European Union Committee: Multiannual Financial Framework

Lord Kakkar Excerpts

Tuesday 19th June 2012 Grand Committee

[Lord Kakkar]

My Lords, I join other noble Lords in congratulating the noble Lord, Lord Boswell of Aynho, on his thoughtful introduction of this report and I pass to your Lordships the regrets of the noble Baroness, Lady O’Cathain, who is chairman of Sub-Committee B on the internal market and would have liked to be here, but cannot. As the recent addition to that sub-committee, I have come in her place to draw your Lordships’ attention to some of the important issues with regard to scrutiny of the part of the multiannual financial framework relating to infrastructure and innovation. In so doing, I remind noble Lords of my entry in the register of interests as professor of surgery at University College, London, an institution that is in receipt of funds from the framework 7 programme for innovation in biomedical sciences research, and as an applicant to that funding scheme.

The Connecting Europe Facility is the proposal in this MFF to bring together the funding streams related to infrastructure spending on transport, telecommunications and energy. These are all important areas, and Sub-Committee B recognised in its scrutiny that appropriate investment in this type of infrastructure could have important benefits by driving growth, improving infrastructure and meeting the objectives of European added value. If properly focused on what independent nations are unable to do but what the European Union could do more effectively by working together, this type of activity could potentially be very important.

In addition, the focus on European added value through properly transparently described and funded programmes of infrastructure investment would allow the opportunity to develop criteria that properly assessed European added value at the outset and ensured that projects could be tracked to demonstrate that added value, which is vital to convince the people of our country that this type of investment through their contributions to the European Union is effective and cost-effective.

Equally, this area of investment could be used to leverage private sector investment in major infrastructure projects, if properly directed. The proposal that the Commission play some important and enhanced role in the supervision of these projects was also potentially welcome, with the caveat that national competences must not be overridden in areas where member nations could perform tasks more effectively.

There were some concerns. The proposal in the current MFF is that funding in this area be increased fourfold over previous infrastructure investments in the areas of transport, energy and telecommunications. This was considered somewhat unrealistic. The emphasis must be on investment and a budget commensurate with that investment that focus on areas of infrastructure development that are truly European added value. As the sub-committee scrutinised proposals in this area, there was some concern that that may not be the case. With this unrealistic proposal for a large increase in expenditure, it is very important for attention to be focused on those areas of added value where nations would be unable to make the appropriate infrastructure investments.

Equally, there was concern that previous budgets have focused more on transport infrastructure and that moving forward in this MFF there should be particular emphasis on energy and telecommunications. There were some concerns about the detail of the various instruments included in this proposal. With regard to the transport instrument, for instance, the Government have recognised that there are concerns about the proposed core corridors and the potentially unwarranted mandatory infrastructure investment that could cost our country and other European nations substantially and inappropriately. The sub-committee is aware of the important advances that the Government have made in negotiations on these matters to ensure that that will no longer be the case, but it remains concerned to hear more from the Government about instruments in the telecommunications and energy areas. What progress has been made to reduce the substantially increased budget to a more realistic level? Are there areas of concern over some features of the transport instrument and mandatory infrastructure investment?

The point was also made in the sub-committee that the proposal that the Commission has a more important role in the supervision of this type of infrastructure investment should not in any way infringe national competences in these areas. This is a vital issue that would need to be emphasised during the period of this budget.

The second area I turn to is Horizon 2020, which is the innovation instrument dealt with in the MFF. The sub-committee agreed that this was a vital area, and we have heard many noble Lords in this important debate emphasise the importance of investment innovation in research and technology to drive economic growth and ensure that Europe more broadly is competitive in the coming years as we see increasing global competition from countries such as the United States, China and others, where investment in research and development continues to play a vital role in public and private investment policy.

On Horizon 2020, we have heard that there is a proposed substantial increase in the budget on research spending, but the Government consider it unrealistic given the current overall financial constraints. The sub-committee was of the view that there should be an increased emphasis on investment in innovation expenditure but within a smaller budget. So there is a very clear view that innovation should rise up the spending priorities of the European Union, should overtake areas such as the common agricultural policy and become the heart of spending proposals from the EU. That would ensure that investment in innovation translates into innovation being applied to small and medium-sized enterprises so that they can promote economic growth and create jobs.

If the proposed budget increase for innovation will not be achieved in this MFF round, it is certainly suggested that the focus should again be on areas where there is European added value. This is to drive forward the European Research Council and research excellence in Europe to ensure that co-operation in research and fostering research networks is achieved as a primary focus of the investment of those valuable funds to drive research.