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Future EU Finances and Own Resources

I am not keen to enter into the very public grief of the Government at the time of the reshuffle, but want to put on the record some sadness that the Minister for Europe is no longer the Leader of the House, albeit not because I do not think that he has many talents that he will offer in his new post. Those of us who are members of the European Scrutiny Committee will remember a discussion that we had with the right hon. Gentleman several months ago in which he had innovative ideas about improving the scrutiny of European business in the House. I hope very much that his successor as Leader of the House will take those suggestions forward. I have no doubt that the Minister for Europe will bring his great experience to European matters, not least as a former Member of the European Parliament, and we in the Scottish National party and Plaid Cymru wish him well. Speaking as someone who represents a constituency that has benefited greatly from EU funding, I wish to make a point about EU finances that has been sadly lacking from much of tonight’s debate. In Moray and the other areas of the highlands and islands, there is tremendous appreciation for the support of the European Union over the past decades. Many of us well remember the cash-starved situation in our communities in the dark 18 years in which the Conservatives were in government. It is ironic to think that throughout that time, Brussels was seen as much more benign whenit came to governance than was—perhaps still is—Westminster. It is with great regret that the highlands and islands has lost objective 1 funding. We have heard much about fraud, mismanagement and the inappropriate use of statistics, but the loss of objective 1 support for the highlands and islands was home-grown. It did not happen because of Brussels, or other dastardly EU member states. Scotland’s national wealth was overstated by £21 billion throughout the 1990s owing to a catalogue of flawed assumptions that were used to compile the UK’s accounts. Newspaper coverage in The Scotsman at the time said that the UK"““Office of National Statistics has admitted to an Enron-scale error, which has been artificially inflating Scotland’s national income by as much as £3.3 billion a year since at least 1989.””" That blunder deprived the highlands and islands of £200 million of EU grants. I hope that hon. Members who have driven through the highlands and islands and are aware how many infrastructure projects were completed only because of the support of the European Union will appreciate that the blunder with which we now have to live, as the recipients of only transitional funding, not objective 1 funding, was severe. It is important that we all accept that the loss of EU funding is not of itself a bad thing. As economies throughout the European Union grow and countries become wealthier, surely those of us in the wealthier parts of Europe have to bear part of the burden so that we can ensure that other parts of the EU catch upwith us. The argument that I will deploy is thus not motivated by a lack of appreciation for our paying our fair share. We should do that, but it is key that we consider the transitional arrangements betweenthe outgoing funding period and the funding period agreed recently. Under the budget deal agreed at the December Council under the UK presidency, the global overall total for European social fund spending was reduced substantially, which will have an impact on communities the length and breadth of the land. Some €308 billion has been allocated for EU funding. The Department of Trade and Industry estimates that the UK will receive€9.4 billion, of which €2.6 billion will be allocated to convergence funding for Cornwall, west Wales and the valleys, and the highlands and islands. Approximately €6.2 billion will be allocated to competitiveness funding for other regions. In December 2004, the Scottish Executive—the devolved Government comprising the Labour party and the Liberal Democrats—estimated that the highlands and islands would get €460 million and the rest of Scotland€721 million. That is a significant amount, and it is important for planning the growth of our economy in the years ahead. Only two short years later, in January 2006, the Executive said that Scotland could receive up to 45 per cent. of the sum we will receive in the current programming period. The highlands and islands would receive £105 million as a so-called statistical effect region under convergence, which is only 60 per cent. of the amount that they currently receive. Basically, the Scottish Executive’s estimates have been chopped by two thirds, and the remaining sum is considerably less than they were expecting. Some hon. Members have asked what is being done, but I want to know what the Scottish Executive were doing. What did the Enterprise Minister, Nicol Stephen—a Liberal Democrat—do when he realised that the Scottish economy will lose hundreds of millions of pounds of funding? Why did the Liberal Democrat Transport Minister not bemoan publicly the loss of significant funds to improve road transport, not least throughout the highlands and islands?