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Ms Atherton: I am interested in the hon. Gentleman's argument, but does he think that his Cornish colleagues would agree?

Dr. Cable: All hon. Members who have spoken rightly advanced strong arguments for maintaining funding for their regions. The Government have guaranteed that that will be sustained under the new arrangements. Several of my hon. Friends say, as would my Cornish colleagues, that they want not only the quantity of money, but the quality of the programmes to be maintained. We have not yet received clear answers from the Government about how that will be maintained. I do not disagree with the hon. Lady or my Cornish colleagues on that matter.
 
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There is a more fundamental question. The poorer areas and depressed regions of the European Union will have to cope without much help from European funding. Even if the European budget were expanded, the money would be a drop in the ocean compared with the economic needs of the depressed areas and poorer regions of Europe. They will have to adjust in other ways and that is why the overall economic framework must be right. There are two key elements to that.

Mr. Bolkestein, the Liberal Commissioner in Brussels, stressed the first element yesterday. It is the importance of the Lisbon approach, which essentially provides for a market mechanism to ensure a proper disciplined system for state aid, competition and the maintenance of the original principles of the Common Market.

Secondly, the poorer areas of Europe cannot be constrained in their application of tax policy. Taxation is not simply a British red line issue; it is about the future of Europe. The poorer countries in Europe must have the flexibility to vary their corporate tax rates. There is nothing wrong with tax competition, which is entirely healthy and should be embedded in the institutions of the European Union.

Mr. Hopkins: I agree with the hon. Gentleman but does he agree with me that it is right for those countries to retain their currencies so that they can secure appropriate parity and maintain competition in that way, too?

Dr. Cable: The hon. Gentleman knows that I perceive some merit in a common currency but he makes a clear point. Such a currency would increase the importance of the need for other forms of flexibility. That is essential not only for taxation but for regulation. Trying to impose uniform regulation can be damaging, especially in a monetary union. One of the most important elements in the treaty negotiation therefore relates to the terms of the protocol on subsidiarity. That should give maximum scope for national Governments to pursue independent approaches on regulation.

Mr. Prisk: Does that mean that the hon. Gentleman agrees with his Liberal Democrat Member of the European Parliament for the eastern region who has submitted to the Convention the proposal that the European Union should establish a system of its own revenue resources, which may include levying taxes and duties?

Dr. Cable: No, I do not agree with my colleague. I have disagreed with him publicly and privately on many occasions, not least on the issue that we are considering.

The hon. Gentleman has conveniently helped me on to my concluding point about whether there should be a European tax system. I believe that my colleague from the eastern region advocated that, but we do not. It is unnecessary because mechanisms for funding the European Union already exist. The third and fourth dimensions of own resources are perfectly adequate. The problem is the way in which the money is spent. It
 
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should be spent in a disciplined way and the terms of the motion capture the essence of what we all agree should happen.

5.58 pm

Ms Candy Atherton (Falmouth and Camborne) (Lab): I am pleased to participate in the debate. It will not surprise hon. Members that I want to talk about Cornwall.

Mr. Luff: A fine county.

Ms Atherton: A very fine county, but one with some difficulties. Its gross domestic product is 59 per cent. of the European Union average. Everyone would agree that that is unacceptable for this country.

I shall say a little about the history of how we obtained objective 1 funding. When I was first elected in 1997, not much had been done to tackle the economic problems of the county, which was in slow decline. We had high unemployment and low wages. We still have low wages but unemployment has fallen. People and the community wanted to tackle the problems and we came together in a campaign to try to secure separation from Devon.

Standing alone, separate from Devon, is popular in Cornwall. However, it was difficult to achieve because the Commission was dead opposed to it on the ground of statistics. In its view, one should not separate geographical areas because it is then impossible to follow long-term statistical analysis. We had a campaign and when I went to see our Prime Minister, he instructed our civil servants to make our case with the Commission. When, just a handful of weeks later, an agreement was reached that, statistically, we would be separated from Devon, we immediately stood out as a shining example of a community that needed objective 1 status and we started to receive the funding from 2000. That involved more than £300 million, plus public and private match funding.

Mr. Luff: The hon. Lady has already acknowledged my recognition of the fact that Cornwall is a fine county. However, if I heard her correctly just now, she seemed to be calling for the separation of Cornwall from Devon. How does that fit with the Government's plans for regional government for the south-west?

Ms Atherton: The hon. Gentleman misunderstands me. For Cornwall to qualify for objective 1 status, we had to be considered statistically on our gross domestic product. Devon's relative prosperity pulled us up above the 75 per cent. level of GDP, which meant that we did not qualify. Thanks to the Government, once the argument that I have described had been put to the Commission, we were able to stand alone and our relatively low GDP enabled us to obtain the objective 1 funding. As I have said, that involved about £300 million of European structural funds, plus match funding from the private and public sectors, including the Government. So the Government are putting money in through the European Commission as well as through match funding. Certain hon. Members on the Liberal Democrat Benches were convinced that that match funding would never materialise, but I am glad to say
 
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that it has, and I am very grateful for it. We now have a number of projects in place, which I shall talk about later.

The funding has also opened the door to other pots of money. It was as though a curtain had fallen away from the eyes of civil servants and politicians in Whitehall, and a number of other programmes suddenly came together. The pots of money filled up to provide a sizeable amount with which to tackle our problems. One area in which we have used this money has been the combined universities in Cornwall. Anyone who knows the county will know that our young people fly across the Tamar bridge, possibly never to be seen again until they retire. However, we need their ideas and their capacity to create new companies.

We had a fantasy about having a university in the county, prior to obtaining the objective 1 funding. Our fantasy involved a university simply landing near Penzance just like the Tardis. However, the fantasy was not funded, which meant that it had a serious problem. But, because we had our stand-alone pot of objective 1 money, Falmouth college of arts and other higher education providers in the county came together with me to develop the concept. A new campus was purchased and the first students will arrive at combined universities in Cornwall this September.

To deliver an idea—a dream—by planning, through the Commission and the British Government, and to have the first students arriving on time, to the day, is a tremendous achievement and I pay tribute to everyone who has taken part in the project. That all took place during the run up to the 2001 general election, when money was getting tight and Ministers were moving around. However, the appropriate Ministers were brought together and they put their hands in their pockets to get the match funding on to the table. They made this happen, and I have a real fear that that would not have been the case if those Ministers had not been brought together in that way. The graduates of the university will create new companies, which will create new jobs. They will be higher-level jobs than we have had in the past, which has to be good for the county.

We are also leading the way on broadband. Being at the periphery of the country means that infrastructure and communications are our most difficult problems. However, once someone has broadband, they are at the centre of the universe. Cornwall now leads the United Kingdom with broadband. By this time next year, any small or medium-sized enterprise in Cornwall that wants access to the internet, either by means of broadband or wireless, will have the opportunity to get it. That will be a huge step forward for any business working in the county.

That is why I have been so supportive of structural funds and I could go on to talk about the many other ways in which they have helped us. That pot of stand-alone money has enabled us to be creative, to think outside the box and to approach the Government for the appropriate match funding. I must be honest with Ministers: I am sympathetic to the case, and, clearly, I understand the economics in relation to why we want to renationalise, which is a nicer term than "repatriate", the structural funds money back to the United Kingdom. But I am concerned that we need to be able to think outside the box—not to come up with central
 
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programmes that other parts of the country are following but innovative, new ideas that we want to work in Cornwall.

I ask Ministers to think creatively over the next few months. I will be supportive of their plans to, so to speak, get our money back. I accept that the Government have made a commitment to Cornwall way beyond any commitment that any previous Government have made to the county, but I am concerned that there will be a lapse in the couple of years after 2006, because we cannot plan now for what will happen in those two years. We cannot make planning applications in case things are not quite in place. I ask Ministers to consider how we can move forward quickly and efficiently to deliver for the county of Cornwall.

Once again, I am grateful to Ministers for their commitment to Cornwall. Our GDP and our need stand out, and I hope that Ministers will continue to work with us to improve the economic prospects of the whole county of Cornwall.

6.6 pm

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