiveness of the funds should be improved, and substantial administrative simplification is needed.
Fairness was at the heart of the remarks by my hon. Friend the Member for Barnsley, East and Mexborough, so I will go into some detail about what we understand by fairness. According to data held by the Commission, the United Kingdom is the fourth or fifth poorest state in the European Union; the Commission's proposals will not make us the fourth or fifth largest per capita recipient. Therefore, we are not convinced that the Commission's ideas for distributing the funds are fair. I am pleased to tell the House that we are actively pursuing with the Commission and with other member states the issue of how a fairer system can be established.
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