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10.45 am

The Parliamentary Under-Secretary of State for Trade and Industry (Mrs. Barbara Roche): I congratulate my hon. Friend the Member for Putney(Mr. Colman) on bringing the needs of London to the attention of the House. As he rightly said, I am a London Member of Parliament, so I share his interests. However, as the Minister in the Department of Trade and Industry with responsibility for the co-ordination of structural funds issues for the United Kingdom as a whole, I have to take a wider view of the process and the factors that have to be taken into account.

Many good points have been made in the debate, especially on the need to tackle bureaucracy--something that the previous Government failed to do. The hon. Member for Christchurch (Mr. Chope) said much in his speech, but little about the reform of structural funds. Perhaps he will give a more considered response when he has had his brief a little longer. It will not surprise the hon. Member for Billericay (Mrs. Gorman) to hear that I did not agree with everything that she said in the speech that the House is used to hearing from her, although she made a good point on the need for simplification, as did my hon. Friends the Members for Putney and for Edmonton (Mr. Love).

Since the publication of the draft regulations on 18 March, we have, under the UK presidency, taken forward the negotiations on structural funds with the Commission and other member states. Throughout the negotiations, the Government continued to emphasise the overarching principles of fairness, affordability and durability. As we head into the discussions in the autumn under the Austrian presidency, those principles will remain as important.

The desire for fairness has dominated the lobbying position of the Government--and of local organisations--in Brussels with the Commission and with other member states since the publication of the Agenda 2000 communication. As I have said on a number of occasions--I have no compunction about repeating it now--fairness means that the costs of reform should be shared fairly between all member states. However, the Government do not believe that the current proposals will achieve that. We believe that, if we are to agree fair and affordable reforms, all member states must be prepared to accept cuts.

We are not prepared to bear disproportionate cuts in United Kingdom coverage. On the strength of our lobbying before publication of the proposals, we secured the last-minute concession of the safety net in the draft regulations, limiting the loss of coverage for objective 2 and 5b areas to no more than a third. That could certainly prove to be an important achievement in several areas in the UK.

In addition, the Government will continue to press for flexibility, both in the objective 1 gross domestic product cut-off and in the new objective 2, in which we are keen to ensure that funds are targeted within member states, using national and local indicators that accurately reflect the areas of greatest need. It has also been said that member states have the ability to know where their areas of deprivation are, and we shall seek the maximum flexibility on objective 2. Those points were well made by my hon. Friends the Members for Putney and for Edmonton, as well as by the hon. Member for Kingston and Surbiton (Mr. Davey).

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In the negotiations to date, the UK presidency has been able to secure agreement on some of the general principles that support the universally agreed aim of simplification of the funds, making them more effective and better value for money. That is an important first step, and we are proud to have played our part in it.

Reference has been made to the agreement on changes to the UK NUTS boundaries announced last week by my hon. Friend the Economic Secretary to the Treasury, who has responsibility for the Office for National Statistics. The structural funds reform negotiations are entirely separate from the issue of NUTS boundaries.

The Government supported the Government statistical service's proposals, sent to Eurostat last summer, which were the result of a general consultation early last year. We asked the Commission to encourage Eurostat to produce a rapid and satisfactory result. Ultimately, as the House will be aware, this has been a statistical exercise, subject to Eurostat's decision, and we welcome the fact that agreement has now been reached.

The European Commission has proposed that NUTS II and III areas be used to draw up the new European Union structural funds map. The Government expect that the new UK NUTS boundaries will be used. However, all those issues depend on the content of the final structural funds regulations and on the data for individual areas. We cannot at this stage predict with certainty what might be the implications for individual areas.

One of our goals in our presidency was to leave a solid framework for continuation of the work into the Austrian presidency, which began last week. All member states have very distinctive views on issues affecting finance and eligibility criteria. Most, including the UK, have difficulties with the proposals as they stand. The issues will begin to be tackled in earnest under the Austrian presidency. The discussions are likely to take place from the autumn and will continue into early 1999.

The Cardiff meeting last month set a deadline of March 1999 for the Agenda 2000 discussions. Reform of the structural funds is one of the most important elements in the process. It is certainly one of the most visible benefits of the European Union to local people, and I warmly welcome the emphasis in this debate on the local nature of the funds.

Many local representatives have put their case to me for objective 2 status, and I am sure that they will continue to do so. The eligibility criteria for the various strands within objective 2, and the distribution of funds, will not be clear until the final structural funds package has been decided. Neither will we know how much flexibility we shall have at member state level in determining the eligibility of areas. I am certainly aware that people feel strongly on those points, which is why the Government will press for maximum flexibility.

I think that we all welcome the proposal to target a number of non-industrial urban areas under objective 2. The extent to which we can do so is a matter for consideration and discussion. We would welcome the ability to home in on pockets of deprivation.

From various parliamentary answers, and the recent Adjournment debate through which I was able to bring the House up to date, hon. Members may know that the focus of our presidency has been to a large extent on simplifying the administration of the funds, which means attempting to reduce the bureaucracy wherever possible and to increase the involvement of local people.

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I am delighted to say that we have achieved a great deal of consensus among member states. At the informal meeting of EU regional policy Ministers in Glasgow last month, chaired by my right hon. Friend the President of the Board of Trade, there was universal agreement on a number of principles: the importance of job creation, employability and regional competitiveness; the value of effective partnership between the Commission, national Governments, and regional and local organisations, with a clear definition of the role for each; and bringing decision making as close as possible to the people affected. All hon. Members will welcome more regional and local control over the funds' delivery.

The UK has a reputation in Europe as a good manager and administrator of European funds. That has been earned through the hard work of those involved in the partnerships and on the monitoring committees throughout the country, including in London. The House has learnt today about some important projects.

I have been able to observe the development of some of the projects: for example, the business innovation centre in the Lee valley, which does excellent work with small businesses, and especially those looking for expertise in new technology. That is why I attach so much importance to ensuring that we engage those involved in the day-to-day administration of the funds and feed their views into the relevant discussions.

I spoke at the national simplification conference in May, where we discussed, among other matters, ways of improving administration and regional partnerships. We have heard about the important issue of community initiatives in London, such as the urban initiative in Park Royal. Some of those initiatives have helped to form useful local and regional partnerships, such as the urban partnership groups, which have involved local residents, community groups and voluntary organisations in the strategy for tackling social exclusion. My hon. Friend the Member for Bethnal Green and Bow (Ms King) spoke about some of those important partnerships.

I am aware that the programmes can be complex to administer, especially given the small amounts of funding involved, and often fragment the strategic approach to the very issues that they are designed to address. It is important that community initiatives should add value to the mainstream programmes. They should certainly not duplicate or cut across other programmes. Since there must be a close relationship between the community initiatives and the main objectives, we can take a view on particular initiatives only once the framework for the main objectives is clear.

We should remember that this is merely the starting point in a long and complex set of negotiations. A great deal more work needs to be done to achieve

--a phrase that we used time and again for all the objectives. I am grateful to those hon. Members and their local groups who have lent their support to our efforts in the structural funds discussions so far and also to all hon. Members who have come to see me. We have a long way to go, but, by working in the common interest in the United Kingdom, we can have a fair and just solution.

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