Select Committee on European Scrutiny Tenth Report


COM(01) 83

Draft Regulation on the establishment of a common classification of Territorial Units for Statistics (NUTS).
Legal base: Article 285 EC; co-decision; qualified majority voting
Document originated: 14 February 2001
Forwarded to the Council: 15 February 2001
Deposited in Parliament: 9 March 2001
Department: HM Treasury
Basis of consideration: EM of 22 March 2001
Previous Committee Report: None
To be discussed in Council: No date known
Committee's assessment: Politically important
Committee's decision: Not cleared; further information requested


  8.1  NUTS (Nomenclature of Units for Territorial Statistics) is a hierarchical classification of geographical areas within the EU for producing comparable regional statistics. In broad terms, the NUTS system uses criteria to subdivide each Member State into a series of areas to correspond with one of five NUTS levels. At the highest level is NUTS level 1, which broadly corresponds to standard regions in the UK. The most detailed level is NUTS level 5, which corresponds to individual wards. Other NUTS levels refer to groups of local authorities and individual counties.

  8.2  NUTS is the cornerstone for producing regional statistics of the EU. However, the NUTS structure also has a wider importance because it is used when determining the eligibility of an area for Structural Funds and state aid. For example, any NUTS level 2 area with a Gross Domestic Product (GDP) per head below 75 per cent of the EU average qualifies for Objective 1 status for the EU's Structural Funds. Objective 2 funding has generally been based on NUTS level 3 regions. Any change to the NUTS structure therefore can potentially affect an area's eligibility for Structural Funds and state aid. At present, any change to the NUTS structure would not affect Structural Funds and state aid until 2007, although discussions would need to take place before.

  8.3  NUTS areas contain broadly comparable sized populations and generally reflect political boundaries, often with a statutory existence. For example, in the UK, there are 12 NUTS level 1 areas, including the South East, West Midlands and North West. London is classified as a separate NUTS level 1 area. Each NUTS level 1 area is subdivided into NUTS level 2 areas. Following a recent review, there are 37 NUTS level 2 areas in the UK, generally comprising groups of local authority areas or larger individual counties. For example, Kent, Cumbria, Merseyside and inner London NUTS level 2 areas are then subdivided into NUTS level 3 areas. There are 133 NUTS level 3 areas in the UK, generally comprising groups of local authority areas or individual counties or unitary authorities. For example, Medway, West Cumbria, Liverpool and Inner London (West). These NUTS level 3 areas are subdivided into 440 NUTS level 4 areas — generally individual local authority districts or unitary authorities — and about 11,000 NUTS level 5 areas, represented by individual wards. In Scotland, the boundaries of the Highlands and Islands Enterprise area and the Local Enterprise Council areas are also taken into account since their boundaries are not coterminous with the local government areas.

The document

  8.4  The proposed Regulation covers the existing regional classification and applies to NUTS levels 1 to 3 only. Until now there has been no legal base for the breakdown of European statistics. The proposed Regulation is intended to provide a legal base, to fix the current breakdown of regions for a number of years and define clear rules for future amendments.

The Government view

  8.5  In her Explanatory Memorandum of 22 March 2001, the Economic Secretary to the Treasury (Miss Melanie Johnson) states that:

"The proposed Regulation seeks to make changes to NUTS only once every three years, which would then come into effect two years after adoption. In effect, this means that the first changes under the Regulation would not become effective until about five years after adoption of the Regulation."

  8.6  However, the Minister does not state whether or not the Government supports the proposed Regulation. Approval of the proposed Regulation could take up to 18 months, although a "fast track" could be used if the Commission decides to have the rules and criteria in place before the NUTS structure is decided for candidate countries.


  8.7  On the face of it, the Nomenclature of Units for Territorial Statistics structure seems to be a statistical classification system of little political importance. However, given its critical role in determining which areas are eligible for Structural Funds and state aid it is clearly politically important. It is for this reason that we consider the document warrants a substantive report to the House. The proposed Regulation will define clear rules for future amendments and reduce the opportunities for changing an area's classification. However, the Government has not declared whether or not it supports the Regulation, and specifically the fixing of the current breakdown for a number of years. We ask the Government to set out its position on these matters. Meanwhile, we leave the document uncleared.

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Prepared 6 April 2001