Select Committee on European Union Fortieth Report


Letter from the Rt Hon Alun Michael MP, Minister of State for Industry and the Regions, Department of Trade and Industry to the Chairman

  Thank you for your letter of 11 January 2006[3], advising me that your Committee is continuing to keep the above Explanatory Memorandum 10684/05 under scrutiny.

  This is clearly a good time to update you on the negotiations on Structural and Cohesion Funds reform post-2006.

  At the December European Council the Member States agreed a Structural and Cohesion Funds budget of 308 billion euros for the 2007-13 Financial Perspective. As in the Commission's original proposal, expenditure will be focused on three objectives: a Convergence Objective for regions with a GDP below 75 per cent of the EU average; a Competitiveness Objective for other regions; and a Co-operation Objective for cross-border and transnational projects.

  As a result, we estimate that the UK will receive a total of approximately 9.4 billion euros (in 2004 prices) in Structural Funds receipts from 2007-13.

  Of this, the UK will receive approximately 2.6 billion euros in Convergence funding for its poorest regions (I have no doubt that this will often be called by its old title of "Objective I"). Cornwall and West Wales and the Valleys will receive full Convergence funding, while the Highlands and Islands will receive phasing-out Convergence funding averaging approximately half of its current allocation.

  The UK will also receive approximately 6.2 billion euros in Competitiveness funding for its other regions. Of this, South Yorkshire and Merseyside would receive phasing-in Competitiveness funding averaging approximately a third of the intervention rates for the UK's future full Convergence regions. It will be for the Government, in agreement with the Commission, to decide how the remaining Competitiveness funding should be allocated between the UK's nations and regions.

  Finally, the UK will receive approximately 0.6 billion euros in Co-operation funding. We will need to agree with the Commission how this should be allocated.

  In summary, the agreement reached at the European Council represents a good deal for the UK. The overall budget is closer to our position than earlier proposals but our regions will continue to receive significant Structual Funds receipts in the next Financial Perspective and our poorer regions in particular will continue to receive substantial EU funds for regional development.

  The next stage is for the Council to reach agreement with the European Parliament on the budget. It will be for the Austrian Presidency to lead on the inter-institutional agreement with the Parliament in the next few months.

  On 18 January the European Parliament passed a resolution rejecting the December European Council budget settlement. This was entirely expected as it was always extremely unlikely that the Parliament would accept the Council's budget settlement without any alteration.

  The Austrian Presidency will now open negotiations with the European Parliament with a view to agreeing minor changes to the structure of the budget to satisfy the Parliament's concerns. These will then be re-presented to the Council for discussion and eventual agreement, we expect, in the Spring.

  We will continue to keep the Committee informed of future developments.

4 February 2006

Letter from the Chairman to John Healey MP, Financial Secretary, HM Treasury

  Thank you very much for your Explanatory Memorandum 5745/06 which Sub-Committee A considered at their meeting on 28 March. Given the interest of the Committee in the Lisbon Agenda we have decided to hold the document under scrutiny until our recently published report on the Agenda is debated on the floor of the House.

  On the Explanatory Memorandum itself, the Sub-Committee were pleased to see the broad welcome the Government gives to this Communication. The Committee also notes your belief that the National Reform Programmes themselves are not sufficient to deliver the Lisbon goals; what mechanisms do you suggest for strengthening the Open Method of Coordination to ensure that the policies outlined in the Programmes are implemented?

  Would you please also provide details of the discussions on the Lisbon Agenda which took place at both the recent ECOFIN Council and European Council meetings.

30 March 2006

Letter from John Healey MP to the Chairman

  Thank you for your letter of 30 March about the Explanatory memorandum on the European Commissions's Communication Time to move up gear: The new partnership for jobs and growth.

  The Lisbon National Reform Programmes (NRPs) are a welcome step forward with all Member States pledging to undertake structural reforms, but what matters now is that Member States live up to those commitments and implement timely and effective reforms. Strengthening the OMC, broadly along the lines suggested by the Lords Select Committee on the EU following its recent review of Lisbon, could also help. In this context, the Government sees merit in a template for Lisbon NRPs with all Member States to include some common elements and the core Lisbon structural indicators, to facilitate comparability.

  Peer review also has an important role to play, and that is why during our Presidency, ECOFIN undertook a review of the first Lisbon NRPs, as well as reviewing the Commission's first Annual Progress Report earlier this year. ECOFIN Ministers have pledged to continue monitoring and evaluating Member. States progress in implementing the Lisbon agenda and we understand the Finnish Presidency plans a further ECOFIN review of Lisbon NRPs this autumn.

  I hope you find this response helpful.

29 May 2006

Letter from the Chairman to John Healey MP

  Thank you very much for your Explanatory Memorandum 5745/06 on the Commission's Lisbon Synthesis Report. This was considered by Sub-Committee A at their meeting on 20 June.

  The Committee have decided to continue to hold this document under scrutiny until their report, "A European Strategy for Jobs and Growth" published on 16 March 2006, has been debated on the floor of the House.

22 June 2006

Letter from Rt Hon Ian McCartney MP, Minister for Trade, Investment and Foreign Affairs, Department of Trade and Industry/Foreign and Commonwealth Office to the Chairman

  I am writing to update you on amendments agreed to the Community Strategic Guidelines on Cohesion.

  DTI provided an explanatory Memorandum 11706/06 on the Guidelines on 27 July, to the Guidelines as published on 14 July. However the Council has agreed some amendments since that version was published. Most of these are minor, but one is significant because it establishes the status of the Guidelines very clearly.

  The significant amendment is to the Articles governing the Guidelines. Member States were concerned that actions included in the Guidelines might be seen as compulsory, and actions not included might be seen as not eligible. Therefore the Council agreed to state the indicative nature of the Guidelines very clearly in the text of the decision. Where in 11706/06 "the Member States shall ensure that the national frameworks and operational programmes are consistent with these guidelines", this is amended so that the Guidelines are "adopted as an indicative framework for the Member States for the preparation of the national strategic reference frameworks and operational programmes for the period 2007 to 2013." The UK was one of many Member States calling for clarity here and we welcome the amendment.

  There were other minor amendments, correcting references, for internal consistency and consistency with the regulations, and to avoid unnecessary repetition. The other substantive changes are:

    —  indicated priorities on transport in 1.1.1 are limited to "as appropriate";

    —  text on Research and Technological Development now acknowledges that market failures do exist;

    —  under Guidelines 1.3 (More and better jobs) a reference to cultural infrastructure is added;

    —  also in 1.3 text on skills is amended, it now includes a reference (suggested by the UK) to National Reform Programmes.

  Looking ahead, the REGI Committee of the European Parliament is likely to address the Guidelines on 11-12 September, and we expect the Parliament to adopt the guide lines with few or no further amendments.

10 August 2006

Letter from Jim Fitzpatrick MP, Minister for Employment Relations and Postal Services, Department of Trade and Industry to the Chairman

  On 10 August my colleague Ian McCartney wrote to you to update you with amendments agreed to the Community Strategic Guidelines on Cohesion. He stated that we expected the European Parliament to adopt the Guidelines with few or no further amendments.

  On 11 September the Regions Committee of the European Parliament agreed a Resolution on the Guidelines. One oral amendment was agreed to add a new citation calling for discussions with the EP prior to the mid-term review.

  We now expect the Council to adopt the Guidelines on 6 October. I regret that this means that it is likely that we will need to override your scrutiny reserve before your Committee meets again. Margaret Hodge will write again following adoption.

  The Guidelines are the last element in the set of Community legislation to govern the Structural Funds 2007-13.  Any delay at this point would mean a delay to the start of Structural Funds Programmes across the Community.

18 September 2006

3   Correspondence with Ministers, 45th Report of Session 2005-06, HL Paper 243, p 41. Back

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