EU Structural Funds: Least Developed Regions

Paul Blomfield Excerpts

Wednesday 26th June 2019 Westminster Hall

[Paul Blomfield (Sheffield Central) (Lab)]

I beg to move,

That this House has considered replacement of EU structural funds for least developed regions.

It is a pleasure to see you in the Chair, Ms McDonagh. I am grateful that this issue has been selected for debate. I thank colleagues across parties and regions for supporting the application, particularly the hon. Member for Truro and Falmouth (Sarah Newton), my right hon. Friend the Member for Cynon Valley (Ann Clwyd), who is not currently in her place, and my hon. Friend the Member for Redcar (Anna Turley).

The application for this debate followed a report by the Conference of Peripheral Maritime Regions that crystallised concern that our regions should not lose out as a result of the decision made in the 2016 referendum. I intend to speak relatively briefly because I want to give plenty of opportunity to colleagues from across the regions to make their points. I have only one question for the Minister, but I will come to it at the end.

The CPMR report estimated that if the UK had remained in the European Union, we would have been entitled to €13 billion, or £11 billion, of support from EU structural funds—primarily the European regional development fund and the European social fund—during the next period, from 2021 to 2027. However, five regions would be set to receive a bigger share of that funding based on our position as having some of the poorest areas in Europe. Those areas are defined as “least developed regions” because our GDP falls below 75% of the European average. Clearly, that is not something that we should be proud of and it needs to be addressed.

Cornwall and the Isles of Scilly, and west Wales and the valleys both already receive funding for that category.

[Mrs Sheryll Murray (South East Cornwall) (Con)]

Does the hon. Gentleman accept that we have already contributed that money to the European Union and are getting it back?

[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.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing the debate. In his calculations, has he taken into account any potential and likely changes towards the end of the seven-year period? With yet more additions to the EU of companies that would be net beneficiaries, the funding structure would change for the UK and other countries that happened to be part of the EU at the time.

[Paul Blomfield]

I thank the hon. Gentleman for his intervention, but that is not part of the CPMR analysis, nor has the House of Commons Library suggested that it is a factor that should be taken into account.

In South Yorkshire, we saw real transformation. The advanced manufacturing park at Waverley—a partnership led by University of Sheffield with Boeing and Rolls-Royce—was held up by the Government as a flagship of growth through innovation. It was dependent on that funding and would not have got off the ground without it. That is just one example of the work in developing clusters, alongside advanced manufacturing and metals, investment in bioscience, creative and digital industries and environmental and energy technologies.

The funding was involved in the remodelling of the primary gateway to Sheffield in my constituency, by developing the station and the main pedestrian route into the heart of the city, and played a key role in making the city a more attractive place in which to invest. There was improved access to finance for small and medium-sized enterprises, which supported start-ups, scale-ups and incubator units such as the Quadrant Business Centre. Community projects in my constituency, such as Matrec and Zest, were funded for programmes to build the skills needed in a changing work environment.

Across South Yorkshire, there was investment in new roads and transport infrastructure.

[Nick Smith (Blaenau Gwent) (Lab)]

In Blaenau Gwent, the structural funds have made a big difference, particularly for transport, with the dualling of the heads of the valleys road. However, there is still bags to do, such as improving the Ebbw Vale train line to get more services to Cardiff. Does my hon. Friend agree that the Minister needs to confirm how much funding will be available and by when, particularly in advance of the spending review, so that we can get not only better trains from Ebbw Vale to Cardiff, but a boost to the local economies of our regions?

[Paul Blomfield]

My hon. Friend is absolutely right, in particular about investment in transport infrastructure. Without that, the wider area of my hon. Friend the Member for Barnsley Central (Dan Jarvis) would have seen none of the road network in the Dearne valley that facilitated growth, with a whole series of new companies and the new jobs to go with them. My hon. Friend the Member for Blaenau Gwent (Nick Smith) is also right—he pre-empted my final question—to say that we need exactly that assurance from the Minister.

In South Yorkshire, the objective 1 funding worked: our economy grew by 8.5%. However, regional inequality has soared again since 2010. We are back in the same situation, qualifying as a least developed region and eligible for the highest level of EU funding had we been continuing as a member.

I know that the regional disparities concern both sides of the Chamber. Inner London is, unsurprisingly, our richest region, with GDP at 614% of the EU average—though I recognise that in London, too, there are pockets of deep poverty—but that figure falls to 69% for Cornwall and the Isles of Scilly. London is obviously represented overwhelmingly by colleagues from my party, but Cornwall and the Isles of Scilly by the Conservative party—this debate is about a fair deal for all our regions and about rebalancing our economy.

[Stephen Kinnock (Aberavon) (Lab)]

I congratulate my hon. Friend on securing this important debate. Given those regional imbalances and the question of how funding should be spent, is it not completely outrageous and unacceptable that we were promised a consultation on the shape of the shared prosperity fund, which should have started in late 2018, but have still not had one? My colleagues and I on the all-party parliamentary group for post-Brexit funding for nations, regions and local areas are sensing that there will not be a consultation before the comprehensive spending review. Does he share my view that that is completely unacceptable? Will he ask the Minister to confirm that he too thinks it is completely unacceptable?

[Paul Blomfield]

My hon. Friend is absolutely right. A feature of the wider debate on Brexit is that so many critical issues that will shape the outcome—structural funds, immigration and others—are just being kicked down the road. I hope that the Minister will respond directly to my hon. Friend’s point.

[Geraint Davies (Swansea West) (Lab/Co-op)]

In Wales, our wages are 70% of the UK average and we receive something like £440 per person in structural funding. Is my hon. Friend aware that with a new plan, we will lose some of that, and that in the case of a new deal, we will have no money at all? Only today, I was talking to representatives of the Swansea universities who said that they were shedding hundreds of jobs. The background to that is the doubling in size of Swansea University thanks to EU money. We are in a critical place in Wales, with closures at Bridgend, Tata and Airbus because of Brexit, so the structural funding is imperative.

[Paul Blomfield]

My hon. Friend is right to highlight the impact on all our areas if there is not adequate investment in economic development.

[Mr Clive Betts (Sheffield South East) (Lab)]

On the shared prosperity fund, a recent report by the Housing, Communities and Local Government Committee called for consultations to begin before the end of April. The Government response simply stated that

“the Government will consult widely on the Fund and final decisions are due to be made following the Spending Review”,

and that

“the Government continues to review our approach to consulting on the Fund accordingly.”

That is not very definite. At some point, we will also need to ask the Minister what, if there were no spending review—which there probably will not be, or at least not a four-year one—that would do to consultations on sorting out the shared prosperity fund.

[Paul Blomfield]

That intervention clearly comes with the great knowledge and experience that my hon. Friend brings as Chair of the Select Committee. I hope that the Minister will pay attention to his concerns in the closing remarks.

I do not necessarily have a lot of confidence in that. I wrote to the Secretary of State for Housing, Communities and Local Government back in February, bringing the CPMR report to his attention and reminding him of the Government’s commitment that regions should not lose out as a result of Brexit. I called on him to commit to providing the equivalent funding to what we would have received had we remained members of the EU. The Minister responded on the Secretary of State’s behalf, but did not make that commitment. I asked the Minister that same question again in May during the Westminster Hall debate on the shared prosperity fund led by my hon. Friend the Member for Barnsley Central. The Minister again did not make that commitment.

Our experience is that where the Government have the opportunity, they shift funding from areas in need to other parts of the country. We have seen that markedly with local government. I therefore simply do not have the confidence that the Government will do the right thing by areas such as ours. In conclusion, I will ask the Minister again, the simple and central question of the entire debate. We were told that there would be no losers as a result of leaving the European Union. Indeed, I pressed that with David Cameron at Prime Minister’s questions in the week after the referendum result. Had we remained a member, South Yorkshire would have received £605 million between 2021 and 2027; other regions would have received comparable amounts. Therefore, will the Government commit to providing, from whatever source, regional development funding at least equivalent to the money that we would have received from the European Union?

[Several hon. Members rose—]

--- Later in debate ---

[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.

[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?

--- Later in debate ---

[Paul Blomfield]

I am sorry that the Minister deliberately misrepresented my intervention. That was a comfortable way of dodging the question before us, which is: will our regions lose out as a result of our departing the European Union? As the hon. Member for Truro and Falmouth highlighted, the Government have given a commitment that they should not. As the hon. Member for St Ives (Derek Thomas) highlighted, we are asking not for a handout but for a hand up—strategic investment in our economies—to ensure that we do not lose out. At the third time of asking, in debates and correspondence, the Minister has not answered the question. We will keep pressing.

Motion lapsed (Standing Order No. 10(6)).