Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Bruce of Donington: Hear, hear!

Lord Barnett: My Lords, I am sorry to hear my noble friend say "Hear, hear"! When I hear the words "in principle", I worry and my natural suspicions are aroused. When the Minister replies, perhaps he will remove any fears or suspicions which I might remotely have.

But, all in all, the report makes clear that there is urgent need for reform of the funds. In particular, there is a need for a radical reform of the administration not least in relation to delays of payment--something we

14 Jul 1997 : Column 828

met on our visit. The letter from the President of the Board of Trade refers not to reviews, which we have heard a great deal about, but to a new formulation: it will be continually reviewed. I hope that the Minister will be able to tell us that that means something. I hope that it means that the review will be in the direction that we as a committee have strongly recommended.

As regards the delays, the letter explains how the Commission makes payment. We are aware of that. Indeed, anybody reading our report will be aware of it. I see that my noble friend Lord Bruce smiles and that he is aware of it. The letter tells us that once a claim is properly made out, payment is made "as soon as possible". It goes on to say:

    "as a general rule, within three months ... [they] seek to minimise delay wherever possible".

I see the noble Baroness smiling. She may have drafted it while she was in government. I hope that the delay will be kept to the minimum because we met a number of small firms which were hit very hard by the delay. I hope that the Minister will be able to tell us that there has already been evidence of improvement in the speed at which payments are made, because delay hurts companies large and small but it hurts small companies in particular.

But there is one major issue which will arise in a few days' time; that is, about the way ahead for the Community. President Santer is to publish the Commission's Agenda 2000 on 16th July, which is in two days' time, and it will eventually be debated fully in Luxembourg in December and no doubt beyond that, when we have the Presidency in the first half of next year. Perhaps the Minister will tell us when we can expect to see the Government's response to that. I suppose that it is asking too much to expect the Minister to tell us what will be in that response, but he may be able to tell us when we may hope to see the response to what is likely to be one of the most important documents to come out of the Commission for a long time.

One does not have to take a pro- or anti-European Union line on matters of regional policy. I am sure that my noble friend Lord Bruce of Donington will understand that. My noble friend is not even smiling. The European Union policy rightly seeks to strengthen the economy and social cohesion--

Lord Bruce of Donington: My Lords, I am most anxious to have articulated clearly the question which the noble Lord wishes me to answer in due course. If he wishes me to answer something, then I can give it my most serious attention.

Lord Barnett: My Lords, I am sorry that I said anything at all because the last thing in the world that I want is to lengthen my noble friend's speech, which I hope may be briefer than usual.

As I was saying, one does not have to be either pro- or anti-European Union to want to see regional policies succeed. I see that my noble friend almost agrees with me--or the noble Lord, Lord Marsh, does in any event. But European Union policy, rightly in the view of the

14 Jul 1997 : Column 829

committee and certainly in my view, seeks to strengthen economic and social cohesion within the Community in view of the significant regional disparities of which I have already spoken. These policies are a key instrument to assist the less prosperous regions to adapt to the single market. The main aim is to create jobs and to ensure balance and sustainable development. I hope that our report will make a small contribution to that objective. I beg to move.

Moved, 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).--(Lord Barnett.)

3.25 p.m.

Lord Renton of Mount Harry: My Lords, I am delighted to follow the mover of the Motion concerning European Union disparities, the noble Lord, Lord Barnett, whom I remember well and whom I admired in his previous incarnation, even though we sometimes disagreed.

As this is my maiden speech, your Lordships will forgive me for quoting very briefly an extract from a book written by David Cannadine, the well-known social historian, which a friend of mine sent to me recently. David Cannadine wrote that earlier this century,

    "there existed a widespread feeling that Peers were raised above the scrimmage of public life [and] beyond the reach of the temptations that beset the ordinary man".

I look forward to learning more about the continuing truth of those comments in the years ahead.

I thought that the report written by the Committee chaired by the noble Lord, Lord Barnett, was extremely clear and easy to read. There was a pleasant simplicity of language in it. As an avid follower of matters European, I believe that this is the very first report that I have read outside those produced by the European Commission on the subject of the effectiveness of the structural and cohesion funds. We hear a great deal about the common agricultural policy and fishing quotas, but I have never read anything of this standard on that subject.

As the noble Lord, Lord Barnett, said, it is an extraordinarily important issue. Europe gets bigger all the time. That may be geographically correct but in terms of the European Union and its significance, it certainly is correct. The question of the enlargement of the European Union looms ahead. It was not settled at all at the Amsterdam Summit but we face the prospect that within five years, we may have a European Union with 20 or 21 members and five or 10 years later, a European Union with 25 or 26 members. All the newcomers are likely to have a gross domestic product per capita significantly below the average of the current 15. Therefore--and I think that this is the underlying message of the report--the question of the funds needed to diminish the disparity between the newcomers and the Cohesion Four and the other members looms very large indeed in people's worries about the future of the European Union.

14 Jul 1997 : Column 830

I remember visiting the Mani at the southern end of the Peloponnese some years ago about whom Paddy Leigh-Fermor wrote in a brilliant book. How could that part of Greece, which still appears totally medieval, be at the same economic level as Frankfurt, Bonn or Brussels?

One of the main concerns, therefore, about joining economic and monetary union is whether the funds required for coherent and stable development throughout the democratic countries of Europe, as the important treaties pledge, are simply too great and whether the flow of funds to achieve that objective from north to south could cause disturbance, leading in the end even to social insecurity.

I add in parenthesis that I am not nearly as worried about economic and monetary union as are other noble Lords. I regard it as an inevitable outcome of the completion of the single market. It is a necessary means for Europe to stay competitive with Japan, China, India and Brazil in the next century. Furthermore, there will be significant competitive advantages for Europe and for the United Kingdom as a result of moving to a single currency. I suspect that five years after moving to a single currency we might look back and wonder what all the fuss was about. But that, of course, is a matter for another debate. I fully understand the concern that after economic and monetary union, the long-term adherence to the Maastricht criteria could cause an unacceptable flow of EU funds, particularly to the central and east European countries.

Therefore, I find it very satisfactory that this report shows how well, by and large and up until now, the problem has been dealt with in relation to the Cohesion Four--that is, Portugal, Spain, Greece and Ireland. There are of course problems involved. It would be impossible for there to be no problems and the noble Lord, Lord Barnett, touched on some of them; for example, delays in payment, insufficient involvement at the lower levels of the Community, local councils, and insufficient involvement in decision making. However, in the main, the result has been extremely good.

I note from paragraph 58 of the report that:

    "In the last ten years the four poorest countries of the EU, the Cohesion Four, have raised their GDP per capita from 66 per cent. to 74 per cent. of the EU15 average".

The commissioner responsible, Commissioner Wulf-Mathies, said that,

    "the performance of the Union's four poorest countries was 'truly remarkable by any international or historic standards'".

I do not believe that any of us would actually disagree with that remark. The figures are indeed very remarkable. The commissioner then went to say that about 40 per cent. of the benefit of the purchasing power which flowed back from the Cohesion Four returned to the,

    "other richer Member States in the form of purchase of know-how and capital equipment".

That is almost the creation of a virtuous circle: dare one say, quoting the phrase from Dodo in Alice in Wonderland (which is quoted elsewhere in the report), "All must have prizes". As we all know, life is not like that. From that, at this early stage, it seems that to date the cohesion and structural funds are working extremely well.

14 Jul 1997 : Column 831

However, there is one small point upon which I disagree with the noble Lord and his committee; namely, the statement in paragraph 95 that, in stressing the "devolution of real autonomy" down to a lower level in the United Kingdom, the government offices of the region should be used. From my previous experience as a Member of Parliament, I have to say that I found the government office for the south-east region to be absolutely useless. I do not know why it was formed. Indeed, when it was formed I wrote to the Minister involved, a good friend of mine, and asked him why. I saw that in its powers it was not only involved in planning applications but also that it was to be involved in tree preservation orders.

That seemed to be an extraordinary addition of yet another layer of bureaucracy and one which would be more likely to get in the way between the Department of the Environment, Transport and the Regions and local authorities than to achieve any real objective. I have to tell your Lordships that if this is to be the vehicle for creating greater local autonomy in such an important area, much will have to be done to improve the powers, the competence and the knowledge of the government offices for the region before they are used any more.

In conclusion, I should point out that in paragraph 100 of the report, Commissioner Wulf-Mathies, refers to the hope that in the next programme period the figure for national GDP going to the European Community budget would remain constant at 1.2 per cent. of GDP; but that, nonetheless, there would be a 30 per cent. increase in the funds available for structural and cohesion policies and, of that, there would be a sevenfold increase in European Union support for the central and east European countries. I would be very grateful if the Minister would confirm whether or not those figures are correct. If they are correct, they are remarkably encouraging. Moreover, if they work out, I believe that the Phare programme which is responsible will truly be acting as a lighthouse for raising standards in former Communist countries.

3.35 p.m.

Lord Elis-Thomas: My Lords, it very happily falls to me on behalf of the whole House warmly to congratulate the noble Lord on his maiden speech. It is a particularly pleasant duty to be able to welcome another member of the class of '74--indeed, a member of the class of February 1974--into this House. The noble Lord comes here as someone who has had substantial experience in another place as a Minister for a number of departments. For example, he served in the Foreign and Commonwealth Office, in the Whips' Office and, more particularly, as Minister for the Arts. That fact came out very clearly in the noble Lord's speech.

There may not be all that many Members of another place who find time to read or write books, but we have here an acquisition to this House of a noble Lord who is also a writer and that is to be welcomed. Indeed, the noble Lord's literary references in his speech today were very well received, as I am sure such references will be in the future. The noble Lord made one controversial point on devolution, but I shall not argue with him today. I believe he said that perhaps the government offices of the region

14 Jul 1997 : Column 832

are not strong enough as yet to deliver the liberation of the English regions. If that is the case, I wholeheartedly agree with the noble Lord.

I have just two themes to pursue today. I am grateful for the opportunity to do so provided by this most excellently produced and excellently designed report by my noble friend's committee. The fact is that we have here a report which enables us to debate the issues, so to speak, beforehand--that is, before we have the announcements from the Commission which, as my noble friend said, are due to be published on Wednesday. We cannot anticipate what is in Agenda 2000, but I assume that the Minister who is to respond to the debate is aware of what is likely to be said on Wednesday in all his capacities; that is, both his previous and his present capacity.

It is essential that we in this House play our part in this debate on regional policy. I should like to do so briefly by underlining two themes, one of which has already been dealt with quite extensively, and one which has not perhaps had enough emphasis placed upon it as yet. I have in mind the regionalisation of regional policy and the greening of the regional policy of structural funds. It may seem rather strange to emphasise the regionalisation of regional policy, but my noble friend did so very effectively--as, indeed, does the report--in referring to the need not to have just a "top down" approach or just a "bottom up" approach--I refer particularly to paragraph 86 of the report--but also that it was essential for the programmes to be,

    "the result of partnership between national and sub-national bodies, down to local communities, at the planning stage as well as at the implementation stage".

The endorsement that we have from the President of the Board of Trade of that line is warmly to be welcomed--an endorsement which we are not quite used to having from government, but it is a pleasure to have it now.

That theme was present in the report and in the minutes of evidence which, as always with such committees, was a very valuable resource. I hope that I pronounce the following name properly, Signor Arias Canete--indeed, I understand from my noble friend that I have; I always like to get these linguistic matters right, and I am always pleased to receive advice. He was the chair of the Regional Policy Committee of the European Parliament and emphasised the importance of concentrating on the geographical issue involved in regional policy and the fact that, as he said in evidence:

    "It should be a general principle that the thematic and geographical concentration policy should be totally applied to all countries, and all regions, whether they are rich or poor".

I know that my noble friend Lord Desai will pursue the matter further, because that was his major line of questioning. However, that is of particular relevance to the United Kingdom and to the Welsh economy. I shall not dwell at length on the Welsh economy as I shall have plenty of opportunity to do so.

Structural changes have taken place very successfully in the restructuring of the former coal and steel communities and the existing very competitive steel industry located in Wales. It is important to recognise the contribution made by the restructuring of old industrial areas emerging from Objective 2 and the need for that to continue for all similarly placed regions within the

14 Jul 1997 : Column 833

Community, especially as we look to the extension of the Community eastwards through enlargement. It is essential that we have that urban old industrial dimension of policy, but it is equally important that the regions designated should be sufficiently specific so that where we use targets such as 75 per cent. of GDP in Objective 1, that aid should be available even when there are sub-regions within more successful regions where the level of performance has not risen to the level of the region as a whole. That issue is important as we look to inward investment in south-east Wales and in north-east Wales and the position of the western seaboard which is benefiting from the INTERREG programmes and other Community initiatives.

It is important that we are able to have a sub-regional structure within regions that is able to deliver the benefits of the structural funds directly to the areas which need them. I am certain that the Minister will be able to comment on that because this is not just a matter for the European Union but also for member state governments. We shall want assurances that this Government, in their dealings with the European Union in the debate on the future of regional policy, will ensure that those areas within regions, such as the western seaboard of Wales--where I live and which I have represented in another place--continue to have recognition. If possible, they should be given further recognition because, as the Minister is aware, the lack of Objective 1 status under the present system in Wales has been a cause of great concern. That needs to be looked at most carefully as regards the new structure.

We have already heard about the emphasis on the decentralisation of partnerships and the concept that local communities are able to respond much more effectively to support through structural funds when they have an impact on planning. Robert Moreland, the chairman of the section for regional development and town and country planning in the Economic and Social Committee has written an excellent memorandum in which he emphasises,

    "A sense of enthusiasm from Member States but in particular from the local community"

as being important to make a programme a success. We cannot over-emphasise that. We should consider recent successful initiatives. One such is the regional technology plan--although that was a Community initiative and therefore signalled from the centre, as it were--which has worked, certainly in the case of the Welsh economy, because it has been taken up by partnership institutions and by public sector bodies such as the Welsh Development Agency, local authorities, the academic sector and so on.

Therefore we cannot over-emphasise the importance of decentralisation in that context. That applies not just to regions or to sub-regions but also to local authorities themselves. I believe Sr Canete pointed out that even where there are autonomous governments within member states, as in Spain, there is discussion in Spain as to whether local authorities should be associated with that matter. There is an ongoing fight between the different bodies of governing states. The regional policy committee of the Parliament has considered this issue and has

14 Jul 1997 : Column 834

attempted, in the context of regional policy, to define the principle of subsidiarity, or at least to ask for a definition. However, I notice that the committee was told in evidence that there had not yet been a decision on whether the whole of the Parliament could agree on a definition of subsidiarity. Clearly they see the importance of applying the principle of subsidiarity to the whole area of regional policy.

It is also essential to apply the principle of sustainable development and the greening of policy. The concerns expressed in evidence by CPRE, I of course endorse as a member of CPRW. I also endorse the detailed evidence put forward by the RSPB itself and on behalf of Birdlife International. I know that the RSPB is a regular contributor of evidence to our Select Committees, but the evidence is perhaps more valuable for that as the organisation is aware of the detailed activities of our committees. That evidence is always welcome. In its emphasis on the need for sustainable development criteria within the structural funds, CPRE has emphasised what has been a serious failure of the operation of policies in the past. It draws attention to the importance of the Cork conference on rural Europe and the need for integration and the role of green tourism in creating employment which is also sustainable in environmental terms.

I warmly welcome the report. I welcome the initial Government response and I look forward to the UK continuing to play a constructive role in the debate on the structural funds. I hope--although this may be a fond hope--that noble Lords on all sides of the House may also play such a constructive role.

3.45 p.m.

Lord Grenfell: My Lords, I add warm words of congratulation to the noble Lord, Lord Renton of Mount Harry, on his maiden speech. When we are treated to the eloquence and wisdom of an "old pro" coming to your Lordships' House from another place it is always a matter for great celebration. We look forward to many interventions from him.

Once again it is a great pleasure to participate in an inquiry under the chairmanship of my noble friend Lord Barnett. As usual, he guided us with his wisdom, wit and well-known skills through a long and complex study. I thank my noble friend for his eloquent and persuasive introduction to this debate.

The committee's recommendations fall into nine main subject areas. I wish to focus mainly on the three that look to the years ahead: the basis for reform; the implications of EMU and of the enlargement of the European Union; and the distribution of funds within the EU after 1999. Before doing so, I record my appreciation of the response of Her Majesty's Government to this report, as set out by my right honourable friend the Secretary of State for Trade and Industry in her letter of 30th June, to which my noble friend Lord Barnett and others have already referred. On the whole, I found it positive. I shall mention three points which struck me as particularly encouraging.

First, I welcome the assurance that in line with our recommendation in the report, and indeed in line with the Government's commitment to lifelong learning, the Government will seek early adoption of an Objective 4

14 Jul 1997 : Column 835

programme for this country. A programme of this kind to help adapt the workforce to industrial change is long overdue. I fully share the hope expressed in our report that this programme can be promptly formulated, agreed with the Commission, and implemented.

Secondly, I am encouraged that in accordance with their manifesto pledge Her Majesty's Government will pursue tough action on unfair state aids which harm enterprises in other EU member states. This accords entirely with the view expressed in our report. I am sure that the Government will use their enhanced influence in the Industry Council and the Commission to achieve that end. We await with great interest the report on this issue which the Industry Council has called on the Commission to produce.

Thirdly, I warmly welcome the Government's pledge to continue reviewing how best structural funds administration can be improved throughout the United Kingdom. I must, however, take issue with the view advanced in the Government's written response that delays in project approvals and payments are largely the consequence of current structural fund regulations, and that our contrary view in the report had resulted from our making comparisons with the Irish experience with the cohesion fund which was not relevant to our own experience with structural funds. With the deepest respect, the views formed by the committee were based on evidence from United Kingdom users of structural funds who found the roots of the problems a lot closer to home than Brussels. And this seems to have been the view also of the European Parliament's report on the use of structural funds in the UK published just three months ago. While that report was in the making, our committee took oral evidence from its rapporteur, Arlene McCarthy, MEP, and she was even then able to hint broadly at what her committee had learnt in the hearings it had held right across the United Kingdom.

In the words of the European Parliament's eventual report,

    "Major problems exist in the UK government's management of the Structural Funds",

and it cites, inter alia, Government failures to act once projects have been approved, the delays often caused by inadequate staffing in government offices, and so on. I could go on but that is not the report that your Lordships are discussing this afternoon. Suffice it for me to suggest, with respect to my right honourable friend the Secretary of State, that her response to our report's findings on this matter of delays and our consequent recommendations in paragraph 96 tend to let the previous Government undeservedly off the hook. That is the only real quibble I have with what I otherwise regard as being a very encouraging government response to our report.

I now turn briefly to the reform of the funds, the implications of EMU and EU enlargement, and the distribution of funds within the EU after 1999. I shall touch on only a few aspects which have been of particular interest to me.

In one respect the debate comes two days too soon. It would have been interesting to have known what Commission President Santer had said rather than relying on press accounts today of what he is expected to say

14 Jul 1997 : Column 836

when he makes his Agenda 2000 statement this Wednesday--it was referred to by my noble friend Lord Barnett--when he presents the Commission's opinion on the preparedness for membership of the 10 applicant countries as well as the outline financial perspectives for the EU budget covering 1999 to 2004. It appears that the Commission is recommending that negotiations be opened with Poland, the Czech Republic, Hungary, Slovenia and Estonia, with Cyprus already on course.

Agenda 2000 will also set out the Commission's ideas on reforming the CAP and the structural funds. What the Commission tells us this Wednesday is, of course, only the beginning of a long process of discussion and negotiation involving both the Council and the European Parliament. We hope, therefore, that our report's recommendations on these matters will be helpful to the Government in the process.

Noble Lords will note that in paragraph 93 our report urges the swift preparation by the Commission of detailed proposals for reform of the funds if new structures and regulations are to be agreed and in place in time to avoid delay in drawing up the programmes to be implemented post-1999. I trust that the Government share our sense of urgency and that they will use Britain's presidency in the first half of 1998 to push matters along.

As to what those reforms should be, our report puts forward a number of proposals in paragraphs 94 to 97. I shall here touch on only one: the recommendation that the number of structural funds should be reduced with perhaps one fund for human resource development and one for all other structural purposes. I signed up to this consensus in the committee but with some doubts lingering in my mind largely fuelled by a quite telling point made by Commissioner Wulf-Mathies when we discussed this issue with her last January.

The point she seemed to be making was that reducing the number of funds was less important than making sure that the basic rules, conditions and procedures for the different funds were the same. A reduction in the number of funds would not of itself reduce the range and variety of problems to be addressed. I also gained the impression from other oral witnesses that the frustrations felt in recipient countries had less to do with the number of funds and more to do with the irritating diversity of procedures and regulations that distinguished one fund from another. Commissioner Wulf-Mathies' plea for harmonisation would address that problem while safeguarding the specificity of the role of each fund.

Nonetheless, the case for simply reducing the number of funds is attractive to many. I ask only that in considering whatever the Commission's proposals are in this regard, Her Majesty's Government bear in mind that a reduction in the number of funds without any complementary harmonisation of rules, conditions and procedures among the lesser number of funds that will emerge from the reform will provide little added value.

I come now to the implications for the funds of eventual European and monetary union and the enlargement of the membership of the European Union. With respect to EMU, I have two points to make. We are aware that with the advent of EMU, and against a background of strict and

14 Jul 1997 : Column 837

sustainable convergence, some member states might want to increase their domestic income transfer payments to adversely affected regions. But our report, quite rightly, argues against this being used as a justification for seeking additional EU funds for investment in structural development, even though EMU may make structural change more urgent. If that sounds half-hearted, it is at least consistent with what the committee wrote in its June 1996 report to your Lordships on an EMU of "ins" and "outs". I think that it is an important point of policy. When it comes to allocating scarce EU funds in the years after 1999, helping new members of an EU enlarged to the east and the south must take priority over relieving fiscal pressures on the older member states of the north and the west.

My second point on the impact of EMU relates to the committee's recommendation that cohesion fund assistance should be tapered off when a beneficiary country joins EMU. I find this logical because the cohesion fund's stated purpose is to assist convergence towards the criteria for entry into the single currency zone. However, I hope that Her Majesty's Government will vigorously encourage the European Investment Bank to help meet the continuing needs of the four existing cohesion countries, whether they are in EMU or waiting, in particular with their infrastructure, as the main focus of the cohesion fund gradually switches to central and eastern Europe.

That brings me to the impact of enlargement. It is sobering to recall that it took nine years to negotiate the entry of Portugal and Spain in 1986--two countries which were relatively more prosperous than today's applicants. No one expects these new negotiations to take as long as that since the Europe agreements have provided a head start. But they will still be long and arduous, and it is important that this is not used as an excuse for delaying the implementation of agreed reforms of the CAP and the structural funds, which urgently need reform irrespective of any enlargement.

My second point on enlargement is this. As the Economist pointed out last week, there is a danger that squabbles among the EU 15 over who gains and who loses from the reforms that must precede enlargement risk turning public opinion against the whole enlargement project. Those squabbles can be largely avoided if, as we point out in the report, the Commission provides convincing evidence to back the theory advanced by Commissioner Wulf-Mathies that the new members can be accommodated with structural funds, and that funds exceeding existing levels will still be available for programmes within the Community of 15, without any additional burden falling on Europe's taxpayers.

As Commissioner Wulf-Mathies stressed in her evidence to us, enlargement will mean a gradual inclusion and a gradual integration of new members into structural funding. The quality of their central and, importantly, regional and local economic administrations, and their capacity for matching funding (a serious problem in countries also coping with the costs of NATO enlargement), are generally not yet of a standard to ensure a high absorptive capacity. In our report we say that we

14 Jul 1997 : Column 838

would be surprised if it were to exceed 4 per cent. of GDP for even the best performing economies in central and eastern Europe.

With that in mind, I find that the hypothesis advanced by Commissioner Wulf-Mathies last August to the Bundestag's European Affairs Committee quite compelling. If today's press reports are accurate, what she said a year ago appears to have been broadly confirmed as regards the underlying assumptions in Agenda 2000. If the assumptions and calculations are correct, this should pre-empt a great deal of unnecessary scaremongering about the costs of enlargement and the future of the funds.

I come finally to the question of the distribution of the funds within the EU after 1999. The report before your Lordships makes some important recommendations in paragraphs 105 to 110. They address central issues such as the need for greater geographical concentration and a better spatial definition of eligible regions. We know that there has been deep division in the Commission over how to reconcile the competing claims of declining urban areas and struggling rural communities with Commissioners Wulf-Mathies and Fischler doggedly fighting their respective corners. One can only hope that a fair compromise has been, or soon will be, reached.

The most important of the recommendations on post-1999 distribution in the report is that there should be a vigorous pruning of the themes or objectives that are eligible for funding. I am tempted to call this the "Lord Dahrendorf seaside bandstand test". That reference may seem a little obscure to some noble Lords; however, I believe that the noble Lord, Lord Dahrendorf, knows to what I refer.

As our report urges, the overriding considerations when determining eligibility for projects should be: increasing competitiveness; increasing sustainable employment; and adjusting skills to meet changing labour market needs. In the past too much funding has failed to pass these tests. Now is the time to get it right.

The bottom line of the report is that the funds which have overall made a positive impact have survived rather well the tests of times past but will not in their present form survive the tests of times to come. I believe that Her Majesty's Government, on the basis of the response we have had so far to the report, will use their new-found influence in the European Union's councils, particularly during their presidency next year, to help ensure the kinds of reforms to these funds which historical experience and current realities now demand.

4 p.m.

Baroness O'Cathain: My Lords, I begin by paying tribute to the skill of the noble Lord, Lord Barnett, which was indeed quite remarkable. The 12 members of the committee were almost as individually disparate as the 15 members of the European Union, yet he managed to control, cajole and encourage us in a most effective way. The noble Lord, Lord Grenfell, put it much more elegantly, referring to his wisdom, wit and well-known skills. "Masterly" is the word. As an aside, he would do wonders in Brussels, bringing those self-same attributes to bear on the bureaucracy and making it more effective--the word "effective" is uppermost in our minds today.

14 Jul 1997 : Column 839

However, we should miss the noble Lord's deft chairmanship of this excellent committee. (I can now describe the committee as such being no longer a member of it.)

Today we are taking note of the 11th report of the European Communities Select Committee on reducing disparities within the EU: the effectiveness of the structural and cohesion funds. Certainly the funds have been effective. But two questions remain in my mind: first, how effective; and, secondly, could they be more effective?

It is difficult to assess how effective the funds have been. When taking evidence one always has to discount the fact that by the very nature of the inquiry witnesses in receipt of funds wish to put the best possible case forward. An inquiry conducted by the representatives of a country which is widely regarded as the least enthusiastic member of the European Union, and one which receives little or no funding by comparison with either Greece or Ireland, must have resulted in a determined effort to convert us!

Witnesses from the Commission and witnesses in the member states or regions of this country in receipt of funds were universally supportive of the funds and were pretty reluctant to envisage a situation in which the funds would be diluted to take account of enlargement; withdrawn because criteria for receipt of the funds had been overtaken, as in the case of Ireland; or changed in concept.

We received masses of supporting evidence to suggest that, without the funds, economic progress and job creation would not have been as "relatively" successful. However, I was left with a lingering doubt as to whether the use of the funds was as effective as it either could be or was claimed to be.

That doubt is founded upon the universal inability to specify exactly how many jobs have been created. That should be a relatively easy calculation to make, but it seems to be outwith the competence of the Commission at present. A subsidiary doubt refers to the "quality" of the jobs created. It was exceedingly difficult to assess whether the jobs created were long-term, skill-enhancing jobs or just temporary, part-time jobs. In one notable instance funds were used to transform a hobby into a business for people who were quite happy to continue with their hobbies but saw an opportunity to make "pin money" out of them because they were in a "funds" area. In all conscience, that is surely not the intention of European taxpayers and does not meet the objective of,

    "reducing disparities within the European Union".

Reducing disparities is the aim of the funds, and every single one of us would wish to do just that. In the absence of any other bright ideas, I guess that they are certainly better than nothing. However, since they are funded out of taxpayers' money, accountability is a prerequisite. I fear, as in many other cases regarding EU measures, accountability is not necessarily uppermost in the minds of the recipients of the funds--and probably not in the minds of the Commission doling out the funds.

Here I have a difficulty, and it relates to my second question: could they be more effective? If we insist on putting in place yet more administrative arrangements to ensure greater accountability--for example, post-grant

14 Jul 1997 : Column 840

audits and the like--more and more of the EU moneys will be spent on bureaucracy and administration. One has only to let one's imagination run a little wild to arrive at the total cost of what has been called the "Lord Dahrendorf Padstow bandstand", which I am sure was well in excess of the £15,000 funding received. I am sure the noble Lord will tell the House what this bandstand is all about.

Everywhere we went we heard of "administrative nightmares" at worst, "hiccups" at best, in dealing with the Commission and with national governments from the petitioners for funds. I turn again to my second question: could the fund be more effective? In Ireland they seem to have the problem substantially licked. Networking by senior civil servants (who to a man--and I say the word advisedly--unfortunately were enthusiastic EU supporters, and most seemed to have "done time" in Brussels) was remarkable in its ability to get funds sanctioned within hours in some cases, while the UK experience was that it usually took many months.

My personal recommendation is for our civil servants to become much more adept at networking in Brussels and with Brussels. I should be most interested to hear whether the Minister has any radical ideas on how to achieve that. Several years ago I raised many hackles by suggesting that spending some time at the Commission should be a pre-condition for promotion to the level of Deputy Secretary in the UK Civil Service. I shall not elaborate on that but at some time, someone, somewhere might consider it.

There is a big requirement to cut red tape. But once more it must be asked: is it possible so to do and still safeguard taxpayers' moneys? We spent much time, officially and unofficially, chewing over this one. I fear that our combined inputs to the discussion did not yield so great a result. Diagnosis is so much easier than effecting a cure.

In our visits to Strathclyde and Cornwall I realised that sometimes the word "effectiveness" does not necessarily mean the effective use of funds to achieve an objective. Effectiveness is not always quantifiable in financial terms. I came to believe that the very existence of the funds has actually, in some cases, energised local groups to do some strategic thinking and local economic planning with the objective of seeing whether they might be able to build up a business case and win funds for it. There have been cases which were not successful in attracting the funds for which they applied yet the people were so energised that they decided to go ahead anyway. Effectiveness of the structural and cohesion funds is not judged by the catalyst effect that they have--perhaps it should be.

Debate on the subject of EU moneys being used to reduce disparities will continue; it will run and run. Future enlargement of the European Union will bring the subject to the fore year after year. One of the real achievements of the committee in undertaking this investigation was to produce a report which states clearly and in simple language the issues, the pitfalls which should be guarded against, while giving the best resume to date of a complicated concept and an emotional subject.

14 Jul 1997 : Column 841

I am sure that some disparities have been reduced. I am sure that the use of the funds, together with the "share of voice" of strong European Union supporters, have been in part responsible. I also believe that this report is in the category of "required reading" for anyone involved with, or interested in, the future of the European Union.

4.9 p.m.

Lord Bruce of Donington: My Lords, it was a great pleasure to have the opportunity of listening to the maiden speech of the noble Lord, Lord Renton, whose reputation in ministerial office in another place is well known to me. I look forward to his future participation in debates, particularly where they involve finance and even more so where the noble Lord's views may conflict with those of the former Financial Secretary sitting on my right.

It is also a great pleasure for me to see for the first time the noble Lord, Lord Shaw of Northstead, on the Front Bench opposite. He and I had many pleasant encounters in the European Parliament when we were both involved in a number of joint enterprises. I look forward to his participation in the debate.

I now turn to the report. I am glad that my noble friend Lord Barnett took advantage of the occasion to refer to the printing of the document. As one who was responsible for the most rigorous enforcement of the strictest financial disciplines, I am at a loss to understand why we suddenly have a House of Lords Select Committee report with a glossy cover, in colour and printed on expensive glossy paper. I must express some surprise that the report has not been produced at the most economic price. The quality of a Select Committee report lies, as I am sure noble Lords agree, not so much in its adornments, colours and dressing-up but in its contents.

Having read the report, I must confess to some disappointment. We are dealing with an endeavour to redress differences that have either always existed in one form or another or developed between various member states of the European Union. As I understood it, the original regional development funds were initiated for that purpose. The current report deals with cohesion funds, which do not concern us domestically but concern only four countries: Spain, Portugal, Greece and one other whose name escapes me for the moment--Ireland, of course.

As chairman of the European Parliament's Regional Committee, I had some experience of the European Community's endeavours to deal with these imbalances. Those endeavours were not entirely successful, at any rate on the basis on which they were originally undertaken. Year after year in the European Parliament we have been forced to acknowledge that, taken globally, they have not been successful at all.

Next Section Back to Table of Contents Lords Hansard Home Page