Michael Fallon
Main Page: Michael Fallon (Conservative - Sevenoaks)EU Funding (Rotherham and Barnsley)
Michael Fallon Excerpts
John Healey (Wentworth and Dearne) (Lab)
These end of day Adjournment debates are normally confined to the Member, the Minister and, of course, you, Mr Speaker. The Minister will note the strong presence of my Labour colleagues tonight, especially from South Yorkshire, but also from Merseyside, which I welcome. All the points of concern and criticism about Barnsley and Rotherham, and our position in relation to the new European Union funding, apply equally across South Yorkshire, the Sheffield city region and the Liverpool city region. In our area, and for the rest of South Yorkshire and for Merseyside, we face cutbacks in European funding that are much more severe even than our worst fears—massively deeper than in any other area in the UK.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
indicated dissent.
John Healey
It is no good the Minister shaking his head, because we face a cliff-edge cut in the funding for the new European funding period as compared with the previous ones. The European funds are designed to give a boost to the economy of flagging regions. I have to say that it is an outrage that areas of the UK with more wealth, more jobs, more business and more prosperity are also getting more European funding in the period ahead.
Let me tell the Minister that it aggravates our anger to learn that the major factor in this unfair distribution and the cuts that our areas will uniquely take is the Government’s plan to direct top-up funds from South Yorkshire and Merseyside in order to support Scotland, Wales and Northern Ireland—to limit their losses to 5% when we face cuts of more than 50% in our funding for the next period. There is no logic and no equity in that and we have seen no effort to be even-handed.
John Healey
No. My hon. Friend is right; I was saying that these decisions defy equity and logic, and there appears to be no attempt to be even-handed in the allocation of this funding.
Michael Fallon
The right hon. Gentleman says that we are defying logic. Is he seriously suggesting, given the wealth of his region at 84.6% of gross domestic product, that South Yorkshire should be entitled to more funding than Shropshire and Staffordshire, Merseyside, Lincolnshire, Tees Valley and Durham, all of which are poorer than the South Yorkshire region? Where is the logic in that?
John Healey
The Minister will have a chance to respond in full, but he is perfectly aware—I have had meetings with him and written to him on this point—that the comparison I make is regarding the special protection put in place for Scotland, Wales and Northern Ireland. Scotland has a GDP higher than that of South Yorkshire, Northern Ireland has a GDP higher than that of South Yorkshire and Wales has a GDP roughly on the same level. That is not fair, and it does not make good policy sense.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this debate, and thank him for the opportunity to address some of the concerns he has raised. I know they are shared more widely than South Yorkshire; obviously they extend to Merseyside, some of whose Members are present tonight.
Before I come to last week’s announcement of the provisional allocations of the structural funds to England, I want to remind the House why we faced a number of extremely complex and difficult decisions when making these allocations. First, let us go back to the overarching goal of the funds. The aim of the funds is to provide EU member states and regions with assistance to overcome structural deficiencies and to enable them to strengthen competitiveness and increase employment. For the next seven-year period, the focus of the funds will be on enhancing economic growth, with a focus on innovation and research, small and medium-sized enterprises, the low-carbon economy, skills, employment and social inclusion.
During the current programming period, there were two notable decisions that impacted on us. First, the last Government decided to prioritise the north when making allocations for the current seven-year period, which expires this year. I have had many representations from those representing the interests of the south, and some of the poorer areas of the south, arguing passionately that the Government should not repeat what happened in 2007 and should shift funding back to the south. While I concede that the south is richer overall, we must not forget that within many areas in the south there are significant pockets of deprivation.
Secondly, the area that includes Rotherham and Barnsley was categorised as a “phasing-in region” for the current funding period, 2007 to 2013. For hon. Members less familiar with the technicalities, let me explain that “phasing-in” is a designation given to a region that is emerging from the poorest regional category—“convergence” or “objective 1”—and into the mainstream “competitiveness” category. Competitiveness regions characterise most of the wealthiest countries of the EU. As such, it is the current EU budget period—2007 to 2013—that is the transitional period for South Yorkshire, and the EU funds have been on a declining taper for the entire seven-year period, in order for partners in that area to adjust to a lower level of EU receipts. The highlands and islands, of course, were not on a phasing-out regime; they were on a phasing-in regime. The precise objective of the phasing-in status is to avoid a cliff edge for these regions. Therefore, comparing the allocation that South Yorkshire received for the whole of 2007 to 2013 with the allocation announced for 2014 to 2020 and concluding that there is a 66% reduction ignores the reality of what phasing in actually means.
The current programme clearly states:
“Because of its phasing-in status South Yorkshire’s financial allocation annual profile is heavily weighted towards the first four years and tapers off towards the end of the programming period”.
That is mirrored in the ESF operational programme. Over the current programme, structural funds to South Yorkshire started at €153 million in 2007 and have ended up at €20 million in the current year. Let me be clear that in each of the past three years that has been the figure. For each of the next seven years the figure will be €23 million—an increase. So let us just be clear: there will be an increase in funding for South Yorkshire, not a decrease.
John Healey
As I said, it is patently incorrect to say that the planned profile reflects the reality of how the money has been spent over the period. May I ask the Minister either to confirm or correct any of the facts I gave the House in my speech in a letter to me afterwards? As he clearly may not get to this, given the sort of technical detail he is keen to read out to the House, will he also confirm what, if anything, he proposes to do to try to rebalance this very significant shortfall of funding for South Yorkshire and for Merseyside?
Michael Fallon
I am certainly very happy to write to the right hon. Gentleman about any technical detail that I may have missed, but I do not want him to mislead the House. In the last three years of the current Parliament, South Yorkshire has had €20 million a year. In each of the next seven years, South Yorkshire will receive—
John Healey
On a point of order, Mr Speaker. I think that the Minister was suggesting that I had misled the House, when in fact what I had told him was that the patterns of actual spend in the European regional development fund funding for the final years of this current programme are broadly similar right across the range and have not sharply dropped as the original plan envisaged.
Mr Speaker
I was listening and I thought the Minister was saying that he did not want the House to be misled. I am sure that he would not accuse any Member of misleading the House, because he would be in breach of our procedures if he did. The Minister was not suggesting that, was he?
Michael Fallon
I certainly was not, Mr Speaker. I just wanted to make it absolutely clear that in each of the past three years the allocation has been €20 million and for each of the next seven years it will be €23 million. I cannot call that a cut, and if other colleagues can, I am extremely puzzled.
Steve Rotheram
I thank the Minister for giving way, but I thought the preamble to his speech seemed like it had been written by Antony Jay and Jonathan Lynn; it was certainly like something out of “Yes Minister”. He spoke earlier about fairness and criticised my hon. Friend the Member for St Helens North (Mr Watts) for the comparison he made. If Cheshire is getting more than Merseyside, can the Minister explain the rationale for that?
Michael Fallon
Let me be clear: overall, Cheshire is not getting more than Merseyside. The issue for Merseyside is very simple, as it is for South Yorkshire. I cannot justify to the House why either South Yorkshire or Merseyside should get more than the Tees Valley, Durham or Lincolnshire, which are poorer regions.
Mr Clive Betts (Sheffield South East) (Lab)
Does the Minister accept this basic fact: over the seven-year period of the spending review, comparing the last spending review round with the round to come, South Yorkshire will get less than half the previous amount, whereas Scotland and Wales will get 95% of the previous amount? Are not those facts true?
Michael Fallon
What is true is that South Yorkshire is transitioning. It was a poorer region and is now becoming a wealthier region. Let me repeat: in each of the next seven years, South Yorkshire will get more than in the past three years. Really, we need to be very clear about this.
Michael Fallon
I think I have been very generous in giving way.
What is a transition region? It is a category of region introduced to support those that have a GDP level between 75% and 90% of the average. It means that those regions are no longer eligible for the highest levels of support—that for the so-called less developed regions—and nor are they considered more developed regions. “Transition region” means that they will get benefits providing greater flexibility in how to spend the funding. I want to highlight that during the current funding regime, for which the right hon. Member for Wentworth and Dearne was responsible as one of the Ministers involved, 50% of the funding was retained by central Government to determine how it was spent. I am sure that that was expedient to the effective delivery of Government programmes and so on, but I am very pleased that in the seven years beginning next year, local areas will define and have at their disposal 95% of all the funding available. Of course it is true that some areas would have had higher levels of funding in the past, but they will certainly be able to direct more of the money they want in the same way.
Michael Fallon
I am sorry, but I only have a minute left.
I have focused my remarks on the structural funds, but that is not the only way in which we are helping South Yorkshire. We have granted enterprise zone status across the Sheffield city region, we have a city deal leading to £72 million in public and private investment and we have a transport fund that could be worth £500 million to the Sheffield city region. No other transition region has a deal like that. More than £80 million has been awarded through the regional growth fund, including a local enterprise partnership-led £25 million unlocking business investment programme.
The footprint of all that growth will be approximately 2,000 sustainable private sector jobs. In Rotherham, we are supporting the advanced manufacturing research—