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Lembit Öpik (Montgomeryshire) (LD): I agree with the comments of my hon. Friend the Member for St. Ives (Andrew George). Many of them apply to Wales. I was also interested in the suggestion of the hon. Member for Blaenau Gwent (Llew Smith) that he personally, not the Labour party, was responsible for European funding.

Llew Smith rose—

Chris Ruane: My hon. Friend did not say that.

Lembit Öpik: I know. I shall give way but I understand that the hon. Gentleman did not really say that.

Llew Smith: Either the hon. Gentleman suffers from major problems with his hearing or I have a major
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communications problem. On this occasion, I shall be polite and say that the hon. Gentleman has a problem with his hearing. On two or three occasions, I said that I should like to claim credit for the introduction of objective 1 but that I knew that the achievement was due to the election of a Labour Government. I repeat, "a Labour Government."

Lembit Öpik: I shall simply say that there has been a sense of humour breakdown rather than a communications breakdown. To avoid doubt and so that the hon. Gentleman does not get into trouble with the Prime Minister, I stress that I fully understand that he is not, at least on this occasion, taking on his party leadership. Nevertheless, he spoke about the benefits of objective 1 to his constituency.

There is no question but that objective 1 has been enormously helpful to Wales, although unfortunately not to Montgomeryshire, which just missed out. By any measure today, it would qualify for objective 1, but it just missed out at the time. That was a disappointment to my constituents. We got limited funding but not on the basis of objective 1. One of my minor criticisms of the objective 1 system is that the inflexibility of its criteria mean that many regions in the United Kingdom, including mid-Wales, have missed out.

The third report on economics and social cohesion, which the European Commission published on 24 February 2004, charts the way for structural funding in Wales for 2007 to 2013. I am tempted to discuss the success of objective 1, but that has been covered widely in interventions. The debate, which is about the way in which the needs of Wales and the United Kingdom should be met through structural funds in future, is most important.

The cohesion report states that the UK is the most divided state in Europe, even including the 10 accession states, for apportioning funding. The figures in the cohesion report clearly show the poverty of aspiration of successive UK Governments in regional development policy. European structural programmes offer an opportunity for regions such as Wales, but also parts of England, Scotland and Northern Ireland, to escape from the straitjacket of rules and funding that UK Governments impose. I stress that such restrictions and the lack of joined-up thinking in dealing with the enormous disparity of wealth in the UK make several of us suspicious of future funding strategies if they are to be primarily in the hands of the UK Government.

The Welsh Liberal Democrats favour a continued link with European funding for economic development projects in Wales. What is likely to be on offer from the UK Treasury would probably be limited to three years, whereas European funding would be solid for up to eight years. Indeed, during the debate in the Assembly on Wales in Europe on 18 June 2003, my colleague Mike German, AM, highlighted the dilemma. He asked a question about the repatriation and future of structural funds in Wales, and inquired

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That is why I would be concerned if the United Kingdom Government were to decide that they should hold the primary reins of distribution for such funding across the United Kingdom.

Mr. Watts: As I understand it, the only way in which the Community could continue its objective 1 and 2 programme would be through a massive increase in funds. The UK Government would therefore have to make a contribution to the European Community for that programme to continue. How can the hon. Gentleman be sure that the resources that would come from the UK would be spent in objective 1 and 2 areas here?

Lembit Öpik: There are two elements to the hon. Gentleman's question. First, he is right to say that there is no question but that the funds have to be available. We need to have a transparent debate on the relative cost to the wealthier nations such as the United Kingdom of ensuring that the funding is there. He did not say—but I will—that other parts of Europe, including the 10 accession countries, will also be making similar claims. I know for a fact that Estonia is likely to do so, so there is a funding issue involved. The action to take in that regard is for us to have a longer debate on the financial implications of UK expenditure in that system and on what the likely return would be.

The second part of the hon. Gentleman's question can be answered as follows. The Liberal Democrats' strategic interest in speaking in favour of maintaining something like the existing system stems from our faith in the fact that the funding is long-term. It could last until 2013 or even 2014. Our concern about the alternative system is that there could be no guarantee of funding over such a long period, during which there will necessarily be a number of general elections. Government policies might change and the promises made by the Chancellor of today might not be honoured by the Chancellor of tomorrow. That is the difficulty. We therefore have a strategic concern about the solidity of that long-term funding arrangement, which could change depending on who was in office in the Exchequer and who was in government.

Mr. Watts: Does the hon. Gentleman agree that the long-term regeneration of areas such as mid-Wales, Yorkshire and Cornwall depends on the Government themselves making resources available? At the end of the day, whether an area has an objective 1 or objective 2 programme, the amount of resources that will be made available depends on the whim of the UK Government of the day. Does it not give him confidence that, since 1997, this Government have shown that they have vastly increased those resources? Is not the best way to ensure that those resources are available to objective 1 and 2 areas to tell people to keep on voting Labour?

Lembit Öpik: If the hon. Gentleman looks at the history of this issue in Wales, he will see that one of the great frictions in Welsh politics was caused by the fact that the then First Minister, the right hon. Member for Cardiff, South and Penarth (Alun Michael), could not deliver what a number of Labour Welsh Assembly Members themselves demanded. In other words, the friction did not come from the Opposition parties alone.
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It came from within the Labour party, which, on the basis of this very issue, demanded the resignation of the right hon. Member for Cardiff, South and Penarth from his role as First Minister and replaced him with Rhodri Morgan. I understand the political point that that the hon. Gentleman makes, but the equally political response is that it was not good enough for Labour in Wales. It would have been instructive for him to have seen the frictions that this very issue caused in that nation.

Chris Ruane: Would a Liberal Democrat Chancellor of the Exchequer, should there ever be one, guarantee sums of £400 million for one region, and £600 million for another, in the middle of a comprehensive spending review? Would that be right?

Lembit Öpik: Of course not, and that is the point that we are discussing. My hon. Friend the Member for St. Ives suggested that the hon. Gentleman and I should settle this score outside the Chamber. I have just been reading a book about the great fight between George Foreman and Muhammad Ali, and I fear that it would be less "The Rumble in the Jungle" than "Danger down in Strangers". I am sure that we can accept one common issue: the frictions that seem to arise in this debate about the certainty of long-term funding are shared, regardless of the colour of the Government. Long-term certainty is therefore what those in business engaged in long-term investment crave, as they can then make long-term plans. That is very important for industry.

Mr. Kilfoyle: The hon. Gentleman mentioned how Montgomeryshire had missed out on objective 1, so I understand his disappointment in relation to his emphasis on the normal give and take of argument about the processes and mechanics of how objective 1 ought to be applied. Will he give credit to the Minister for Sport and Tourism, the then Minister for the Regions, Regeneration and Planning, who went to great lengths to ensure, with a lot of support from different elements in his party and from others in the House, that the most needy parts of Wales, as well as Cornwall and South Yorkshire, shared in the benefits of objective 1, which he had seen for himself on Merseyside?

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