EU Structural Funds: Least Developed Regions

(Limited Text - Ministerial Extracts only)

Wednesday 26th June 2019 Westminster Hall

[Paul Blomfield]

I agree. The European Union has demonstrated itself to be a very effective redistributive mechanism, taking from richer areas and redistributing to poorer ones. In my area of South Yorkshire, I imagine that we are a net beneficiary of that, although the UK as a whole is a net contributor.

Cornwall and the Isles of Scilly and west Wales and the valleys are already recipients of funding for that category, but have been joined by Tees Valley and Durham, Lincolnshire and my own region of South Yorkshire, because those three regions have now sunk below the 75% threshold, too.

In preparing for the debate, I consulted the House of Commons Library, which, as ever, provided excellent independent assessment and support—I commend those in the Library for the work that they always do for us—and confirmed the CPMR analysis. The Library said that, if anything, the CPMR report underestimated the position because it had not taken account of southern Scotland, which would have been eligible, and added that

“the ‘Outer London – East and North East’ region is also on the borderline”

for classification for support. The amount of funding for which UK regions could have been eligible may have been even higher than in the CPMR analysis.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)]

I will raise a point about the CPMR analysis that I was going to make during my speech, because it is hugely important to the hon. Gentleman’s argument. I saw a copy of the House of Commons Library briefing, which confirmed that the analysis said that some areas could see funding rise by 22%, but, as I am sure he knows, the European Union has said that it does not want funding to go up by more than 8% in relevant areas. I do not think that the Library covered that. That would be worth expanding on as the hon. Gentleman develops his argument.

[Paul Blomfield]

I will mention the 22% increase specifically as I proceed.

I am delighted that Members from across the regions that would have benefited are in the Chamber. Everybody will want to focus on the impact in their own areas but, as the Minister indicated, the projections indicate that the UK would be entitled to an increase of 22% in funding. I am sure that if we were a participating member, we would be arguing strongly to ensure that that assessment was matched in reality and that the funding came through.

The funding estimate is up from the €l0.6 billion that we received from 2014 to 2020 to approximately €13 billion. Part of the reason that the CPMR estimates that increase is that we would now have five less developed regions, compared with two during the current funding period. The analysis states:

“All five of these regions would stand to receive EU support in excess of 500 euros per capita for the seven-year period.”

On current figures, that would result in £605 million for South Yorkshire to support economic growth.

There is a sense of déjà vu, because South Yorkshire has been here before. When the Thatcher Government decimated our coal and steel industries, and our whole economic base with them, we became one of the poorest regions in Europe. The EU stepped in with funding that was critical to rebuilding our economy, funding projects decided by local politicians and delivered by local bodies.

We received £820 million of objective 1 funding—levering in matched funding—which was channelled into more than 250 organisations and 650 projects. That encouraged investment, stimulated the development of new growth and high-technology sectors, helped businesses to modernise and become more competitive, supported innovation, helped with the commercialisation of research, developed skills and provided infrastructure in the region. We saw real transformation in a variety of ways.

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[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)]

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate the hon. Member for Sheffield Central (Paul Blomfield) on proposing and securing the debate. I put him on notice that I intend to finish early to give him the customary ability to say that he disagrees with most of what I say. I will let him think about that while I am talking—he may surprise himself.

Many hon. Members have spoken in the debate, and I was most encouraged by the heartfelt speeches by the Opposition spokespeople, the hon. Members for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and for City of Durham (Dr Blackman-Woods), about the importance of this issue. It really demonstrated to me the passion there is across England, Wales, Scotland and Northern Ireland to achieve and drive a local community. As a proud Unionist, I was reminded of the awesome foursome of our United Kingdom, which we should hold precious in our hearts. When the UK shared prosperity fund comes forward, I hope it will demonstrate our commitment to create growth in every single part of the UK, wherever it may be.

We have had a wide-ranging debate. As well as talking about the shared prosperity fund, the hon. Member for Sheffield Central, the proposer of the debate, took the opportunity to make his fundamental point that the Government have not supported the regions. I fundamentally disagree. This is the Government who created the northern powerhouse, and we are investing hundreds of millions—in fact, billions—of pounds directly into the northern economy. We did not see that under the last Labour Government. If the hon. Gentleman wants proof that the northern powerhouse is real, he has only to look to the hon. Member for Barnsley Central (Dan Jarvis), the proud Mayor of the Sheffield city region, who is sitting a few seats down from him, and to his four mayoral colleagues across the north of England.

We heard from many hon. Members about our being such a centralised country. For the first time in a generation in England, this Government have taken power, money and influence away from London and returned it to our regions. Surely that is a good thing. I am sure it is widely supported by Members across the Chamber. Those of us who want to see all areas of our country thrive should welcome that decentralisation and return of powers to mayors and regions.

[Mr Betts]

I am sure the Minister agrees that this is about not just Government actions but the impact of those actions. Will he confirm that, despite what the Government have done, or think they have done, since 2010, the difference in gross value added between the south-east and the north has not changed?

[Jake Berry]

The hon. Gentleman will have to send me the figures he refers to. Across the north of England, unemployment is lower than it has been for a generation. Picking up on the comments of the hon. Member for Redcar (Anna Turley), £450 million has been committed to a devolution deal for the Tees valley and £120 million has been invested in the SSI site.

Frankly, if the Labour local authorities in the Sheffield city region could get their act together and agree what powers they should hand to the Mayor of South Yorkshire—I know he is already doing an excellent job, but I want him to be given those powers so he can continue to drive the hopes and dreams of the people of South Yorkshire—the Sheffield city region could receive nearly £1 billion as part of its devolution deal. It is shameful that Labour councils are blocking this Government’s giving nearly £1 billion to the Sheffield city region. The councils should hang their heads in shame. We are debating European structural funds, but all this is connected; we cannot consider Europe on its own.

Let me set out some truths. There was reference to a report that mentioned growth of up to 22% in money for less developed areas. That report does not take into account the points made by the hon. Member for Strangford (Jim Shannon), who is no longer in his place, about European countries that may join the European Union during the spending period; it does not take into account the cap that the European Union itself has said it would like to see on spending increases; and it is an estimate. That estimate would go into the European Union and be negotiated.

[Paul Blomfield]

Will the Minister give way?

[Jake Berry]

I will in a moment. I will develop this point first.

Once the negotiation had taken place in Europe, the British Government would bring that figure into the comprehensive spending review and negotiate how it was distributed—which parts should go to European structural funds, to the Department for Work and Pensions and to the Department for Environment, Food and Rural Affairs. Only after that would any of the bodies have certainty about how much they were going to receive.

In fact, if we accept that the quantum of the UK shared prosperity fund should be negotiated through the comprehensive spending review, people will find themselves with exactly the same certainty under that fund as they would have had if we had continued with European structural funds. There is of course certainty until January 2021, when the current spending period ends, and the Government have been clear that the UK shared prosperity fund will start in 2021, so there will be no gap.

[Patricia Gibson]

Will the Minister give way?

[Jake Berry]

I have to give way first to the hon. Member for Sheffield Central, who opened the debate.

People talked about crashing out of the European Union with no deal. Frankly, I do not expect that to happen. Nor do I accept that, even if it did happen, it would look like a crash out of the European Union. However, even if we accepted that analysis—I do not—the Treasury has given a guarantee about the current spending period for European structural funds, which means people who are in receipt of them or want to apply for them should carry on as normal, regardless of Brexit.

[Paul Blomfield]

The Minister knows we are not talking about the current period of structural funds. We are talking about the next period of structural funds, and about what we would have expected to receive had we remained a member of the European Union. We should receive no less than that. I know the European Commission has said since the publication of the CPMR report that, in part because of the impact on the EU budget as a result of Brexit, it may be that regions can expect to receive not 22% but 8% more, but that is not the circumstance we are debating. We are debating what we would have got had we remained in the European Union. Even if I accepted the Minister’s premise, that would mean £536 million for South Yorkshire. Will he guarantee that?

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[Jake Berry]

The hon. Gentleman needs to make a decision. It is all well and good debating what we would get if we remained in the European Union, but we will not remain in the European Union. He has to decide whose side he is on. There are 17.4 million people who voted for Brexit. Is he on their side, or is he on the side of the cabal of politicians in this House who have sought repeatedly to block Brexit? I know whose side I am on. I am on the side of the hundreds, thousands and millions of people across the north of England who voted for Brexit. They gave this Parliament a clear instruction. To debate what life would be like if we remained in the EU is, frankly, an irrelevance.

I hope I can now move on to address some of the other points—

[Patricia Gibson]

Will the Minister give way?

[Jake Berry]

I will, because I said I would, but it has to be brief.

[Patricia Gibson]

I came to this debate to ask for clarity. If I heard the Minister correctly, it appears we now have clarity. Although he has not told us what will happen to this money in a no-deal situation, he has, if I have understood him correctly, clarified that the Government are giving no guarantees to the projects that currently benefit from structural funds about the next funding period. Is that correct?

[Jake Berry]

I hope the hon. Lady goes back and reads the Hansard report of my opening statement. I have limited time, but she will find that I answered both those questions. Many people—including the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey, who is chuntering and chuckling to himself—have said that the problem is that places do not have certainty. I was simply pointing out that even if we remained in Europe—I sincerely hope we do not—they still would not have the certainty they seek in any event.

I want to mention briefly the comments of the Chair of the Housing, Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), who said we should start some form of consultation. Although, clearly, the consultation has been delayed, I know he is aware, because it has been said in the House when he has been present, that more than 500 people have already been involved in a consultation with the Government—what we might call a pre-consultation consultation. I have consulted widely with the metro Mayors both about this subject and more widely about the impact of Brexit in places such as South Yorkshire, where the hon. Member for Barnsley Central is the Mayor. We are already involved in detailed discussions with officials in the devolved Administrations about the form and function of the UK shared prosperity fund, of which I am sure the SNP spokesman is aware.

I wish I had time to talk in more detail about the brilliant speeches that were made by many others, but I will move directly to address some of the points made by the Opposition spokesman, the hon. Member for City of Durham, and I am sure many others. The Government have been absolutely clear that we will respect the devolution settlement when it comes to the UK shared prosperity fund. That has not changed, and it will not change. We have been clear that we will consult widely in order to get right the UK shared prosperity fund, which is designed to tackle inequality.

I know that, in many cases, the people who spoke about the benefit of European funds know they are not perfect. The SNP spokesman said he sees a wee European flag on many projects. One of my jobs in Government is to take back the money from projects that forgot to put that wee European flag on them, because it is one of the requirements of the hugely complicated and bureaucratic EU structural funds that if someone does not put that wee European flag on their project, the money, in many cases, has to be recovered. We are consulting on a UK shared prosperity fund to ensure that funding is simplified. We will be consulting shortly, and the quantum of the fund will be set during the comprehensive spending review, in the same way that EU structural funds would have been.