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10.48 pm

The Minister for Trade (Mr. Richard Caborn): Before I start to respond to the points made by my hon. Friend the Member for Burnley (Mr. Pike), I congratulate his local football team, Burnley, on making it into the first division. He will be able to join us at Bramall Lane, where my team, Sheffield United, plays. I do not know whether it is the great support for Burnley that got the team into the first division, or whether spin coming out of No. 10 is responsible--I know that one of the official spokesmen there is also a supporter. Whatever the reason, it is good to see Burnley back in the first division.

I commend my hon. Friend on the force of his argument. As he said, we entered Parliament at the same time, so I know that he has always been a strong advocate

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of Burnley and East Lancashire as a whole, especially its manufacturing base. He speaks with great sincerity on the issues and he has made the case well tonight. The Government recognised the needs and concerns of the area in the proposals for the new assisted areas map published in July last year. We listened closely to the views of local and regional partners, including the regional development agencies, when drawing up those proposals.

I know that my hon. Friend and his constituents share my disappointment that we have been unable to secure Commission approval for those proposals, but I can assure him that we fought hard to secure our July proposals, including all those for east Lancashire, and we are not amending those proposals lightly. The amendments that we announced last month, which have been the subject of a three-week consultation period, were made solely to meet the European Commission's concerns about our July proposals.

My hon. Friend may find it helpful if I set out the Commission's concerns and what we have had to do to meet them. The Commission thought that the approach to the July proposals, which reflected earlier public consultation and dialogue with regional and local partners, would have given the United Kingdom an unfair advantage over other member states of the European Union.

The proposals, the Commission believed, allowed the UK to include industrial locations within the assisted areas, while excluding the population of surrounding areas that might benefit from the regional assistance given to such industry. With our population ceiling, that would have allowed the UK greater scope for supporting industry in competition with our European partners.

To meet the concern that the July proposals would give the UK an unfair advantage, the Commission required that our proposed assisted areas be more compact and self-contained. It also required us to reduce the population coverage of our proposed assisted areas by a third of a million people.

The changes have had an impact on our proposals in east Lancashire. We could not, as we did under the July proposals, extend coverage in a strip from Blackburn to Burnley, Rossendale and Hyndburn. The areas proposed in July were not sufficiently compact to secure Commission approval. Under the new constraints imposed by the Commission, we would have had to include the whole of east Lancashire. That would have required a substantial increase in population coverage--instead of which, of course, we have been faced by a demand from the Commission that we cut the population coverage by a third of a million.

I said earlier that we fought hard to secure our July proposals, but we should be clear that the Government do not have the final say in the matter. Under the European Community treaties the Commission has sole competence. Therefore, as my hon. Friend said, we cannot pay any regional state aid without an assisted areas map approved by the Commission. It was clear that the Commission would not approve our July proposals, and we have had to make changes accordingly.

The Government, however, are conscious of the needs and concerns of the people of east Lancashire. Assisted area status is but one part of a package of measures that the Government have put in place to meet regional and local needs.

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My hon. Friend knows that when the Government came to power, we inherited an unco-ordinated, disjointed set of regional bodies. Regional activity on inward investment, supply chains, rural development, physical regeneration, and social and economic regeneration all took place in separate organisations. There was no overall strategy to bring together regional activity. We have addressed that problem.

We have devolved power to Scotland and Wales and set up the regional development agencies in England. Last October each RDA produced, with local partners, a strategy for improving the economic performance of its region. The strategies provide a framework for ensuring that all our regions share in Britain's growth. East Lancashire will benefit from the implementation of the north-west's regional strategy--"England's North West: A Strategy towards 2020"--with its work to improve the performance of sectors of continuing and growing importance to the region. Aerospace, for example, is one of the sectors specifically targeted.

Our strategy is not to set one area or region against another, but to use the policy instruments that we have available to make sure that all our regions are competitive and successful.

The framework provided by the regional development agencies, together with initiatives such as the new enterprise grant scheme, to which my hon. Friend referred; the strengthened provision of trade promotion and development services in partnership with local providers, through the formation of British Trade International; the £50 million regional innovation fund to provide support for business clusters; the £30 million phoenix fund; and the £10 million competitiveness development fund will ensure that all areas benefit from Britain's growth.

Our aim is to enable regions to meet the challenges of the new economy. Rather than throwing money at the symptoms, we must tackle the underlying causes, invest in skills and increase opportunities for enterprise. We are doing that.

Those policies are having an impact on the ground. Since the beginning of this year, the new enterprise grant scheme has supported investment of £575,000 in east Lancashire. Training and skills development is being supported through the East Lancashire training and enterprise council, and, from next year, by the learning and skills council. In addition, in June, the Government will announce objective 3 structural fund support for skills

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and training, and publishing bidding guidance. Based on previous programme allocations, that is likely to mean about £250 million for the north-west, and I would expect east Lancashire to be at the forefront of the bids.

The funding will provide significant support for the Government's employability agenda. It will help people of all ages to get to work. It will also help firms and workers to adapt to new working conditions and thus compete more effectively in the global marketplace. In total, the areas of east Lancashire that we can no longer include in our assisted area proposals will continue to receive Government funding of nearly £40 million to regenerate the area and boost business.

I know that my hon. Friend and his constituents were also disappointed not to secure coverage under the objective 2 structural funds map. However, the Government, through hard negotiation in Europe, secured transitional funding for the areas that lost out. In the north-west, that means that more than £100 million of transitional funding will be available to assist areas such as east Lancashire. That funding is, of course, part of a comprehensive £10 billion package of European structural funding to boost industry and enterprise in the regions.

While I recognise the disappointment of my hon. Friend and the people of Burnley, Rossendale and Hyndburn that they are not included in the amended assisted areas map, I am confident that the amended proposals represent the best package that we can broker with the Commission within the constraints that it has now imposed.

For east Lancashire, we must work together to build on the area's many strengths, which my hon. Friend has highlighted over many years, to ensure a prosperous and vibrant future for the people and businesses of the area. I repeat my offer, which I made to my hon. Friend when he and his colleagues came to see me, to visit east Lancashire and discuss with him and with regional and local partners how we can secure the sort of future for east Lancashire that we all want.

Although I accept that my hon. Friend and his constituents are disappointed, I believe that we have done the best job. I stress that it is only one part of a much larger funding package for our regions, and I am sure that east Lancashire will take advantage of the other provisions that the Government will make available.

Question put and agreed to.

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