European Regional Development Fund - Communities and Local Government Committee Contents

5  Repatriating regional policy

81.  We considered whether regional policy in the UK should be entirely managed and funded by the UK itself with the UK's contribution to EU Structural and Cohesion funds going only to the poorer Member States. Open Europe suggested that regional funding from Brussels should be replaced by an equal level of ring-fenced funding from Westminster. The UK could also choose to spend the money it would save, from not funding Member States above the 90% threshold, on its own regional policy:

Devolving regional policy should involve the Coalition promising to ring-fence the £8.7bn that it currently receives via the EU's structural funds for continued regional and regeneration spending around Britain. In addition, it could pledge to re-invest its projected saving of up to £4.2bn under the 90% threshold back into regional development. This would mean that virtually all UK regions would experience a rise in the amount of subsidies they receive by around 45%.[95]

82.  Open Europe proposed that, under this model, regional funding could be channelled more effectively to national, rather than EU, priorities. It could afford greater flexibility to respond to changing economic priorities, rather than be constrained by a set of objectives fixed for a seven year period.[96] We also heard that removing the involvement of the EU would reduce some of the bureaucracy, administration and audit requirements that some witnesses commented on.[97] The Government has indicated that it wants wealthier states, such as the UK, to stop receiving Structural Funds after 2020.[98] This would mean that responsibility for all aspects of regional policy, and its funding, would return to the UK.

83.  As we have noted, this policy of repatriation was not supported by other Member States during negotiations for the 2007-13 period, and is opposed by the Welsh Assembly Government, which receives by far the most Convergence funding in the UK for the West Wales and the Valleys region (€1.3 billion).[99] It is also opposed by many organisations that submitted written evidence, who value the long-term nature and focus of the funding streams. CEDOS/ADEPT said that:

The seven year programming cycle provides continuity and facilitates strategic programming and the development time required for large-scale projects. It avoids the precipitous 'dash for cash' that can be the case with shorter lived funds or those whose lifetime is uncertain.[100]

84.  Cornwall Council noted that "Seven year European funding programmes are outside of political timescales".[101] We note that it would be difficult to ring-fence money for any period longer than a UK public spending round (three or four years) or the five year electoral cycle, but since the EU Multiannual Financial Framework already sets the UK's regional funding on a seven year basis it follows that in certain circumstances special arrangements could be made. The current ERDF arrangement effectively removes this part of regional funding from the UK spending round cycle and so the change proposed would not alter that. There is therefore a solid basis for HM Treasury to maintain a seven year cycle, and to secure a formal agreement with the EU to set funding levels in line with what would have been agreed under the EU system. The Government will need to think creatively and take the lead in driving this agenda forward to negotiate a successful outcome with the Commission and other Member States.

85.  We support the principle of repatriating regional policy funding, provided funding could be protected and ring-fenced over the long-term to ensure that the poorest English regions continued to receive the same level of support they would have received under the current system. The mechanism for achieving this objective will require the consent of other Member States and the Commission, as well as agreement with HM Treasury that the funding be guaranteed for the same seven year cycle.

95   Ev 38 Back

96   Open Europe, Off Target: The case for bringing regional policy back home, January 2012, p 18 Back

97   For example, Ev w94 [Centre for Process Innovation], para Back

98   Ev 46, para 34 Back

99   House of Commons Library Standard Note, SN/EP/5636, p 5; "ERDF Convergence Operational Programme" at Back

100   Ev 33, para 12 Back

101   Ev w47 Back

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Prepared 13 July 2012