Plenary, 06 Oct 2005

Meeting date: Thursday, October 6, 2005

Official Report 780KB pdf

---

Structural Funds (South of Scotland)

The final item of business today is a members' business debate on motion S2M-3339, in the name of Euan Robson, on the south of Scotland structural funds. The debate will be concluded without any question being put.

Motion debated,

That the Parliament welcomes the investment in Roxburgh and Berwickshire, the Borders and the South of Scotland from European Union structural funding, such as at Springwood Park in Kelso and at Ettrick Riverside in Selkirk; notes that the current round of such funding ends in March 2006, and believes that the south of Scotland has a clear case for continuing investment to support its economy and communities.

In 1999, the south of Scotland was designated as a distinct region for European structural funding. A south of Scotland objective 2 programme was established with a budget of £44 million for six years. The programme commenced in April 2000 and it will close in March of next year.

The campaign to establish the distinct south of Scotland region was long in the making before 1999. Its success in that year was widely acclaimed and the benefits that flow from that programme are now manifest throughout the region.

I will give a concrete example from my constituency. Springwood park in Kelso, where the Border Union showground is located, has been transformed and is now a premier location for not only regional but national events. It has brought huge benefits to the economy of my home town and that of the wider Borders. Events ranging from the traditional agricultural show and ram sale are now complemented by a range of attractions from the world convention of Honda Gold Wing motorbikes through to major conferences and events.

The objective 2 programme has brought very significant projects such as the heart of Hawick project, the business efficiency initiative, the innovation and technology initiative, the business loan scheme, mountain biking projects, the broadband pathfinder project and many more that other members may care to record tonight.

Coupled to the structural funding is the successful re-establishment of regional selective assistance for investment in businesses, which was withdrawn in 1982. Its reintroduction was achieved partly in the wake of the Viasystems collapse in 1999 and 2000. The region has benefited from European social fund money and it has made a major contribution towards the delivery of that distinct programme with a number of innovative projects.

The south of Scotland clearly needs to continue with the level of investment that has delivered so much to an economy that is still brittle in parts and that needs to diversify from its core of tourism, agriculture, electronics and textiles. Unfortunately, however, plans for structural funding after March 2006 suggest that little resource will be made available to the south of Scotland because of the way in which the nomenclature of territorial units for statistics—the so-called NUTS classification—stands at present. In brief, structural funds are attached to the so-called European NUTS II regions and the south of Scotland is not to be included in NUTS II as it is defined under the present objective 2 programme.

In effect, the south of Scotland is split between the south-western Scotland and eastern Scotland NUTS II regions. The fact that Dumfries and Galloway is linked to the Strathclyde urban conurbation means that its gross domestic product is 94.3 per cent of the average for European Union countries. The fact that the Borders is included with Edinburgh and the Lothians means that the GDP for that NUTS II region is 101.2 per cent of the EU average.

If we were to isolate the south of Scotland and its population of 255,000 and establish it as a NUTS II region on its own, its GDP would be 73.7 per cent of the EU average. If that were done, it would show the south of Scotland in its true light: the region is directly comparable to the Highlands and Islands, where the equivalent GDP figure is 72.4 per cent.

We need only consider the resources that are likely to go to the Highlands and Islands post March 2006 to see that the Highlands and Islands, with a per capita GDP that is almost identical to that of the south of Scotland, will qualify for perhaps 10 times as much assistance as the south of Scotland. The same may also be true of similar United Kingdom regions such as Cornwall and west Wales.

I make it clear that I welcome the funding for the Highlands and Islands and, indeed, for Cornwall and Wales. Such funding is important for those regions, but it is equally important for the south of Scotland. The Department of Trade and Industry in particular, and the Scottish Executive, need to place more emphasis on obtaining this funding. In passing, I thank Jim Wallace, the former Minister for Enterprise and Lifelong Learning, for his effort to do that.

If it was good enough to establish an objective 2 programme area that covered the south of Scotland in 2000, it remains the case that a similar funding arrangement should be secured for the next programme period from 2007 to 2013. A lowland Scotland programme—if that is what is intended—will not do the job for the south of Scotland.

I invite the minister to give serious consideration to a renewed effort to convince the DTI to assist the south of Scotland. I fully recognise the fact that the next review of NUTS boundaries will not take place until after next March—in fact, if I understand the position correctly, it will take place in 2007. Nevertheless, we should start making the case now. If there is no will in Brussels to bring forward the review, we should make a special case for the south of Scotland to be redesignated as a separate region. After all, there are at least nine NUTS II regions across Europe with smaller populations. If the attempt to make a special case fails, both the Executive and the UK Government ought to look to fill the funding gap until such a reclassification is achieved.

My colleague Jeremy Purvis will doubtless add more details in due course. I consider the debate to be a follow-on to the debate that he sponsored some months ago in which, sadly, some Opposition members offered nothing but criticism. Be that as it may, it is now time to pull together across the south of Scotland. In that regard, I particularly welcome the report of the south of Scotland alliance entitled "Scotland's Hidden Region", which sets out the case for NUTS II designation and the funding that that would bring. Seemingly, the report is to be updated by the alliance. Perhaps the Executive could offer some assistance in doing so as part of a concerted effort to assist this large part of Scotland that deserves the same attention as all other parts of the nation enjoy.

I welcome all new entrants to the chamber, even if they have not taken the oath.

I suspect that many of us will make similar points, so I will start with a general point. EU structural funds exist to help us raise the poorest performing areas—those whose GDP most widely diverges from the EU average. I agree that, increasingly, we need to concentrate those funds on the poorest areas, which means, I am afraid, that they have to go to the new entrants to the EU. That is not just philanthropy on our part—it is to our economic benefit in the more developed countries because through helping the economies of the poorer countries they become our customers. That is one of the founding objectives of the EU and of any economic union. It is clear, though, that if we do that, there will be less jam to spread around. We have to accept that our share will diminish.

If we are targeting poorer areas, we have to be careful that we define them properly, which is where the problems that are being discussed in this debate arise. Few areas in any country are homogeneous; most have relatively prosperous areas and poorer patches. It is clear that, with structural fund programmes, it is impossible for administrative reasons to make funding areas so small that there are no economic anomalies. Areas have to be big enough to have a sensible management programme. We all agree on that. However, the basis of the split of funds in NUTS II areas is madness. Other than the Highlands and Islands, nobody in Scotland will qualify because all the new areas are well over the GDP threshold.

Two years ago, Christine Grahame quoted Professor MacCormick with regard to the SNP's position:

"The SNP is of the view that … structural funds"—

post 2006—

"should be directed at funding infrastructure projects rather than by way of direct payments to foreign companies."—[Official Report, 3 September 2003; c 1336.]

I agree with the foreign companies side, but does Alasdair Morgan accept that if the future is only for infrastructure projects, the SNP's policy rules out objective 2 funding? Can he clarify the SNP's position?

I am not going to get into what the money is used for. Let us try to get the money first of all, then maybe we can argue about what it is going to be used for. In terms of SNP policy, if we had our own Government we would be talking about an entirely different and more prosperous situation.

What people in the south of Scotland find so frustrating is that if there were a south of Scotland region, GDP would, as Euan Robson said, be only marginally above that in the Highlands and Islands region and well adrift of the current figure of 94 per cent for the south-west Scotland region and the 101 per cent for the area the Borders is lumped into. The entire Highlands and Islands area, where prosperity is only marginally less than it is in the south of Scotland, can qualify for up to 10 times as much assistance as the south of Scotland.

The argument that the south of Scotland is too small to be a separate region does not wash either, because there are smaller mainland regions in Europe. The Valle d'Aosta in Italy and the Luxembourg province of Belgium are roughly the same size as the south of Scotland and qualify as NUTS II regions on their own. Why cannot the south of Scotland?

We will be told, "It cannot be done—the decisions have been made and the boundaries drawn," but at the end of the day most decisions that are made in Europe are political. What is required is the political will to ensure that the south of Scotland continues to receive structural funding. Rules have been changed—even at the last minute—when political pressure has been brought to bear. I believe that that could be done on this occasion if the United Kingdom Government had the will and if the Executive exerted enough pressure on it. That is what we are looking for.

I, too, congratulate Euan Robson on securing the debate, which is attended by the usual suspects—except that Mary Scanlon and the minister are here as well. It is good to have the opportunity to reflect on the significance of objective 2 funding for the south of Scotland.

In Dumfries and Galloway, almost £6.5 million has been invested by the South of Scotland European Partnership since the Parliament's second session began. That is leaving aside the money that was invested before then. On top of that, we had a share of the £1.127 million for the business loan scheme, which added to the money Scottish Enterprise gave during the foot-and-mouth outbreak. Initially, it was intended to help the businesses that had been affected by foot-and-mouth, but it was retained as a loan scheme for businesses in the south of Scotland. I know of a number of businesses that have benefited from it.

In addition, £1.3 million has been invested in tourism. Originally, that was match funding for Executive money; thereafter, it was match funding for funds that Dumfries and Galloway put in. The investment was designed to help the area recover from the ravages of foot-and-mouth. More recently, £320,000 has been provided towards Dumfries and Galloway Council's proposed leisure complex, which I hope the council will get on with building. At least there has been a commitment of funding.

An allocation of £331,000 has been made for the development of conference facilities at Easterbrook Hall at the Crichton in Dumfries. That, allied to the fact that Dumfries and Galloway Council has approved a planning application following Historic Scotland's lifting of its objections, will enable us, for the first time, to have significant conference facilities in the south-west. Those facilities will be big enough to hold Scottish party conferences. I know that the Conservatives have held a smaller conference there, but I look forward to welcoming my party and members of other parties to the new facilities once they have been built.

The north-west resource centre in Dumfries, which is not far up the road from where I live, has received nearly £900,000. That centre developed when many voluntary sector organisations came together with the council to renovate an old people's home and make it into an important facility in a slightly more deprived area of Dumfries. It makes training possible, provides employment opportunities, acts as a meeting centre and offers facilities for young people. Recently, £100,000 was given to Buccleuch Hall in Langholm. Although that is a smaller sum, it is nevertheless important in that it will allow the community in Langholm to have up-to-date facilities and to build on the significant arts experience that is available in that town through the work of local people.

In spite of the political differences between the members who represent the area, we all agree that the south of Scotland is special. It is different. It is distinct in that it has its own culture, its own traditions and a very special landscape that changes as one goes from east to west. It has its own wildlife, which includes red squirrels, golden eagles, ospreys and red kites. The area has a tremendous amount to offer.

I think I have said before in the Parliament that Pip Tabor of the Southern Uplands Partnership has suggested that the south of Scotland should be renamed the southern uplands, to reflect what the area is. It is not the southern lowlands, nor is it the south of the central belt. Unfortunately, the current NUTS boundaries seem to treat the south of Scotland as if it is the south of the central belt.

I invite the minister to comment on whether it would be possible to persuade the DTI and the EU to revise the boundaries. The suggestion that my colleague Euan Robson is making, which is that the number of NUTS areas should increase from three to four, would not in any way disadvantage Glasgow or Edinburgh; it would advantage the south of the Scotland, but it would not disadvantage anyone. In advantaging the south of Scotland, it would advantage Scotland, because more money would come into the country. I urge the minister to see whether the matter can be reconsidered.

NUTS boundaries have been redrawn in the past. For example, in 2003, changes were made in Germany, Spain, Italy, Portugal and Finland. Cannot changes be made here? Let us bring more funding into the south of Scotland—indeed, to all Scotland—to fund extremely important projects in local communities.

I, too, congratulate Euan Robson on securing the debate, which is about an important subject that perhaps does not get the attention it deserves. Perhaps that is reflected in the attendance. I am sure that Mary Scanlon will be delighted not to be regarded as one of the usual suspects, whatever that phrase means. However, I am delighted to join that gang.

Euan Robson made several interesting points. We must be careful not to be unnecessarily confrontational in the Parliament. We all recognise that there are peculiarities in the south of Scotland situation, whether in Dumfries and Galloway or in the Borders. We ought to work together where we can.

Parts of the south of Scotland have good links to Glasgow and other parts have strong links to Edinburgh. However, if we take away those areas, there is probably more that unites Dumfries and Galloway and the Borders than divides them. There are certainly strong and growing links between the councils that serve the region. There are also long-established family and business links. We only have to look at the history and traditions of the region to see that there are strong cultural links, which are important.

For the purposes of the debate, does Mr Brownlee agree that the one thing that unites Dumfries and Galloway with the Borders is low GDP compared with comparable areas in the rest of the EU?

Absolutely. Mr Morgan has stolen my thunder on that point. I was about to say that, in addition to the obvious rural connection that areas in the south of Scotland have, a significant set of challenges faces them, from demographic change to the existence of significant pockets of deprivation.

The south of Scotland has particular issues on which we must reflect, but I do not wish to diminish the seriousness of the pockets of deprivation that exist in the central belt or the undoubted challenges that exist in the Highlands and Islands. I note that the Highlands and Islands are keeping a close watch on what is being said in this debate. However, the south of Scotland has particular problems that we should recognise. Euan Robson's description of the economy in places in the south of Scotland as brittle was good. I grew up in Selkirk and saw the impact of the textile industry contracting severely and felt the chill that went round the town when the Viasystems factory closed.

There is real economic deprivation in the south of Scotland, but one of the dangers we face is that people outwith the area perceive us to be rather prosperous. They perhaps think of us as a commuter belt. That is true for some areas, but not for the majority of the region. It is important that we emphasise the fact that there is deprivation in the south of Scotland. Euan Robson also talked about the need for diversification. I warmly welcome those words. I agree whole-heartedly that there is a real need to diversify our economy.

Nothing associated with the EU is ever simple and it seems that structural funds are no exception. The current uncertainty over the future provision of those funds is, at the least, unsettling. The Executive has a difficult task in liaising with both the Westminster Government and the EU, but I hope that it will lobby vigorously on behalf of the south of Scotland. If the Executive does not speak out, I doubt whether the south of Scotland will be listened to. It is important that the Executive is in there fighting the corner for the south of Scotland. If it does not do so, there is a danger that we will be forgotten about in what is a large area for the European Commission or the Westminster Government to consider.

I congratulate Euan Robson on his speech. He brought light to the issue of structural funding. I look forward with interest to what the minister has to say.

I pay tribute to Mr Brownlee for his measured and well-considered speech and his analysis of the problems that face the Borders and our constituents. I also thank my friend Euan Robson for bringing this important debate to the Parliament and for outlining so eloquently the importance of European structural funding for his and my constituents.

I was pleased that my first members' business debate after being elected to the Parliament was, as Euan Robson said, on European structural funds. That was in September 2003 and I have been concerned since then that we should lobby for the continuation of support for his and my area. I felt that that debate was important for my constituents in the Borders and for people in the south of Scotland as a whole, and it was of considerable regret to me that I was attacked for securing the debate. Mr Mundell, who was Mr Brownlee's predecessor in the Parliament, said in the Borders media that I chose to debate motherhood and apple pie. When I spoke on local radio, the interviewer asked me to respond to comments made by Ms Grahame, who had said that, instead of debating this issue,

"I should have chosen to debate a more important issue to my constituency."

However, in Mr Brownlee's spirit of welcoming a repentant sinner to the kingdom of heaven, I am pleased that all parties speaking on behalf of the south of Scotland do so with, I hope, a single voice. However, I am not naive and I expect us to have a robust debate about tactics.

Before I move on, I want to pay tribute to Douglas Scott, an officer in Scottish Borders Council. His dedication and diligence in supporting his council colleagues and others in the new ways forum in the Borders, the south of Scotland alliance and the South of Scotland European Partnership should be recognised. The partnership is an extremely well-managed programme and I hope that the minister will pay tribute to its work.

Euan Robson's motion mentions Ettrick Riverside in my constituency. I am delighted that that business centre has this week received a further boost in investment to complete the remaining floors in a former mill. That is a boost to my constituents in Selkirk and, indeed, to the wider economy in the Borders. I attended the centre's opening and I have supported it since. Incidentally, the investment was attacked vehemently by Ms Grahame—a pattern seems to be developing.

Ettrick Riverside has regenerated a former textiles mill. For many generations, textiles symbolised the economic strength of the Borders; but then, when derelict, the mill symbolised the decline of that strength. The renaissance of the building, with the partnership of Scottish Executive and European funding, is an excellent example of the benefit that structural funds can bring.

The future is not just about bricks and mortar but about people. The economic benefit of tourism in the Borders—tourism is probably our biggest hope for growing our GDP—is highly reliant on European funding. If funding is reduced, jobs in the industry could well be affected at the very time when we should be investing in the future of the tourism industry.

My position is more black and white than that of the European and External Relations Committee's report last year, which eloquently outlined the dilemma for the future in relation to competing priorities in the enlarged EU. Alasdair Morgan highlighted such issues. We in the south of Scotland should speak with a single, clear voice—as Euan Robson has done—that as a NUTS II area, the south of Scotland has its own priorities. I find it hard to agree that priorities can be established on a lowland Scotland basis that covers the entire Scottish Enterprise network.

I pay tribute to Euan Robson for securing this debate. There is considerable debate to come, but designating the south of Scotland as a NUTS II area is the right approach. I hope that all members from the south of Scotland will be able to coalesce round that view this afternoon.

I, too, congratulate Euan Robson on securing this debate on a very important issue. I cannot congratulate Mr Purvis on his rather selective quotations. I recall that, during the previous debate on this issue, infrastructure projects were seen as additional. One of the great needs in the Borders is the railway line, but investment is also required in the A75 in Dumfries and Galloway. Unfortunately, European funding is not available for those projects, although it would open up the economy in both areas.

I was at the Ettrick Riverside business centre today; the reclamation of the old mill site is absolutely splendid. Funding for the development of the centre included £1.5 million of European funding. There are 26 or so businesses, employing 112 full-time equivalents. That is important in the area and should be set against the backdrop of the horrors that we all recall when 1,200 jobs were lost at Viasystems and when £24 million of funding was lost, which the DTI never got back. But what is new?

A BBC Scotland office has opened up at the centre in Selkirk and new equipment has been installed. That is a broadcasting commitment to the Borders. At one point several years ago, it looked as if we might lose that commitment, so the opening of the office is very welcome.

As we all agree, European funding is extremely complex, which is why I lodged a parliamentary question on the issue to find out how much funding goes to the south of Scotland. Allan Wilson answered that question, so he no doubt knows what I am about to say. The total amount of funding from the European regional development fund since 2001—without the 2005-06 applications, which have not yet gone through the system—has been £37 million and the European social fund has contributed £10 million, which are substantial amounts.

I have connections with both areas in the south of Scotland. I have represented the Borders area and other parts of the south of Scotland since 1999, and I lived in Galloway for 15 years. From my experience, I agree with Derek Brownlee that the areas have much in common, although people may not always think so. The areas have similar problems with failing traditional industries and low wages.

I presented the answer to my parliamentary question to Douglas Scott, who has been mentioned, and asked for his comments on it. Interestingly, he said that the lack of clarity about the future for the south of Scotland was of grave concern. He made three points. First, he said:

"The UK Government wants to nationalise European Regional Aid and the Chancellor has indicated he would replace the amount".

However, the south of Scotland does not feel secure that the funding would come in its direction. Secondly, he said:

"If the European Union's proposals for European Regional Policy stand, then a lot depends on the budget allocation … If the European Commission gets what it wants, which is unlikely, then for the new funding period 2007-2013, the South of Scotland could get a maximum of £25 million".

That is staggering when compared with the previous amount. Thirdly, he said that, if the south of Scotland funding were worked out on the same basis as that for the Highlands and Islands, we would get £200 million in that period.

Some people think that there is a forced marriage of convenience between Dumfries and Galloway and the Borders, but I have never seen the relationship in that way. When the south of Scotland alliance was formed way back in 2000, there was a strength of purpose behind it. As I said, the areas have similar problems with infrastructure and low wages. They cannot simply be lumped in with cities in the east and west, as that would distort not only the population, but the economic viability of the areas. I hope that the minister will make progress on the issue.

A petition on the matter is before the Public Petitions Committee, although it is from friends of the south of Scotland alliance and not from the alliance itself, which is a bit misleading. The petition will be considered again on 23 November, when, I trust, the committee will take account of this debate in its considerations.

I draw members' attention to my registered interest in a book shop in Wigtown that has received money from the Wigtown development company, which in turn has received money from the south of Scotland structural funds—the trickle-down effect from the funds works. I congratulate Euan Robson on securing this extremely important debate. It is true that the usual suspects are here, but that is because there is complete cross-party agreement on the importance of the issue and the need for the Executive to resolve the matter.

The south of Scotland is neglected in Scotland. There is an assumption at large that rural Scotland is Highland Scotland. When Scottish Natural Heritage was relocated to Inverness, the Executive described Inverness as SNH's natural heartland, but there is a rural Scotland south of the Highland line and it requires support. We may feel a collective guilt towards the Highlands because of the clearances, but the claims and needs of southern Scotland are equally strong and should be taken into equal consideration. The southern clearances avoided the violence of the Highland clearances, but the evidence is that more people were displaced from land in the south than were displaced in the Highlands.

While I am on the subject of history, I point out that Dumfries and Galloway was deliberately bankrupted by the original Scottish Parliament for its support for the covenanting cause. The south of Scotland continues to do badly under the Scottish Parliament, of which we see ample evidence in the relocation policy, which has been an abysmal failure for the area.

However, this is a win-win situation. We need a commitment from the Executive to enter into full and positive negotiations with the south of Scotland alliance and I hope that, in the minister's summing up speech, he will give that commitment.

The list of what has been achieved with structural funds is immense and represents the large majority of what is bright and vibrant across the south of Scotland. It includes: the successful Borders business efficiency scheme; the rural resource centre; the Hawick regeneration initiative; the animal care training unit at Barony College; Crichton business park; youth enterprise developments throughout the regions; business loans throughout the regions; the Scottish Borders film initiative; the South West Scotland Screen Commission; the marketing of countryside access schemes; Stewartry Council of Voluntary Service; the Southern uplands partnership; music industry development; Wigtown book town, which I have mentioned; the Scottish Cashmere Club; fisheries promotion schemes; the Scottish forest industries technology centre; mountain biking centres; regeneration in Eyemouth; golf tourism; broadband; food and drink initiatives; and arts and culture initiatives. I do not believe that those initiatives would have happened without structural funds.

It is incumbent on the Parliament to find a way to secure a continuation of at least some funding from the European Union to the south of Scotland. As I said, this is a win-win situation. We very much hope that the minister will enter into full, positive dialogue with the south of Scotland alliance.

I, too, congratulate Euan Robson on securing an important debate; it is certainly not about motherhood and apple pie, as I will demonstrate.

The Scottish Executive recognises the important contribution that structural funds have made to economic development in the south of Scotland and we welcome that investment. For the financial period 2000-06, the south of Scotland objective 2 programme will deliver €73 million, which converts to about £50.4 million. That is given with the aim of generating sustainable economic development and is founded on the key principles of enterprise, learning and social justice.

As a number of members have said, the achievements to date have been impressive. Euan Robson mentioned the investment at Kelso and Selkirk, but a number of good examples are spread throughout the south of Scotland, such as in Elaine Murray and Alex Fergusson's constituencies, which I have had the pleasure of visiting in the past 11 months. I am pleased that those achievements are continuing now that we are getting towards the end of the current programme. There is still £9.36 million unallocated. The achievements will leave an important legacy.

The debate comes at a crucial point of change in structural funds. There is considerable uncertainty about what lies ahead. The level of future structural funds that Scotland as a whole will receive obviously depends on agreement on the overall EU budget for 2007-13. Failure to reach agreement on the budget under the previous, Luxembourg presidency has led to an inevitable delay in the negotiations. The United Kingdom presidency is now continuing efforts to reach a deal by the end of the year, possibly exploring more wide-ranging options for budget reform. However, the distinct possibility remains that negotiations could continue into 2006, given that there is now likely to be a period of reflection by all parties on the failure of the Luxembourg presidency proposition.

The uncertainty means that the range of possible funding scenarios remains significantly large and will depend on the outcome of the budget negotiations. When we strip away all the fog, it is clear that the level of funding that Scotland might receive—if any—would be much reduced from what we get currently.

Under the Commission's proposals that were outlined in 2004, the south of Scotland would be eligible for competitiveness funding. Many representatives of the south of Scotland alliance and others—including Euan Robson tonight—have campaigned for reclassification of the area as a NUTS II region, to allow it to qualify for conversion status. However, as I made clear on my most recent visit to the area and on other occasions, that will not be possible ahead of agreement on the structural fund negotiations that are under way. We have examined the option thoroughly and it is clear that there will be no reclassification of NUTS boundaries until 2008. Even allowing for the inevitable delay, that will be well after the completion of the budget negotiations. In any event, eligibility for funding is not a means by which one would reclassify the NUTS boundaries.

With regard to the petition from the supporters of the south of Scotland alliance, I cannot recall whether the minister was one of the people to whom the Public Petitions Committee was going to write about this subject. If so, I do not suppose that he can tell us anything about his response until the group has seen it.

I do not know about the petition. I am happy to meet the petitioners to discuss the matter with them and to revisit the issue. I assure the member that, if there were ways in which we could bring political or other pressure to bear on the situation, we would do so. I understand the potential benefit to the region, although, as I said, that is not an eligibility criteria.

The minister's comments about NUTS II notwithstanding, does he agree that the Scottish Executive can still accept that the south of Scotland, the Borders and Dumfries and Galloway have distinct needs with regard to how moneys within Scotland are delivered?

I will come to that point later, as we are consulting on a proposal that Euan Robson referred to in his speech. Further, I am happy to discuss that issue outwith the chamber.

There is a case for continuing investment to support the south of Scotland's economy and its constituent communities. The south of Scotland faces significant challenges, as does the whole of Scotland, in relation to matters such as improving productivity and addressing social exclusion. Our key strategies, which are contained in the framework and "A Smart, Successful Scotland" outline our commitment to tackling those challenges and our future regional policy will be based on precisely those strategies.

In the changing funding environment, however, we must focus on making the best use of available resources. It is important to remember that there is a full range of domestic funding for regional economic development. Off the top of my head, I would say that around 3 per cent of total economic development spend comes from the structural funds, which means that substantially more is available in terms of regional economic development funds. The vast majority of funding for economic development in the south of Scotland and Scotland as a whole comes from domestic funding.

We have said that future programming will need to be flexible enough to meet the needs of all areas of Scotland. We are looking into the use of spatial criteria and other options to ensure that the funding is concentrated in areas with the greatest need and is distributed equitably throughout Scotland.

It is true to say that we have proposed a programme in lowland Scotland, outwith the Highland region—a single European regional development fund programme and a single European structural fund programme. Sums to the region through the competitiveness objective will inevitably be much reduced and economies of scale will necessarily flow from that. The operation of multiple programmes would be expensive and could be overly bureaucratic. However, we are engaged in a consultation process with all our stakeholders and partners in that regard.

We should concentrate on maximising the opportunities that we are faced with. We must build on the achievements of the past and adapt to the challenges of the future.

I assure members that, whatever the future holds for structural funds, we are absolutely committed to effective regional economic development that benefits every region in Scotland, wherever those resources come from, regardless of whether they come as a consequence of the Treasury guarantee—if the United Kingdom presidency prevails—or as a consequence of conventional structural funding.

Meeting closed at 17:55.