Examination of Witness (Questions 222-239)
Mr Graham Meadows
4 MARCH 2008
Q222 Chairman: Good morning, Mr Meadows,
thank you very much for coming. May I say by way of a preliminary
remark that the whole session is recorded and you will get a transcript
which you can take a view on. You have of course already provided
written answers to many of our questions but we are probably still
going to ask them just the same and pick away at the answers.
Would you like us just to start or would you prefer to make an
opening statement?
Mr Meadows: Thank you, My Lord Chairman; I would
prefer you to start.
Q223 Chairman: Then we will do that.
You get me first putting the formal question, what should be the
objectives of the EU's Structural Funds and how can the Funds
become more effective in supporting public policy in Member States
and regions? What mechanisms of delivery could make the policy
more user-friendly? That is the formal general question which
you have already provided some answers on, but perhaps you could
just start there.
Mr Meadows: The first point to underline is
that the EU Structural Funds are instruments of regional and cohesion
policy, or agricultural development policy, or policy for restructuring
the fisheries sector. The Funds are governed by the objectives
of the policies. The objectives of regional and cohesion policy
are best seen in relation to the economic objectives set out most
recently in the Lisbon Treaty: the pursuit of balanced growth
and of social market economy which is providing jobs for Union
citizens. These are the overall objectives of the Treaty, of EU
regional policy and, therefore, of the funds. Are the Funds effective
or is the policy effective? In my answers I tried to show that,
although the structure of the policy is quite complex, it brings
a number of benefits to the policymaker in the sense of levering
in financial resources from other sources into development areas,
of on strategic investments, of supporting the creation of the
European Union's single market for labour, and so on. The main
problem with the Funds at the moment, which makes them less user-friendly
than they otherwise would be is the steady accretion of financial
management responsibilities. Whereas we would all wish to see
public policy managed in such a way that taxpayers' money is used
for the purposes for which it is intended by the policymakers,
European regional and cohesion policy is reaching a state where
you have the impression that financial controls are now into the
belt and braces zone: the processes are being over-controlled
and there is a need to find a new way of approaching this question
of financial control which would make it easier for people and
for companies to have access to Structural Funds through regional
development programmes.
Chairman: I am going to postpone, if I may,
discussion of how might we change the finances to later when Lord
Woolmer will ask you about it, but I want to get us into the heart
of it. One of the issues that this Committee is having to think
about for the report is whether we in any way support a policy
of repatriation or we do not; in that context I want to focus
very much on that particular question because it is one of the
issues for us. Lord Trimble.
Q224 Lord Trimble: On the question
of repatriation of Funds I notice in paragraph 30 of your evidence
you have a long list—it runs over the page—of things
that would be lost by the policies of repatriation and re-nationalisation,
so you see a lot of disadvantages, do you, in the repatriation
of regional policy. Do you see any advantages?
Mr Meadows: The first point I would like to
make, for my benefit rather than for the Committee's -so that
you choose the word "repatriation" to describe the process
which makes it sound as if you are bringing home wounded warriors
who have been fighting for the realm abroad. Re-nationalisation
is a slightly better word in the sense that a process which brought
the implementation and direction of regional policy more closely
towards central government would actually remove, or would be
in danger of removing powers or measures of discretion from the
regions themselves. Repatriation focuses only on that part of
the process which is bringing something back from abroad, to here
in the heart of government as it were. Re-nationalisation makes
us aware that there are two sides to the process. It may be that
the price of bringing something back from abroad is that we also
take something away from either the devolved parts of the United
Kingdom or from the regions themselves.
Q225 Lord Kerr of Kinlochard: You
could run a regional policy on a regional basis, it does not have
to be centrally run.
Mr Meadows: Perhaps I can come to the question
about what you could do in a second part of this answer because
you could do many things. It is rather a question of how you assess
what you would do if you could. If that sounds Rumsfeldian, I
apologise. Let me come back to Lord Trimble's question about advantages.
Quite clearly, to the extent that administration may be more difficult
because any European Union policy has to apply in 27 Member States
and has to try to reflect the conditions in 27 Member States,
in theory at least it ought to be possible to have a simpler administrative
system if you are only dealing with one particular Member State.
Coming back to Lord Kerr's question about could and would, there
is no doubt that many of the disadvantages of re-nationalisation
could be avoided if that is what the re-nationalising government
wished to do. There are one or two things which it would be difficult
to avoid, which in my view would represent a loss of quality inside
a country like the United Kingdom: one would be the time horizon
which European policy gives at the moment—it would be difficult
to replicate a seven year or a nine year time horizon: another
would be the difficulty of replicating the linkage in terms of
economic management between the Cohesion Fund, which is part of
the Structural Fund package, and the Union's Growth and Stability
pact, or, in other words, management of deficits. To end on the
advantage, the advantage ought to be a simpler administrative
system, it ought to be perhaps a system which is more responsive
to the Member States' needs. The problem is that we have to try
to judge—this is why I get into this difficulty between
would and could—what a Member State would do if it was re-creating
a national regional policy. Here it seems to be fair to consider
as important the track record of particular Member States. If
you look into the Union there are some Member States who are extremely
committed to regional policy and you can see that, perhaps, the
transfer back to them of regional policy would have little impact
and perhaps bring extra advantages. The Federal Republic of Germany,
for example, is one which has a long history of very active regional
policy. Then you have other Member States which have a more embryonic
or ad hoc regional policy and you have the feeling that if regional
policy went back to those Member States, perhaps within a fairly
short time some of the benefits which have been established in
the past would be eroded.
Q226 Lord Trimble: I have to say
that from that perspective one regards European regional policy
as only an aspect of regional policy, there are other aspects
of regional policy that currently operate on a national basis,
and indeed regional policy existed before we went into the European
Union, so I do not regard European regional policy as being regional
policy full stop. Can I put to you an interesting experience that
I had about ten years ago when we were starting to prepare for
devolution in Northern Ireland and I found myself in conversation
with a very senior official of the Northern Ireland Department
of Finance. We were discussing European funding and he said that
European regional funding was quite often more trouble than it
is worth, and the reason why he said that was that the Northern
Ireland Department was under constant pressure from the Treasury
to design its capital spending programme so as to attract as much
European funding as possible and that this distorted the public
expenditure priorities and sometimes made them adopt projects
that would not be high priorities simply in order to ensure a
drawdown on European funding. Obviously, this is that particular
official's viewpoint and it is a different viewpoint from that
of people who are running the regional authorities and already
know that they are going to get X amount of money branded as European
anyway, but I would just like to share that with you.
Mr Meadows: Lord Trimble, you are right to say
that European regional policy is only a part of the regional policy
armoury which has been deployed in the United Kingdom. You may
have been more aware of regional policy in Northern Ireland than
someone would have been in perhaps the South West of England before
European regional policy began. The views of civil servants—I
speak as a former civil servant—are sometimes imperfect.
I remember that when the politicians in Cornwall and South-West
England were lobbying for Objective 1 status which would have
meant considerably more resources coming to the county from Brussels
that one of the civil servants in the county said to me confidentially
at the time "I only hope we do not succeed because we just
will not know what to do with the money". Now it is clear
that the rate of economic growth in Cornwall is much greater as
a result of Objective 1 status and funding being granted to the
country. If you went to the county you would find that there is
a fairly widespread agreement that European regional policy has
helped the county to reverse its fortunes.
Q227 Lord Trimble: I notice that
in the succeeding paragraphs to the one listing all the things
that would be lost by re-nationalisation of regional policy, you
say that regional policy makes the Union visible to citizens but
then criticise it by saying that it has a "poor record"
of claiming credit for its achievements. I am again not really
sure that I see this because one is accustomed to seeing regularly
projects with large signs saying that this project is being funded
by blah-blah-blah—one sees that travelling around the regions
regularly. The two points in any event seem to me to be somewhat
inconsistent with each other.
Mr Meadows: You do see signs, you are right,
but the number of signs that you see often bears quite a low relationship
to the number of projects which are being financed in any region.
At times, from Brussels, the European Commission has launched
the idea that there should be, for example, one day a year on
which people draw attention to the projects or the training actions
which have been co-financed from the European Union, not as a
way of trying to detract from an appreciation of what the Member
States have done for their citizens, but as a way of saying that
here Europe has also been trying to assist you. These sorts of
ideas are never really very welcome in Member States' capitals.
Lord Renton of Mount Harry: Can I add something
to that last point, simply to say that I am very interested and
very glad to hear you say that because I, as very much a supporter
of the EU generally, and regional funding, have always thought
that it is a very great shame that it is not compulsory that if
you are going to get EU regional money as we are talking about,
you should advertise the fact that some value is coming from the
development of the EU. It happens in Scotland, very much so, but
it is totally different and noticeable in my part of the country,
south-east England, you never get any credit for the EU but in
Scotland it is always very much on the billboards.
Q228 Lord Trimble: I thought it was
compulsory that you did.
Mr Meadows: It is compulsory.
Lord Renton of Mount Harry: It is compulsory,
is it, and just ignored, is that so?
Lord Trimble: It may be that there is not much
expenditure of regional funds in your area.
Lord Renton of Mount Harry: It is where one
knows that there has been expenditure and there is no advertising.
Q229 Chairman: Mr Meadows, perhaps
you can answer the question whether it is or is not compulsory.
Mr Meadows: I was quite happy to hear their
Lordships' dispute. It is compulsory but it is, as it were, still
something which is honoured or fulfilled in a rather strange way
and is often not fulfilled at all, so much so that the European
Union has the power to withdraw a percentage of funding if it
finds that afterwards proper publicity has not been accorded to
the project. In my own time we withdrew money from one quite large
project because there was no sign inside the airport to say that
this was part funded by the European Union. In the north-east
of England once Commissioner Wulf-Mathies was taken to the Theatre
Royal in Newcastle, which had been refurbished partly with European
Union money, but it was difficult to find the plaque. It was there
and the law was fulfilled but people going to the theatre would
not have been aware of it.
Lord Renton of Mount Harry: I must say have
been to that theatre with Lord and Lady Eccles and I was totally
unaware that it had been in any way revamped by EU money.
Chairman: I would like to pull us back to where
we were. Lord Kerr, you had a question on the last point.
Q230 Lord Kerr of Kinlochard: I was
thinking about Lord Trimble's point about Northern Ireland and
that going for regional fund money is more trouble than it is
worth; and about Mr Meadows' point about the South West. The South
West was a very impressive story, but post hoc does not necessarily
mean propter hoc, and one of the reasons it seems to me why there
has not always been the wildest enthusiasm for bidding for Structural
Fund money in the United Kingdom is the Treasury rules on non-additionality;
in order to maintain the planned total of public expenditure,
if you win money from Brussels this is netted off against your
money from London. This rule does not create enormous enthusiasm
for a huge bidding exercise or perhaps plaques in theatres when
you win. Would you like to comment on that?
Mr Meadows: In the past was a tough debate between
the European Union and the United Kingdom about this very question,
about whether funding was, or should be, additional or not, I
think Lord Kerr, who was then Sir John Kerr, was the British Permanent
Representative in Brussels at the time. The issue was only partly
solved and has been further diluted since. It is true that among
officials you may encounter reluctance to campaign for funding,
but politicians from Brussels, politicians or political leaders
in regions or in the devolved parts of the Union realise that
there is at least publicity value in it and there may be a marginal
or even considerable value in getting additional funds by going
to Brussels. My experience was that there was no shortage of people
coming and arguing for funding. One of the problems that the policy
faces, and I do not think this is only in the United Kingdom it
is in other places also, is that if the amount of funding being
granted to a Member States is low, then it is very tempting for
the Member States to merely mix it in with its own resources.
If you were at the moment running the Polish government it would
be very difficult not to make the expenditure additional because
there is so much, something like 60 billions euros over nine years.
That gives a clue as to how to view things. If one looks at a
detailed level in the United Kingdom, the amount of funding being
targeted into a particular local authority area by the European
Union may be a considerable percentage of the authority's investment
resources. I have in mind West Cumbria, which was a very clear
case. The Union targeted more money into West Cumbria than the
British Government would have otherwise paid to the region, so
there was a considerable net benefit. Also, you sometimes find
that in terms of the net investment effort in a region, the investment
effort will be considerably increased by the fact that European
Union funding is chiefly for investment. Looked at it in more
detail, therefore, and at the level of smaller units, you do see
an additional benefit and you see also the benefit of a different
quality of expenditure. You do get additional benefits on the
ground therefore.
Q231 Lord Kerr of Kinlochard: Following
that up, one takes your point with regard to Poland because EU
funding going into Poland is something like 20 per cent, the rate
of increase is 20 per cent above the funds that the Polish Government
has, so obviously with regard to Poland regional funding has got
considerable added value. With regard to larger, richer states,
regional funding has comparatively limited added value, so apart
from some ideological point, would it not be actually better to
take the richer and larger states out of regional funding so as
to concentrate the funding where it is going to make a significant
difference?
Mr Meadows: The richer Member States conceal
or contain very wide variations in regional incomes or in regional
well-being and, as I have just mentioned, we have had experience
in the United Kingdom whereby European Union resources coming
into the country meant that the Government transferred more of
its own resources to less well-off areas. At the end of the exercise
it was clear that the regions which had been listed as being eligible
for EU funding came out with more funding than they would have
otherwise had. One can allocate resources to richer regions and
concentrate it on the poorer parts of those regions. Also, it
is quite conceivable that without a regional policy which operates
in all of the Member States adherence to the single market or
adherence to the single currency would be weakened in some Member
States.
Q232 Lord Renton of Mount Harry:
Could I just mention, Mr Meadows, that area of northern England
that you mentioned? Could this be due to them having a very active
MEP and therefore making a lot of noise, and that some of this
has therefore been picked up by the local MPs in order to get
the EU money and with that more Government money? It seems to
me just the sort of suitable target for an MEP.
Mr Meadows: I would like to hand the credit
to them, but West Cumbria was two local authority areas and because
of the configuration of the areas—it is the coastal plain
between the Lake District and the sea—these local authority
areas are rather long and they cover the whole area. This was
a very particular case, that is why I remember it, and it bore
on the additionality argument that Lord Kerr was referring to.
The problem for London was the realisation that London had agreed
to the transfer to this area of a fairly large amount of European
Union resources and then had realised that its own funding to
the area was insufficient to provide matching funding. I am quite
happy to give the credit to the boisterous nature of Members of
the European Parliament or Members of the House of Commons or
Members of the House of Lords.
Q233 Chairman: Can I pick up out
of the general question about re-nationalisation of funds or not,
in your experience where are the States of the European Union
going with it? Is there any general level of support for re-nationalisation?
I have no feeling for who thinks what about it.
Mr Meadows: The last time that Member States
had to decide whether they wanted to go for some kind of re-nationalisation
was, of course, the budget settlement which was reached in December
2005. That is the last time that the question was put. The fact
that the policy is going on in a similar to that which existed
before, though with some changes, indicates that there was not
a consensus among Member States to re-nationalise European regional
policy. Under normal circumstances, after an agreement of that
kind, it would be some years before the same question was put
again. But in the agreement of December 2005, there was a provision
to look again in the mid-term at the evolution of the budget,
so, strangely, the arguments which were used in that negotiation
are still circulating because the Union is now going through its
mid-term review of the present budget settlement. The last time
that the Member States were called upon to decide this particular
question, then, they decided not to re-nationalise. The Member
States themselves have a wide range of needs which can be met
through the existence of something like European regional policy,
even though it is true as Lord Trimble says, that each of the
Member States themselves has its own regional policy.
Q234 Lord Kerr of Kinlochard: As
a strictly economic policy—this is between the lines of
your admirable paper—skewing towards the poor makes sense.
There was a bit more skewing introduced in 2005 and maybe a little
bit more in this mid-term review, but in terms of strict economics,
that must be right. You have a number of political arguments for
maintaining the Structural Funds EU-wide; you say it is supportive
of the single labour market; you say it is supportive of the disciplines
of the Stability and Growth Pacts and you say it is also good
for the image of the Union EU-wide. Probably you would also concede
that it is politically tricky in some Member States to agree that
they would not be eligible for any money from the Structural Funds,
or only for a little bit. But basically the economics of the operation
only make sense if it is a way of transferring resources from
the richer Member States to the poorer Member States; do you agree
with that?
Mr Meadows: By and large, yes, but I would also
say that in my view the skewing to the poorer Member States has
probably gone too far. One has to have in mind that when the policy
began there was a certain balance and the balance was struck around
the threshold of 75 per cent of community income. Those regions
with a per head income less than 75 per cent of the Community
average received something like 80 per cent of the funding and
the others 20 per cent. The enlargements of the Union which have
taken place have lowered the Community average income by about
15 percentage points. So the balancing point which was thought
to be suitable for the policy between 1989 and 2006 has suddenly
gone down, although the practice of concentrating funding on the
regions below 75 per cent has been retained. You have, therefore,
a considerable exaggeration in the skewing effect and you see
the effect of this in the United Kingdom. In the United Kingdom,
regions which would have continued to receive a fairly large injection
of European resources had the enlargements not taken place, in
other words had the average income not fallen, no longer receive
the same intensity of support. In effect, economically speaking,
they are removed from the category of regions receiving the highest
intensity of assistance, perhaps before they are in a position
where they could continue to sustain the further growth of their
own prosperity. This is because the threshold income which triggers
the highest intensity of support is now 15 percentage points lower.
I find that there is a danger of—if I say it in these terms
I do not mean it in an emotional way—abandoning a region
before it has reached the position where it can sustain its own
development. If one is not careful one will discover that regions—we
have seen this in the case of one or two regions—leave eligibility
and then bounce back into it, like planes which do not take off.
Their economies are in the process of restructuring but when the
Union withdraws the funding they cannot sustain the effort and
bounce back onto the runway again. I would see that as an economic
argument that the balance of the policy has been changed by this
lowering of the Community's average income.
Lord Renton of Mount Harry: Perhaps we could
just take that point a bit further because it is precisely the
question that I was going to ask.
Chairman: We will go back, but do take that
point now.
Q235 Lord Renton of Mount Harry:
Indeed, that is precisely the point that you make in paragraphs
46 and 47 of your note to us, this drop of 15 percentage points,
and when I read that last night I must say I was taken by considerable
surprise. Does this actually show the real difficulty for you
or the Commission in getting this right and actually satisfying
both the needs and the requests? You then, Mr Meadows, go on to
suggest the creation of a third category of regions between convergence
and competitiveness, perhaps to be called regions in transition,
to cover those who might otherwise be over 75 per cent but really
should not be. Would you like to just explain that a little bit
more because it seems to be part of the difficulty in always having
as it were to create new classes in order to keep up with the
mob?
Mr Meadows: The third category exists at the
moment but in an ad hoc way. Basically what happens is the Commission
proposes some kind of short term transitional arrangement for
regions which are no longer to receive high intensity support.
The policy offers degressive to help the transition to a lower
intensity of aid. This degressive support is time-limited, however.
If one looks at the development of some regions, one finds that
they become stuck in the, as it were, netherworld. To continue
their development, they need an intensity of support which is
higher than that given to the generality of regions, although
it need not be as high as in the very worst-off. As a result they
find it difficult to close the gap between their average income
and the Union average. At the moment, the policy is in a certain
sense unfair because it removes necessary support from some regions
before they are able to sustain their continued development. In
economic terms it is not good management to reduce the intensity
of support below the level which would be justified by the economic
fundamentals. I think it could be done better and have suggested,
as you say Lord Renton, a third intermediate regional classification.
Lord Trimble: It might just be worthwhile trying
to sort out the factual basis of this because you are assuming
that if a region ceases for example to be Objective 1 and then
there is a reduction in the amount of European regional fund money
that comes to the pot, that then results in a lowering of regional
funding for the region. I do not think that actually is the case
as far as the United Kingdom is concerned. Just from our own experience
when we ceased to be Objective 1 we had of course transitional
arrangements regionally after that, but there was no reduction
in total funding for the region, it continued to increase in the
way that other parts of the United Kingdom expenditure was increasing.
The strain did not come in the region; if there was any strain
it came on the Exchequer generally and there was no reduction
of expenditure in the region. That might not be true of other
countries or other regions, but it might be worthwhile just inquiring
into that.
Lord Kerr of Kinlochard: Poverty is relative.
If you admit a large number of poor Member States what happens
to the average is pretty obvious and 75 per cent of that is 75
per cent of something else. I have noted down the years how Member
States grappled with that situation, changing the frontiers of
their regions, and playing games of that kind. I did it with the
frontiers of the Highlands and Islands myself, to get Aberdeen
out of the Highlands in order to maintain the great poverty of
the Highlands.
Lord Renton of Mount Harry: We now know who
was to blame.
Q236 Lord Kerr of Kinlochard: This
is a political game which is nothing to do with the economics.
The economics is that you will do most good by sending the money
to where the need is greatest and when Spain joined the pressure
on the UK was considerable and we fought gallantly to hang on
to as much as we possibly could, but the balance tilted to Spain,
quite rightly. Now that the East Europeans have joined the balance
has tilted from Spain to East Europe, and this is correct, that
is where the money is needed.
Mr Meadows: I will come to Lord Trimble but,
first of all, yes, poverty is relative. I find it, however, difficult
to say to a region which is no better off absolutely on Tuesday
than it was on Monday, "You are relatively much better off
than you were yesterday because a lot of less well-off Member
States have joined the European Union." It is true that poverty
is relative, but there is an absolute element to be taken into
account. The second thing is you will be pleased to know, Lord
Kerr, that as a result of your stalwart efforts with the Highlands
a regulation was adopted by the European Union which prevents
the gerrymandering of regional borders in the course of a negotiation
over a budget settlement. Lord Kerr was quite shameful in the
sense that he actually did it when he knew he would derive a financial
benefit from it—or he knew that the region would.
Q237 Lord Woolmer of Leeds: Is that
shameless or shameful?
Mr Meadows: Could I answer Lord Trimble? The
first thing to remember—and I have only ever seen this through
a glass darkly, as it were, is that the United Kingdom has a very
firm arrangement, the Barnet formula, for distributing public
sector resources between its constituent nations. It may well
be possible, as Lord Kerr said, that the removal of European Union
finance would in some way be compensated in the application of
that formula. If you look into the Irish Republic, I would imagine
that support for regions has changed as a result of the fact that
intensity of support under regional policy is now much less than
it was, let us say five years ago, and if you look into other
Member States you do see a difference in the amount of resources
being injected into a region if their status inside European regional
policy changes. In other words, you can see by the loss of a resource
the fact that the resource was bringing an additional benefit.
Q238 Lord Trimble: This is the point
that I put to you earlier, that there are some states where, because
of their smaller size and position financially, regional policy
has significant added value for those states and there are other
states where it does not. That is basically the argument that
you are putting to me now.
Mr Meadows: Yes, but I do not want you to interpret
me as saying that it is only in a particular group of Member States
that the benefit can be derived from regional policy—and
here I would probably have to part company with you and Lord Kerr.
I believe that even in a quite well-off Member State there are
always quite large pockets of low income which would benefit from
the application of a regional approach.
Lord Trimble: That is undoubtedly the case but
I do not think it is right to assume that the comparatively well-off
Member State would not itself have a policy for dealing with the
problems of deprivation.
Chairman: I am going to call time on this one
and move us on. Lord Steinberg, you were going to ask about the
impact that enlargement has had on Structural Funds but much of
this it seems to me has already been answered. Have you anything
that you would like to ask on that?
Q239 Lord Steinberg: First of all
I would like to congratulate you, Mr Meadows, on preparing a good
list of answers to our questions. Whilst we may not agree with
all of them, it is certainly a very comprehensive answer, so thank
you for that. What I want to ask is we have been talking quite
a bit about percentages of effect and whilst I have never been
a mathematician I have worked in the question of financial matters
for some time. I am concerned as to how you arrive at the 15 percentage
points. Where have you taken that figure from? How many new entrants
were there; have you taken that then with the full 27 in and what
was your previous starting figure because 15 percentage points
is an awful lot, and I am really very much concerned that you
might not have taken it from the right starting point and you
may have gathered this figure from some statistic. I found it
very, very strange when you have large numbers of countries already
with rather large Structural Fund positions; 15 percentage points
seems enormous to me, could you explain that, please?
Mr Meadows: Thank you, Lord Steinberg. Remember
that we are working with harmonised income data which is collected
from the Member States so one may have a range of questions about
the data, but these are harmonised and to the best of everyone's
efforts we can have confidence in the data with which we are working.
That is the first point. The second point is that the enlargement
of the Union to take in the ten new Member States—that is
the 12 minus Romania and Bulgaria—because the national income
per head of those Member States is so much lower than the Union
average, and in some parts of Poland it is only a little more
than a third of the Union average, the effect of taking in ten
rather poor Member States meant that the average income fell by
about 12 percentage points at the first stage, and it was on the
basis of that reduced income that the present period was decided,
and that produced, as Lord Kerr said, a shift of resources towards
the new Member States. In the United Kingdom a number of regions
like Merseyside and South Yorkshire, for example—which had
been below 75 per cent—as a result of this change came above
75 per cent and moved into this transitional group that I mentioned
earlier. What is significant is that even with that percentage
drop in income, there are still parts of the United Kingdom which
are below 75 per cent of the average, which is really a significant
finding. Since that political agreement was reached in December
2005, of course, Romania and Bulgaria have also joined the Union
and they are also poorer than the new average, so they have pulled
the average down by another two percentage points although the
lower income of 15 percentage points has not yet been applied
for the policy. In other words we have never had the selection
of regions on the basis of this full 15 percentage point drop.
Quite clearly, however, a region like Cornwall or West Wales and
the Valleys would no longer qualify for the high levels of support
they are getting on the basis of the present level of income in
the European Union, they would both now be above 75 per cent of
the new Community average.
Lord Steinberg: I can understand all of that
and I know of course that there has been a shift, but you still
did not tell me where you started off from, how the 15 per cent
was arrived at, because 15 per cent is a colossal figure and Romania,
Bulgaria and Poland would not change it by that amount. I entirely
agree with my colleagues that there is a shift and that the poorer
countries are not only entitled but are receiving much more in
terms of aid. Here I have to declare an interest: I have just
bought a sizeable business in Poland a week and a half ago, so
I am obviously confident about the future of Poland. If you are
telling me that that 15 percentage points has come from when we
were 15 then I can understand it better, but if you are telling
me that it has happened with Romania and Bulgaria coming in, going
from 25 to 27—if I am right you said that effect was about
two or three percentage points.
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