Regional Development Funding
Good afternoon, colleagues, and welcome to our fourth meeting in the second session. I have received no apologies for today's meeting. I hope that the members who have not arrived yet will do so before the end of the meeting.
We move straight to item 1 on the agenda, which is our proposed action on structural funding. We discussed the issue at our last meeting and decided to wait until the United Kingdom Government had made a statement on its intentions, as we knew that such a statement was imminent.
As members will see from their papers, Patricia Hewitt made a statement to the House of Commons on behalf of the UK Government, in which she indicated that the Government had consulted on the future of regional funding and had listened to consultees. Generally speaking, the Government is to continue with its original proposals. However, it will make further information available to everyone, which was one of the requests from all those who made submissions in the consultation.
I hope that members have had a chance to go through the paper and to read the UK Government statement. Members will recall that a number of concerns were expressed by the organisations that made submissions to the committee. Those concerns revolved around the UK Government's proposals for the renationalisation of the funds and the lack of information about guarantees. The UK Government said that if regional funding were to be renationalised, it would continue to match the funds that would have come from Europe.
Before I take comments on the paper, I want to bring it to the committee's attention that no other House of Commons or Scottish Parliament committee intends to undertake an inquiry into the issue at this point in time. The issue has moved on since we inquired into it. Members around the table have taken a close interest in some of the issues. The Scottish European structural funds forum is looking at the issue. Members will remember that the Executive submitted its views to the UK Government through that forum. However, the forum is not an open forum like the committee; it is a closed shop. I hope that we can take the issues on board.
One of the options that are set out in the paper is that we conduct a brief inquiry into the subject. Given how things have moved on, such a brief inquiry would allow us to put out a call for evidence on some of the basic questions and take evidence from the relevant ministers. I invite members to comment on the paper.
As it says in the paper, the debate has a long way to run. I would be surprised if, in the end, other Scottish Parliament committees or those at Westminster do not look at the issue. I am in favour of the option that the convener recommended of holding a short, focused inquiry. That would enable us to put forward our views at an early stage.
Ultimately, the committee's responsibility for the issue will cross over with that of the Enterprise and Culture Committee. If the whole issue of the funds that are to be repatriated or renationalised is to be considered, it is almost inevitable that that committee will want to look at the issue at some stage. As I said, we should hold a new, focused and brief inquiry. We are in the early stages of what will be a lengthy debate.
I have read the paper very carefully and my first comment is that I do not like the word "renationalisation"; "repatriation" is more acceptable for all of us.
There has been a huge element of feet dragging at Westminster. Having served on the European Scrutiny Committee at Westminster for many years, I do not see why additional work cannot be done at this stage. Paragraph 3 of the paper says:
"The Committee of the Office of the Deputy Prime Minister was also not looking specifically at this issue, but was just completing a look at regional disparities in England and Wales."
It seems to me that somehow or another Scotland is being squeezed out of the debate. The Scottish Parliament—I use the word "Parliament" advisedly, as we are not an Assembly—should take a much firmer stance on the issue. We should involve ourselves in a direct exchange of letters with the Trade and Industry Committee, the Select Committee on the Office of the Deputy Prime Minister and the Treasury Committee, all of which have responsibilities in the area.
No committee in the House of Commons is looking at the issue. Although we might say that it will be 2005 or 2006 before all of the rearrangements come about, if we do not start in 2003, Scotland could be left behind. Speaking as a member who represents the Highlands, I think that it is important that we get involved.
I suggest that we contact the Scottish Executive. Page 4 of the paper says:
"The Scottish Executive has not yet produced a definitive public statement on the merits of"
the various proposals. The paper goes on to say:
"the DTI hopes to have an initial policy response by early September 2003."
Is there such a response or have I just missed out on one of the papers?
As we are the committee that deals with Europe and external relations, we should put very firm pressure on the various committees in the House of Commons and on the Scottish Executive to ensure that Scotland is not left trailing behind. I know what happens with European documentation—it gets lost.
Like Keith Raffan, I support option 3.
Just for clarification, I confirm that the impending UK response to which Margaret Ewing referred would have been the statement that Patricia Hewitt made to the House of Commons last week.
I have further questions on the subject. It seems to me that European parliamentarians will determine that repatriation is unlikely in any case. That might affect the longer-term activities at Westminster. The issue that runs through the debate is that we all feel that we will lose out to a degree to the new incoming countries. What will that mean to the UK Government and the Scottish Executive when we approach them for support for our own industries when we feel that that is necessary?
In all the documentation that I have seen, I have not seen anything that pertains to that aspect of the subject. The changes to regional development funding could mean that we lose out on structural funds and end up with over-regulation from Europe. I am concerned that single market rules could limit us from supporting our industries, companies and educational processes. We should consider that issue.
Phil Gallie raises an important point. I wanted to bring up something about the inquiry. The original consultation document refers to the importance of regional flexibility in relation to state aid. Such flexibility would be very important to Scotland. Our predecessor committee actively sought that for Scotland and welcomed it in its initial consideration of the consultation paper. It is not explicitly mentioned in the key questions in the committee paper, but I hope that we can build it in, because it is important.
I welcome the updated paper and the reference to the Scottish European structural funds forum. Margaret Ewing mentioned that the Executive has not produced a definitive statement. As I attended the structural funds forum, I can tell her that the reasoning behind that is that external research is going on and is being reported to the forum. Local authorities, universities and other sectors throughout Scotland are represented on the forum. People feel that it is important that we get the academic input before any definitive Scottish view goes out.
Also, as the Department of Trade and Industry has produced a response to the consultation, we will probably find that Westminster will begin to look into the issue. The United Kingdom delegation at the Committee of the Regions has discussed it. Obviously, regions throughout England find themselves in a similar position. They are wondering what will happen and want to know how the proposal will affect them post 2006.
A wider debate about the matter is going on, but many have been waiting for the minister's views before participating. I am sure that further inquiries will come on stream and it is important that we link into them. It is particularly important that we link into the work of the Scottish European structural funds forum.
The committee has a role to play in open and transparent government by inviting evidence from interested groups from throughout Scotland on what the proposal will mean for them. Last time, the committee was minded to work towards option 3 and I would be happy to continue in that vein.
Thank you for that, Irene, and for shedding light on other issues.
I have a couple of words of caution. One, which is rather pedantic and procedural, is that we are the European and External Relations Committee and, whether we like it or not, we are moving to a position in which the European structural funds will not be much use to us after 2006, so what we are talking about is not really European. The funding will be repatriated or renationalised. Whitehall is proposing a reinvention of structural funds so, strictly speaking, is the matter European any more? However, if we can consider it, by all means, let us do it.
The parallel word of caution is that the situation is difficult. Other European countries will be watching what is going on in Britain. Our Government has said that it intends to find a way of reinventing structural funds to ensure that they continue to be available to assist regions that need them. We should do nothing that makes that more difficult in relation to other parts of the European Union by attracting unwelcome attention. It would also be a mistake for us Scots to do anything that might jeopardise the possible scale of our share of renationalised funds. This matter needs to be approached with some caution with the objective of getting the best possible deal for Scotland.
I favour option 3:
"launching a new, focused call for views".
However, I hope that as well as calling for views, whether by written evidence, oral evidence or both, we will have time to come to some firm conclusions on the matter. My recollection is that our predecessor committee failed to reach any firm conclusions because of time constraints—we merely sat on the fence. I hope that, after hearing others' views, this committee will be able to come to some firm conclusions and make some recommendations.
We should obviously take evidence from the Scottish Executive because, as Margaret Ewing pointed out, it has not yet produced a definitive public statement on the merits or otherwise of the UK Government's proposal. Obviously we want to get an update on the Executive's thinking on that matter, as well as the views of local authorities. We got some views from local authorities in the previous session, but an update would be valuable. No doubt other organisations such as the Scottish Trades Union Congress and the Confederation of British Industry Scotland would like to give us some evidence.
We should also try to get—directly or indirectly—the views of some of the other states in the European Union, including some of the new applicant states. When we assess the various views and evidence we should think not only of the effect on Scotland. The Scottish dimension is obviously very important for the committee, for our Parliament and for the people whom we represent, but we ought to consider the wider repercussions throughout the EU, including the possible impact on new member states—in particular the poorest member states. I hope that we could also encompass that in our inquiry.
I know from previous discussions that the committee has had with the Czech Republic that that state has strong views on the issue. Our videoconferencing session with the Finnish Parliament is coming up, so that will be an opportunity to explore these issues.
I want to come back on what John Home Robertson said as I disagree with it rather strongly. In her statement to the House of Commons on 17 September, Patricia Hewitt stated:
"we put forward for consultation a proposal to reform the EU Structural and Cohesion Funds through the establishment of an EU Framework for Devolved Regional Policy."—[Official Report, House of Commons, 17 September 2003; Vol 410, c 53WS.]
That is clearly a matter for the committee. It is a question of what we are allowed to do once the EU and the Commission have discussed the issue. The matter is still very much within our remit and we should examine it.
I strongly agree with Dennis Caravan's suggestion that we should consult other countries, in particular the accession countries—one of which I visited last weekend. It is very important that they be consulted. It may be that that might be difficult prior to accession, but this brief and focused inquiry should be by way of an interim inquiry. We may well want to return to the issue again in the course of a lengthy debate that will last until 2005-06.
I will follow on from the point that Dennis Canavan and Keith Raffan made. The production of the European Commission's cohesion report, which I think should be published in November or December, will be vital to the inquiry. The report will give us a picture of exactly what this will mean throughout the EU and in particular for the new accession states. That will take on board many of the points that Keith Raffan and Dennis Canavan have raised. We have not mentioned the cohesion report, but I have taken it as a foregone conclusion that we will consider it and take it on board in our deliberations. That will be important.
We must also consider the EU budget across the board. What are the alternatives? What will the budget have to be in order to maintain cohesion policy? The EU budget and the cohesion policy should form part of the basis of the inquiry.
I might be looking at the matter totally the wrong way. However, as far as I can see the accession countries are looking forward to coming into the EU and one of the reasons for that is that they will get access to European structural funds. They cannot wait to benefit from that and I do not blame them one bit for having that in their minds. I thought that the remit of the committee was to look at European matters from the perspective of how they affect Scotland and to consider the benefits and disadvantages for Scotland. I would like any inquiry that we conduct to be centred very much on Scotland's interests.
On the distribution of European structural funds, I think that disadvantage for Scotland will be built into the fact that we are bringing in poorer countries, to which Dennis Canavan referred. On that basis, we must look at ways in which Scotland can get round those problems. I do not take the same view as John Home Robertson, who suggests that we have to look at the wider European ideal.
Did I say that?
You did in your analysis. You did not use those words, but you asked how it would affect the wider European objectives if we looked at some of the aspects that have been suggested. I will read the Official Report to see what you said, and stand to be corrected. However, as far as I am concerned, Scotland's interests come first, and that is the way in which we should approach the issue.
I have listened to the various contributions. This issue will have a huge impact across Scotland and the UK. The clerks might be able to tell us whether the issues are going to be examined by the Finance Committee, the Enterprise and Culture Committee and the Local Government and Transport Committee. Regional funding impacts on so many aspects of life. Could our clerks contact the conveners of those committees to see whether they wish to contribute to any deliberations that we wish to pursue?
I know that the clerks to other committees are waiting for this committee to take the lead. There will be lots of scope to involve other committees.
I propose to bring this discussion to an end, unless anyone who has not spoken wishes to do so. We have a consensus that we should proceed with option 3, and hold a short, focused inquiry. Many members made important points, which we will take on board and include in our inquiry. The nature of the inquiry will be to assess the impact on Scotland of this debate and the options that exist. As Dennis Canavan said, it will be up to the committee to reach conclusions. However, none of the issues that have been raised round the table are mutually exclusive, so they can all be built into the inquiry.
The paper suggests that we should have the inquiry wrapped up by Christmas, if everything goes according to plan. We will put out an open call for evidence, but if anyone round the table feels that there is someone who should give evidence, please pass their details to the clerks so that we can ensure that they are notified.
I have a question on the completion date. We thought that there was a need for urgency, given the time limits on the previous consultation, but now we are talking about well into 2005, so we may not have to bring the inquiry to a conclusion so soon.
We will remain flexible. The cohesion report from Europe will come out before the end of the year, so many of the initial decisions will be taken early on as to the direction of the debate and, if we want to influence it at an early stage, we may want to complete our inquiry sooner rather than later. However, we can play it by ear, depending on the evidence that is produced.
If everyone is happy, we can instruct the clerks to proceed with that inquiry.
Members indicated agreement.