European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020

Lord Callanan Excerpts

Wednesday 16th September 2020 Grand Committee

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[Lord Callanan]

That the Grand Committee do consider the European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the EU regulations for structural funds and the cohesion fund are designed to reduce social and economic disparities in the EU and are the main funding tools designed to deliver the EU’s cohesion policy. They come under the wider family of European structural and investment funds. These EU regulations set out the rules governing these funds and give powers to the member state to ensure the operability of eligible projects.

More than half of EU funding is channelled through the European structural and investment funds. They are jointly managed by the European Commission and the EU member states. BEIS sets the policy and co-ordinates the management of four of these funds across the UK: the European Regional Development Fund, ERDF, which includes European Territorial Co-operation funding—ETC; the European Social Fund—ESF; the European Agricultural Fund for Rural Development—EAFRD; and the European Maritime and Fisheries Fund, or EMFF.

The UK has been allocated about £9.5 billion of funding under structural funds for the 2014-20 period. The funds currently support growth, low carbon, transport, research, innovation, small businesses, employment opportunities and social inclusion. Structural fund programmes are managed and delivered by government organisations designated as managing authorities—MAs—which in essence are delivery bodies for the funds in England and the devolved Administrations and are responsible for drawing up operational programmes. These programmes set out the levels of funding available for certain activities and how the programmes will be run within the parameters set by the EU regulations.

The Department for Business, Energy and Industrial Strategy—BEIS—is the co-ordinating body for ESIFs in the UK. In England, the managing authorities for the European Regional Development Fund and the European Social Fund are, respectively, the Ministry of Housing, Communities and Local Government and the Department for Work and Pensions. The devolved Administrations and Her Majesty’s Government of Gibraltar administer ERDF and ESF in their respective areas. The Department for Environment Food and Rural Affairs manages the agricultural funds—EAFRD—in England, and the devolved Administrations in their areas, apart from EMFF which is run across the UK by the Marine Management Organisation, an executive non-departmental public body sponsored by Defra. Gibraltar receives a small allocation of about €10 million —£8.8 million—from the European Regional Development Fund and the European Social Fund for 2014-20 and has agreed operational programmes with the European Commission to implement them. It also takes part in two transnational programmes.

The need for continued regional investment in the event of a no-deal exit and the nature of the projects supported by these funds led to the introduction of legislation so that these funds could operate domestically under a no deal until their planned closure, even though they would cease to be funded by the EU in such circumstances. As the UK subsequently signed the withdrawal agreement, which maintains the EU regulations for European Structural and Investment Funds until programme closure, which could be until 2026, given that programmes run until 2023 and then generally take two to three years to wind up, SI 625 contradicts the intent and purpose of the withdrawal agreement.

This instrument is being laid in order to revoke the aforementioned SI 625/2019, which was made on 18 March 2019. That SI disapplied retained EU law in relation to the European Regional Development Fund, the European Social Fund and the European Territorial Cooperation Fund to ensure that the programmes could continue in a no-deal scenario. Under the withdrawal agreement, these regulations can still apply in the UK, despite the UK not being a member state. Now that the withdrawal agreement has been signed by the UK and made into law through the European Union (Withdrawal Agreement) Act 2020, the original statutory instrument, 625/2019, is therefore no longer required and should be repealed in order not to confuse the statute book.

The EU withdrawal agreement Act 2020 allows the UK to continue to apply EU Regulation 1303/2013, supplementary funds, specific regulations and associated delegated and implementing legislation for the European structural and investment funds through until the end of the current programme. It is proposed that the UK shared prosperity fund will be set up as the domestic successor to the European structural and investment funds for new programmes.

In conclusion, it is therefore necessary to revoke the original no-deal statutory instrument 625/2019 to remove conflict with the provisions of the EU withdrawal Act. The UK will continue to participate in European structural and investment funds programmes until their closure, and delivery continues through the managing authorities and devolved Administrations. Therefore, in order to remove any confusion from the statute book as the no-deal guarantee for funding is now not required, I commend this regulation to the Committee.

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[Lord Callanan (Con)]

I thank noble Lords again for their valuable contributions to this short debate. Now that the UK has left the European Union, one of the opportunities that we have is to design and implement our own regional funding programmes. Through the UK shared prosperity fund, the Government can cut out bureaucracy and create a fund that invests in UK priorities and is easier for local authorities and areas to access.

I know that there have been queries on our future participation in EU programmes but, to reiterate, the UK will not participate in any future ESIF programmes, apart from the PEACE PLUS programme mentioned by the noble Baroness, Lady Ritchie. The UK Government have committed to contributing to PEACE PLUS until 2027, as part of their unwavering commitment to uphold the hard-won peace in Northern Ireland following Brexit. PEACE PLUS will succeed the current PEACE scheme, which has helped promote economic and social progress in Northern Ireland and the border region of Ireland since 1995. The current programme, run with funding from the UK, Ireland and the EU, will end in 2020. The Special EU Programmes Body will continue to act as managing authority for these PEACE PLUS programmes. Discussions around shaping the proposal and the wider regulations are ongoing and the UK is participating in these.

The noble Lord, Lord Foulkes of Cumnock, in his usual combative tone, asked about timings for the allocations. I assure him, the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, and other noble Lords that the 2019 Conservative manifesto—of which the noble Lord, Lord Foulkes, is a strong supporter —committed to at least matching the funding for EU structural funds to each nation in the United Kingdom. In response to their questions, I say again to the noble Lord, Lord Foulkes, and the noble Baronesses, Lady Bowles, Lady Kramer and Lady Ritchie, that final decisions on the allocation of the UK shared prosperity fund will be taken following the cross-government spending review, which is in progress. When that is completed, we will have further announcements to make. The Government have been working closely with interested parties across the UK, while developing the fund.

In response to my noble friend Lord Naseby, who asked whether it is the Government’s intention to apply for new projects for the remaining three and a half months, I say yes. The Government will be signing new projects during 2020 to make the most of the available European funding, which is recycled British funding in real terms. On the question from the noble Lord about Wales, I assure him that the SI indeed applies to Wales. On his question about ERDF and ESF, £9.5 billion is the agreed amount of EU funding for ERDF and ESF for the 2014-20 multiannual financial framework.

The noble Baroness, Lady Ritchie of Downpatrick, asked how it will be resourced. The intention is for the fund to be resourced centrally and then allocated to the devolved Administrations. The noble Baroness and other noble Lords also asked about co-operation with other devolved Administrations. It will operate across the UK, and UK government officials regularly speak to their counterparts in the devolved Administrations to discuss any updates to their concerns or queries about the proposed fund. Similarly, Ministers also meet their counterparts in the devolved Administrations. I assure all noble Lords that these matters are raised regularly, and that Ministers from the devolved Administrations regularly air their concerns.

The noble Baroness, Lady Altmann, asked whether the sums agreed under the withdrawal agreement could be withheld. The answer is no. Article 138 of the withdrawal agreement states that the UK will continue to have access to European structural funds until the end of the current multiannual financial framework funding cycle. Funding to the UK SPF will be realigned to match domestic priorities, with a focus on investing in people.

There were also multiple queries about how the new fund would be operated and whether it would target by need. As I said, it will be driven by domestic priorities with a focus on investing in people. It will, at a minimum, match current levels of funding to each nation from the structural funds. We strongly believe that leaving the European Union provides us with a fresh opportunity to create a fund that invests in our priorities and targets funding where we decide it is most needed, while maintaining support for businesses and communities.

My noble friend Lady McIntosh of Pickering asked about rural areas. The European agricultural fund for rural development is outside the scope of this SI. The original SI, which it revokes, repealed regulations for the European regional development fund, the European Social Fund and the European territorial co-operation fund only.

The noble Baroness, Lady Kramer, asked about the impacts of Covid-19. We will continue working closely as one United Kingdom to understand the changing needs of local and regional economies. In our response to the impact of Covid-19, including the role the UK SPF will play, we have a great opportunity to design a fund driven by domestic priorities. As I said earlier, the decisions on the quantum of the fund will be made through the spending review.

I know that all queries have been about the shared prosperity fund. I have tried to aid noble Lords by responding to them, but they have nothing to do with the statutory instrument, which revokes the original no-deal instrument to ensure that our legislation is compatible with the arrangements set out under Article 138 of the withdrawal agreement. If the original no-deal SI were not repealed, it would confuse the statute book and cause potential conflict with these provisions. The Government fully recognise the role that structural funds play in supporting vital jobs and growth opportunities across the UK. I commend this SI to the Committee.

Motion agreed.