16 European Economic Recovery Plan: rural
measures
| (30402)
5883/09
COM(09) 38
| (a)
Draft Council Regulation amending Regulation (EC) No. 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)
(b)
Draft Council Decision amending Decision 2006/493/EC laying down the amount of Community support for rural development for the period from 1 January 2007 to 31 December 2013, its annual breakdown and the minimum amount to be concentrated in regions eligible under the Convergence Objective
|
| Legal base | Articles 36 and 37EC; consultation; QMV
|
| Document originated | 28 January 2009
|
| Deposited in Parliament | 4 February 2009
|
| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 17 February 2009
|
| Previous Committee Report | None, but see footnotes 45, 47 and 48
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| To be discussed in Council | See para 16.8 below
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
16.1 On 26 November 2008, we reported on a Commission Communication[45]
(A European Economic Recovery Plan), which sought to develop
an overall Community strategy in response to the financial crisis,
notably by a major injection of an additional €200 billion
purchasing power into the economy. That approach was subsequently
endorsed by the European Council on 11-12 December 2008, which
also supported increased Community spending in a number of sectors,
including €5 billion for energy, the broadband internet and
rural development. The Commission has now brought forward this
draft Regulation (document (a)), which seeks to develop broadband
infrastructure in rural areas, and to address further a number
of the "new challenges" for rural development arising
out of the Common Agricultural Policy "Health Check".
It is accompanied by a draft Council Decision (document (b)),
adjusting the level of Community support for rural development
in the period 2007-13. We are also reporting separately on a further
proposal relating to energy.[46]
The current proposals
16.2 In putting forward the draft Regulation, the Commission says
that rural communities can be among the most vulnerable to economic
downturn, and points out that, although access to the broadband
internet can help those affected to secure new jobs, learn new
skills, and identify new markets, there are communities which
lack coverage, due to their dispersed population and the high
costs involved. The proposal therefore aims to develop broadband
networks in order to achieve a 100% coverage by 2010, and to upgrade
the performance of existing networks, and it would amend Council
Regulation (EC) No 1698/2005 (the Rural Development Regulation)
to direct €1bn towards rural broadband infrastructure.
16.3 The Commission also notes that the Common Agricultural
Policy "Health Check" identified a number of "new
challenges" in relation to rural development and agriculture,
including climate change, renewable energies, water management,
biodiversity, and measures accompanying the restructuring of the
dairy sector.[47] Council
Regulation (EC) No 74/2009 subsequently amended Council Regulation
(EC) No 1698/2005 in order to make specific provisions for these
challenges, including a 10 percentage point increase in certain
aid rates as from 1 January 2010, whilst Council Regulation (EC)
No 73/2009 set new, increased rates of compulsory modulation (under
which specified deductions are made from the producer support
payments) to finance such measures.
16.4 The Commission now says that tackling these
challenges more quickly would enable agricultural communities
to be ready for improved economic circumstances. The proposal
would therefore provide an additional €500 million for this
purpose. It would also bring forward to 1 January 2009 the scheduled
increase in the aid intensity
rate; bring forward, by one year to 2009, additional funding (which
from 2010, will be funded by increased compulsory modulation);
and require Member States to submit revised rural development
programmes, taking account of this funding, to the Commission
for approval by the end of June 2009.
However, additional
funding for the new challenges was not agreed as part of the December
Council conclusions, and the Commission has proposed —
in line with the approach set out in the Communication[48]
on the revision of the Multiannual Framework Agreement for 2007-13
it produced in December 2008 in the context of the European Economic
Recovery Plan — a revision of the 2007-2013 Financial Framework,
and the use of the unallocated 2008 budget margin.
The Government's view
16.5 In his Explanatory Memorandum of 17 February
2009, the Minister for the Natural and Marine Environment, Wildlife
and Rural Affairs at the Department for Environment, Food and
Rural Affairs (Mr Huw Irranca-Davies) says the Government supports
this proposal, which is designed to assist rural businesses facing
difficulties funding projects in the present economic circumstances.
He notes that rural broadband projects can already be funded under
the rural development regulation, and that the proposal would
change the limit on the size of projects that can be funded (within
existing state aid rules) in order to assist the development of
rural broadband infrastructure.
16.6 So far as the UK is concerned, the Minister
notes that The Digital Britain Interim Report published in January
recognises that broadband is still lagging in certain excluded
areas (including rural areas), and he says it is unlikely that
all of the improvements necessary to meet the Government's commitment
to bring rural broadband infrastructure up to a minimum level
will take place if left to the market. The Government therefore
supports the use of this funding to encourage the development
of broadband in rural areas, but, since the proposed allocation
between Member States is based on historic allocations under the
EAFRD, the UK's share is likely to be only about 1.2% and thus
insufficient to make a significant impact. The Minister also points
out that, as the UK would contribute about 15% of the additional
financing involved, the proposals would entail a considerable
net cost.
16.7 The Minister notes that these proposals form
part of the Commission's wider European Economic Recovery Plan,
but says that the Government is concerned about the proposed financing
method, and that it will work with like-minded Member States to
ensure that the Commission explores all other possibilities for
the additional resources to be met from within the existing Financial
Framework (including through appropriate redeployment, re-profiling
of expenditure and use of existing margins). It will also argue
that the financing aspects of the package as a whole should be
agreed before these proposals can be adopted.
16.8 The Minister says that agreement on the rural
development aspects of the proposal were to be sought in the Special
Committee on Agriculture on 16 February 2009, adding that formal
agreement of the package as a whole is likely to be sought at
the General Affairs Council on 23 February or at the European
Council.
Conclusion
16.9 This document gives rise to three separate
issues — whether the measures proposed should be taken,
how they should be achieved, and the level and manner of their
funding. It is clear that the decision that a sum of some €1.5
billion should be devoted to these two areas was taken by the
European Council in December 2008, and the detailed manner in
which it is now proposed that this should be done appears to be
sensible (and to be based upon the approach already set out in
the Rural Development Regulation).
16.10 The main outstanding issues therefore arise
on the relationship between the funding proposed and the Multiannual
Framework Agreement for 2007-13, as set out in the Communication
put forward in December 2008. It seems to us that this last issue
is one best pursued through that more general document, rather
than in relation to individual proposals such as this one (and
the one on energy projects): and, since the current proposal raises
no other major outstanding issues, we are content to clear it.
45 (30092) 16097/08: see HC 19-i (2008-09), chapter
4 (26 November 2008). Back
46
See chapter 4 of this Report. Back
47
(29703) 99656/08: see HC 16-xxv (2007-08), chapter 1 (25 June
2008). Back
48
(30280) 17606/1/08: see HC 19-iii (2008-09), chapter 7 (14 January
2009) and chapter 7 of this Report. Back
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