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The Chairman: We now have until 5.42 pm for questions to the Minister, which is an extension because of our late start. I remind Members that questions should be brief. It is up to a Member, subject to my discretion, to ask related supplementary questions together—though not so many that it hogs all the time.
Mr. Mark Francois (Rayleigh) (Con): It is always a pleasure, Mr. Olner, to serve under your chairmanship. That is particularly the case this afternoon, as the allocated Chairman was apparently unavailable when we were due to start. We thank you for manfully stepping in so that we can proceed with this important debate. I also thank the hon. Member for South Ribble for ably introducing the debate on behalf of the ESC and for helping us to focus on the matter.
“The remaining...€350 million”—
is due to come—
“from the margins of Heading 4 of the budget, EU as a Global Partner.”
As she knows, that money is set aside for crises. The Minister referred to funding in her opening statement, but only briefly. Will she update the Committee on where exactly that €350 million will come from?
Caroline Flint: As I stated in my letter, there has been some discussion around €600 million being provided for this area of work. Some €250 million is being reprioritised from the existing European neighbourhood policy budget area. The hon. Gentleman is right to raise this issue, because this particular budget is about looking forward to try to foresee crises. We had concerns about that in relation to, for example, the middle east, or if another situation, such as the Russia-Georgia conflict, were to emerge.
In the spring European Council declaration on the eastern partnership, my right hon. Friend the Foreign Secretary secured language on the importance of maintaining adequate margins to alert everyone to the importance of the issue. I understand that there is also an emergency aid reserve in the European Commission budget. In 2009, there is an allocation of €244 million for that emergency aid reserve. The amount was fixed at €221 million for the 2007 crisis for the duration of the 2007-2013 financial framework.
As the budget margins under the external action budget accommodate unforeseen and new expenditure, we really need to ensure that this matter is dealt with properly and in a disciplined fashion. I must say that one of the aspects of this matter, if one looks through the tables in the document pack, is the amount that it is suggested might be spent as opposed to what it is actually believed will be spent in terms of payment appropriations.
Again, we need to continue working in that area. I say that because, obviously, the six countries involved over the next year or so will be coming back with different proposals and plans for projects. With the language that my right hon. Friend the Foreign Secretary secured, we need to ensure that we pay attention, first, to whether the margin of money is there and, secondly, to how it affects other priorities. I think that we can attend to that matter.
In addition, there is agreement on a mid-term review, which has already started to look at budgeting in this area, and it is due to be completed roughly a year from now in 2010. Again, some aspects of the matter need refinement, and I am happy to keep both this Committee and the European Scrutiny Committee informed about the detail of that work.
Mr. Francois: I hear what the Minister has said, but we still have a problem: this project is due to be launched formally on 7 May; we are in late April now, and there is still a potential shortfall of €350 million, if the project is to be carried through as originally envisaged.
The Minister has mentioned the emergency aid reserve of up to €244 million. However, if all that money were committed to this project and other crises were to happen, there would be no emergency aid reserve to provide assistance for those other crises, so it would be a very important decision if that fund were to be earmarked for the eastern partnership.
Bearing in mind that we will launch this thing within a fortnight, those financial questions ought to have been answered by now. I want to press the Minister. Is she saying that the emergency aid reserve has been allocated to make up the funding shortfall? If she is not saying that, where will that money come from, bearing in mind, as I have said, that we are due to launch this thing within a fortnight?
Caroline Flint: As I said, the talks around moneys for this particular partnership are part of an ongoing discussion, the suggestion being that there could be scope in the margins of the money set aside for external crises. I presume that that view is based on previous spending in that area. The aid reserve money is separate, but it has been identified as a potential source of money, if necessary. Again, this is something that has to be worked through.
We can see from some of the projected spending plans that this amount of money will not necessarily have to come online in this financial year. For many of the projects and much of the institution-building, proposals will have to be worked up and then decided on, on a case-by-case basis.
So the hon. Gentleman is right to point out the need to keep on top of this issue, but he is also right to point out the need for us to ensure that we are clear about what the money will be spent on. Some of the safeguards that have been included, to look at annual plans and payment against individual projects, will be one of the ways to check things; first, that what we are paying for is a good idea and secondly, that the money is actually there. As I have said, more work needs to be done and I will be happy to keep the Committee involved and informed.
Mr. Francois: I have heard what the Minister has said. However, if we boil the issue down, within a fortnight we are supposedly going to commit to a project that could cost up to €600 million, but we have identified only half the money with which to fund it. Control of public spending is clearly important given our country’s current economic condition, so is it in any way good practice to commit to something when less than half the money to fund it has been identified? Furthermore, why are we debating the issue so late in the day when the money is not available? The situation is a mess, is it not?
Caroline Flint: No, I do not agree. The European Union already has a level of engagement with the six countries involved on a number of different fronts, and a number of different projects are already operating in those countries as a result of EU support. I have met people in Ukraine who have told me about that, and I saw it myself when I visited the country.
The Commission’s plans on the further €350 million will be discussed as part of the mid-term review of the EU financial instruments and will need Council agreement. It is acknowledged that more work needs to be done in this area to see it through, but there is a commitment to make that happen. As far as I am aware, none of the six countries feels that the issue should stand in the way of them working in a closer relationship with the EU to build on existing relationships. As far as I am aware, all six countries plan to attend the launch.
The Chairman: I call Mr. Francois, but this will be his last related question.
Mr. Francois: Thank you for your forbearance, Mr. Olner; I will try to make my question succinct.
The issue is not that all of the countries turn up to the launch, but how the project will be paid for. The Minister has said a couple of times that the issue will be looked at in the mid-term review in 2010, but that will be a year after the launch of the initiative. I must press her again: where is the money going to come from? She is asking us to commit in principle to an initiative that is not fully funded; in fact, it is hardly even half funded. If she wants the Committee’s support, she needs to provide greater reassurance and clarity about what is going on.
Caroline Flint: I have tried to provide the Committee with that today, as well as in my correspondence with the Chairman of the European Scrutiny Committee. First and foremost, it was felt that a step change was needed in our relationships with the six countries, which was based on the fact that, in many respects, we in the EU and, bilaterally, in the UK Government, already have relationships with each of the six countries. The issue is therefore one of building and looking for efficiencies as well as added value via this new dimension.
Some €250 million has already been found from existing resources of the European neighbourhood, which is a pretty good start.
Mr. Francois: That is less than half.
Caroline Flint: Hang on a second. There is a need across the piece, as the Commission and I have said and the Council has agreed, to look further at what other support could be forthcoming to support the project’s ambition. The Government are conscious of, and are in many respects influencing more, the way in which we can better budget and plan for the support we need. That is one of the reasons why we urge that, when budgets are developed, there is a commitment appropriation, which is like a ballpark figure of what might be spent—we can see it in the tables in some of the Council documents—and payment appropriations in relation to what we think will actually be spent. If members of the Committee look at the tables, they will see that there is quite a big difference between those two appropriations, so I have asked my officials to look into how we can bring the reality of what we think will be spent closer to the initial overall figure. I assure the hon. Gentleman that we will be watching the matter very carefully.
As I have said, I do not think that there have been any complaints from the countries involved about the method of going forward. Furthermore, looking at the issue involves tight scrutiny. We all know that sometimes budgets can be put down and the money not spent, and it is not unusual for projects to be supported in that way. As I have said, I will be happy to keep the hon. Gentleman informed as the debate develops, and if I can provide anything more at the end, I will certainly do so.
Richard Younger-Ross (Teignbridge) (LD): The Minister is clearly putting meat on the problem. The Conservative party, the Liberal Democrats and Labour Back Benchers have been trying to argue in favour of the European Union, as we again have a project that has gained momentum, and it does not matter whether it has been funded, because it will proceed. We should start the ball rolling down the hill only when we know where it will arrive and what it will cost. Will the Minister state concisely whether she knows where the extra funding should come from and whether she believes it should come out of the aid programme, and will she guarantee that some of the other projects will be protected, such as the funding for Turkey and other countries that the European Scrutiny Committee debated last week?
Caroline Flint: As far as I am aware, our relationship with and support for Turkey would not be affected. The Commission has proposed the use of a further €350 million from the margins of the heading, “External Relations”, in the EU budget between 2010 and 2013. I think that it is partly a step-by-step approach to funding to ensure that we advance in a practical way, and I do not think that we necessarily have to decide it all in advance. This autumn we are due to agree priorities for the use of margins for 2010, and the eastern partnership is just one of several priorities. The Commission proposal for expenditure on the eastern partnership in 2010 is €24.25 million, which is a small part of the margin. In future years we will be able to look at it in the light of the mid-term review. We have been asking for the development of mid-term reviews so that we can better track spending and look at what is really happening.
To a certain extent there has to be a level of flexibility in all that, because projects do not always come to fruition in a way that requires a lot of up-front loading of finance. The tables suggest that the EU is recognising that many projects will take a couple of years to plan before money comes in. Overall, the EU has to look at its budget and how it works, and part of that will be its neighbourhood policy, whether in the south or the east.
Richard Younger-Ross: I hear what the Minister is saying, but there is a danger, to which I alluded earlier, in that projects gain momentum. One of the difficulties we have with current EU structures is that once projects have momentum it is difficult to put the breaks on and ensure that funding is properly used and that they work and deliver the aspirations as we are being told they should. What discussions is the Minister having to ensure proper regulatory and financial control of the projects so that part of the way through the project we can say, “No, we are going to put the breaks on, because the funding has not been identified and we are not convinced that it is worth the money.”?
Caroline Flint: I will try to help the hon. Gentleman. I have mentioned several times the mid-term review of ENP financial instruments, which will take place over the coming years. Allocations for the eastern partnership will then be allocated to some of the countries, based on the outcomes of the mid-term reviews. We would like the allocation of resources to be prioritised according to needs, but we would also like them to look at the capacity of partners to deliver.
We are also working closely with the Commission on how we can strengthen the effectiveness of EU assistance. Our suggestion on measuring and improving the objective reporting of partners’ progress, for example, was taken on board last year, and I think that we improved ENP progress reports last April as a result. We will continue to pay attention to that. We will try to ensure that we get clear objective reporting about how things are being planned and developed, and the capacity of those countries to take on a project, so that when the money is delivered it can be implemented on the ground. Work is in progress to improve the method of planning, monitoring and reporting. If a country cannot demonstrate that its planning is such that the money being provided can actually kick in and go into action, it will be appropriate to have a discussion and not send the money forward. In a number of areas—dare I say it?—the European Union has got better in some of the funding it provides, not only for countries outside the EU but some of the countries in the EU, to make sure that we get better value for money. If money is not used in the way suggested, it is brought back. I recall that we discussed that in relation to Bulgaria and Romania not long ago.
Mr. Borrow: In view of the Minister’s observations and correspondence and this afternoon’s Committee, will the Minister elaborate and elucidate how she feels the eastern partnership will affect the current and future direction of Belarus in respect of its relationship with the European Union?
Caroline Flint: I thank my hon. Friend for that contribution. Engaging with Belarus was the right decision. It is important to recognise that Belarus has made some positive steps, but there is still a long way to go. We remain very concerned about the detention of activists, and we are in regular contact with NGOs about the detention of individuals, which is important. Belarus will be fully included in the eastern partnership only if it can demonstrate that it is making real progress towards democracy and human rights. We will continue to monitor the situation very carefully.
I wrote to the Committee about sanctions not long ago. I am pleased to say that the European Union has decided to extend the common position on sanctions for 12 months from April and to suspend the travel ban for a further 9 months. In many respects, that reflects the mixed progress that Belarus made during the first six months of the suspension; we have our eyes wide open. That adds to my earlier point that there is not one blueprint for the six countries. Those countries have different aspirations in terms of their relationships with the EU, and we should be up front about that. We expect certain standards, whether they are in trade or other areas. There is certainly not one blueprint on the starting line or what we expect of those countries, because the process will be customised to the situation of individual countries.
 
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