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The Duke of Somerset: My Lords, does the Minister agree that those living in rural areas (away from public transport systems) should not be disadvantaged by fuel fiscal rates?

Baroness Hayman: My Lords, I understand the noble Duke's point about the impact on those living in rural areas and the need to find ways of helping them without penalising them because of their fuel consumption. Higher fuel costs encourage manufacturers to improve the fuel efficiency of their vehicles and can influence road users' decisions about car purchases and maintenance and their driving behaviour, particularly the speeds at which they drive as well as the journeys that they undertake. Some 30 per cent. of people do not own a car, and one must also be concerned about them.

Eurofighter Aircraft Programme

3 p.m.

The Earl of Kinnoull asked Her Majesty's Government:

The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, the Eurofighter development programme is making excellent progress. All seven development aircraft are now flying, five with the EJ200 engines as planned. In total they have made over 400 flights. The ECR90 radar has recently flown in the Eurofighter, and all the key development maturity criteria have been met. Consequently, we are now ready to proceed to the crucial production and support phases of the programme. I hope that, as a result of the positive outcome from the German cabinet discussion last Friday, final German approval can be secured in the Bundestag in the autumn.

The Earl of Kinnoull: My Lords, I thank the Minister for that encouraging reply. Does he agree that the project is of vital importance and value to the future capability of the Royal Air Force to defend the realm? Moreover, does he also agree that it is a great achievement on the part of our European partners, who over many years have maintained the political will to

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show how effective a large European collaborative programme such as this can be and have produced a world-beating military aircraft far cheaper, as I understand it, than its American counterpart, the F22 project?

Lord Gilbert: My Lords, I confirm that this aircraft will be much cheaper than the F22. It is a tribute to the skill of those who have produced it and to those who have negotiated and sustained over many years such a complicated project. The aircraft has been flying since 1994. It will fill an essential role in the capabilities of the Royal Air Force.

Lord Craig of Radley: My Lords, does the Minister acknowledge that while the industrial benefits of Eurofighter will be enormous, the overriding justification for proceeding with the programme is to satisfy the air power needs of our Armed Forces in the next century, particularly in air defence and air superiority?

Lord Gilbert: My Lords, I would never attempt to justify a procurement decision for the Armed Forces on the grounds that it produced employment. The fact of the matter is that in this particular case it does. The Eurofighter has already produced 6,000 jobs and is expected to produce of the order of 14,000 at the time of pre-production. The noble and gallant Lord is right. The justification for this expenditure is that it is necessary to meet operational requirements for the defence of the realm.

Lord Jenkins of Putney: My Lords, speaking as one who worked for five years in Fighter Command during the late war--spent mostly on the ground--can my noble friend inform the House in what form of aerial combat it is envisaged the Eurofighter will be engaged?

Lord Gilbert: My Lords, I am delighted to hear of my noble friend's gallant war record. I point out to him that the majority of pilots, however able they are, spend most of their time on the ground. This fighter will have the traditional dogfight capability. I do not believe that I am allowed to disclose how many Gs it will pull, but it is also hoped that it will be armed with a beyond visual range air-to-air missile to enable it to engage in very long distance aerial combat.

Lord Ironside: My Lords, can the noble Lord inform the House of the likely in-service date of the Eurofighter? Further, can he inform the House when he expects the Tornado production lines to cease?

Lord Gilbert: My Lords, the Government hope for the in-service date of 2001. We are not completely out of the woods because the German authorities have yet to complete their parliamentary arrangements to see that it is approved. Approval of the aircraft will be put to the Bundestag either early in the autumn as a single item or may be wrapped up in a budget proposal later in the year. Until we have overcome that hurdle, we cannot be finally confident that the project will succeed. However,

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we are far more optimistic than we have been up until now. As to when the Tornado production line will be closed, I am afraid that the noble Lord takes me a little wider than the original Question. I shall find out the answer and let him have it.

Lord Monkswell: My Lords, bearing in mind the importance of this project in terms of national defence, is my noble friend aware that in its very early stages the project was about to be cancelled and the only factor that prevented it was the very vociferous campaign by the trade unions involved to ensure that it continued? Will my noble friend join with me in paying tribute to their foresight in their campaign to satisfy this essential defence equipment need?

Lord Gilbert: My Lords, I am always happy to pay tribute to my friends in the trades union movement, who show great foresight in many matters.

Earl Howe: My Lords, will the Minister confirm that the Government intend to order no fewer than 232 Eurofighter aircraft, as was the policy of the previous government? Can the Minister also say what the prospects are of export orders for this excellent aircraft and what countries have expressed an interest in it?

Lord Gilbert: My Lords, it is the Government's intention to order 232 of these aircraft, as was the proposal of the previous government. So far as concerns export orders, quite firm inquiries have been received from major Middle Eastern countries that have shown an interest in it. I am afraid that I cannot disclose their names at this stage.

Imperial College Bill

3.6 p.m.

Read a third time, and passed.

Coordinated Universal Time Bill [H.L.]

Read a third time, and passed, and sent to the Commons.

Structural and Cohesion Funds: ECC Report

3.8 p.m.

Lord Barnett rose to move, That this House take note of the Report of the European Communities Committee on Reducing Disparities within the European Union: the Effectiveness of the Structural and Cohesion Funds (11th Report, Session 1996-97, HL Paper 64).

The noble Lord said: My Lords, I begin by thanking the Members of the committee for the tremendous job that they have done in the preparation of this report. I have been very fortunate in having such an excellent committee. I also thank the clerk to the committee,

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John Goddard, together with our special adviser, Professor Iain Begg, who have helped the committee tremendously. I also mention the witnesses, who provided excellent evidence which is in one of the volumes of the report. I hope that this report will be recognised as a most useful document both here and abroad.

I also take this opportunity of welcoming the noble Lord, Lord Renton of Mount Harry, our maiden speaker this afternoon. To listen to him again will take me back to old days. I am sure that the House will also be glad to hear him. I also take the opportunity to welcome my noble friend Lord Simon, who is to reply to this debate. He has an unusual dual capacity in the sense that he gave evidence to the committee in relation to a previous report, not this one, and now he speaks as a Minister. I hope that he will give evidence to us of a character that equals the excellent evidence that he provided previously.

Finally by way of introduction, let me say that we received a letter from the President of the Board of Trade to which I shall refer on a number of occasions during my remarks.

The Motion on the Order Paper, which it is as well to read, refers to a report of the European Communities Committee on Reducing Disparities within the European Union: the Effectiveness of the Structural and Cohesion Funds. That may seem a dull and lengthy title, but the issue is anything but dull. We are debating a very important issue.

The committee tried to make the report a little livelier in the sense that we gave it an unusual cover for the House of Lords; that is, red with technicolour photographs. I notice that even the Chancellor of the Exchequer has changed this year's Red Book; only the back cover is red, the front being in a different colour, with photographs. I am glad to see that someone is taking note of what we have done with our report!

The structural funds were reformed in 1988 when their amount was doubled following the adoption of the Single European Act in 1987. The reforms followed four principles: concentration, programming, additionality and partnership. They are explained in our report and I shall touch on them briefly. The funds under discussion are very important because they cover some one-third of the European Union budget. I emphasise, and I hope that everyone understands, that we are not talking simply about regional disparities between countries but about the richest and poorest regions within all countries.

Apart from Holland, sadly, the disparities between and within member states have not improved a great deal. We saw something of what has and has not been done. We visited two countries, Greece and Ireland, with widely different success stories. We also visited Glasgow and Cornwall and saw the benefits that have occurred.

I welcome to the debate my noble friend Lord Elis-Thomas, who no doubt will speak about Wales. I apologise in advance for the fact that the committee did not visit Wales. I can assure my noble

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friend that that was due only to the shortage of time. We would have loved to have visited Wales, too. However, I am pleased to note that between 1994 and 1999 Wales will have received about £0.5 billion from the structural funds, which I am sure he will tell us is nothing like sufficient. Indeed, I see that he agrees.

In addition, the report calls for radical reform to reduce bureaucracy and delay and perhaps the nonsense of some of the small grants that are made. I am sure that the recipients of those small grants were pleased to receive them. But it is important that the grants are made not because, as was said by the noble Baroness, Lady Thatcher, "We want some of our money back"--that is precisely the wrong reason to make structural grants--but because they are effective and economically sensible. They should not be made because of political expediency--and I do not mean "political" in the party political sense.

I recognise that that is a generalisation of the kind that departments like; and I know that the Department of Trade and Industry loves generalisations. Therefore, I shall be specific in my remarks. In the time available I can refer to only a few of our many recommendations, but I shall seek clarification from the Minister on some of the general views expressed by my right honourable and old friend the President of the Board of Trade.

The central point in my right honourable friend's letter was that the "debate" on the future of the funds is at an "early stage"--and that is only the debate! No doubt that is factually correct, but it is somewhat depressing. I assume that it means that it will be a long time before anything happens. Perhaps my noble friend the Minister can reassure us that we shall not have to wait a long time before something sensible is done about the structural and cohesion funds.

My right honourable friend concentrated on our recommendations affecting the funds within the UK and therefore I shall do the same. However, any reading of our report will show that we covered many other areas, too. The first recommendation to which I shall refer is contained in paragraph 116 relating to devolution to regional level. That should be carried further to maximise the potential benefits of structural funds. That must be right. Indeed, it almost certainly is right because my right honourable friend stated in her letter that it was in line with government policy. That statement was unqualified, so naturally I assume that the recommendation is right. No doubt the Minister will confirm that.

In paragraphs 115 and 125 we recommend that programmes should not be imposed but should be the result of partnership between national and sub-national bodies, down to local communities. Indeed, we saw examples of that in Scotland, where the partnership between the Scottish Office and some of the local community bodies was excellent and very much appreciated locally.

Again, the letter from the President of the Board of Trade informs us that not only is that in line with government policy but it is welcomed. I am delighted to hear that and assume that the department agrees. I hope that that is not a rash assumption. However, there is a

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reference in her letter to "strategies". That is a good word because it can mean much and it can mean nothing. She says that the department's policies are drawn up by English, Scottish, Welsh and Northern Ireland offices.

Perhaps I may ask my noble friend the Minister a simple question. As regards Scotland, will he confirm that the Barnett formula is sacrosanct? Of course, everyone will know what the Barnett formula is. I devised it some 20 years ago and I know that the Minister will be aware of it. I understand that there has been some little dispute in government about it, but I have no doubt that he will be able to confirm that the formula is sacrosanct. He may wish to use another form of words, but I hope that his confirmation will be unqualified.

The next recommendation to which I wish to refer is contained in paragraphs 135 and 136. It is also referred to in paragraphs 51 and 52. We believe that the funds are spread far too thinly. Approximately 51 per cent. of the EU population (which the committee gathered from the noble Lord, Lord Marsh, is about 400 million)--I am mistaken; perhaps it is a little more--live in areas which are eligible for assistance. Commissioner Wulf-Mathies told us that it would be better geographically for the spread to cover no more than 35 per cent. of the population, which is big enough. However, my right honourable friend's letter tells of the difficulties. It seems that we can identify areas of particular need but other countries cannot. My right honourable friend must have overlooked the question that we posed. I assume that she overlooked it only because she did not tell us whether she agreed with the Commission that the figure should be reduced to something like 35 per cent. I look forward to my noble friend the Minister telling us that he and the department agree that the figure should be nearer 35 per cent. than 51 per cent.

In paragraph 117 we recommend an important role for local authority elected members. I am glad to see in my right honourable friend's letter that that policy is "being implemented". It is marvellous to read that comment about a recommendation. It does not always happen and I shall believe it when I see it.

In paragraph 119 and 120, we strongly support the concept of additionality. I am glad to see again from the letter that the Government support that policy, but they add, "as a general principle". I hope it is not just my old suspicious mind--

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