Examination of Witnesses (Questions 36-39)
Mr Neil O'Brian and Mr Mats Persson
15 JANUARY 2008
Q36 Chairman: Welcome to our sub-committee
and thank you very much for coming. This is a public session.
You have had the list of topics for discussion. Would you like
to make a general statement first or would you rather we started
with questions?
Mr O'Brian: We would rather start with the questions.
Q37 Chairman: My first question is
the obvious one to get us started. You make the case for the abolition
of structural funds and the complete renationalisation of regional
policy. Could you give me a quick summary for the record?
Mr O'Brian: The quick way of expressing that,
turning the question round, would be to say that if you take the
idea of subsidiarity seriously, why should we run regional policy
at European level? It is not intuitively clear why we should do
that, particularly given that there are fairly clear problems
in doing that in the present system at the moment. The main problems
that we identify are, firstly, quite poor targeting of funds—almost
all regions get something; and from the limited amount of data
that we have been able to find, when you get down to a regional
level, we still find that a greater proportion of the money is
not being spent in the poorest areas. Secondly, you have quite
high bureaucratic costs; you have various levels of administration
and very high costs in doing that. Thirdly, you have problems
with the kinds of projects that are being funded at the moment.
A lot of these things are not really creating as much employment
as they could or as much growth as they possibly could. Fourthly,
you have quite bad connection with national policies. Certainly
that is a problem which the Prime Minister has identified. Gordon
Brown said that "there are many things that we want to do
to encourage local skills in research and development and local
businesses that we are not able to do because of the existing
rules". Fifthly and finally, there are problems with vulnerability
to fraud in the current system. It is a very complex system. The
Court of Auditors has not, as you know, cleared the overall budget
for 13 years in a row and the structural funds seem to be one
of the main areas of problems. In the ECA's last survey, only
about 31 per cent of all of the funds they surveyed were completely
free from error. You have five pretty serious problems. The Government
I think has made a very good case for renationalising the funds,
certainly in the richer Member States. I think we would agree
with their case.
Q38 Lord Kerr of Kinlochard: So we
can assume, as I did from your written evidence, that you are
more or less against the status quo?
Mr O'Brian: Yes.
Q39 Lord Kerr of Kinlochard: You
make a number of proposals for changes. One is that Member States
should be permitted to opt out from the EU structural funds system
as a whole. Could I ask you what you mean by that, because you
also argue as the British Government has done, that access to
the structural funds should be concentrated heavily on the poorest.
I think you support that. If the system were to continue, you
think that is correct—a poverty focus. But how do you reconcile
an opt-out system with a poverty focus? Presumably those who would
not be receiving funds via the structural funds would opt out;
the structural funds would then be a means of recycling money
among the poorest.
Mr O'Brian: I think what we would propose and,
as I understand it, what the Government would propose, is to disentangle
two different issues. One is the overall net transfer of funds
from rich Member States to the poorer Member States and the second
is the specific system of structural and cohesion funds that we
have at the moment. For example, we would propose, and again,
I think the Government proposed, that countries like the UK with
a GDP per capita of more than 90 per cent of the EU average would
neither receive funds from the SCF nor pay in that amount of money.
Overall, the impact would be fiscally neutral on the EU Budget.
For example, if you were either to allow Member States to opt
out or you were to have the EU-15 no longer receiving funds from
the SCF—
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