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EU Regional Policy (EUC Report)

My Lords, I join other noble Lords in thanking the noble Baroness, Lady Cohen of Pimlico, for initiating this debate. I congratulate her on her sub-committee’s report, which is well researched and full of interesting and very important information. Before I talk further about this and EU regional policy, I hope that your Lordships and the noble Baroness, Lady Cohen, in particular, will forgive me if I devote a few words to welcoming the Minister. Fortunately, I have a sound basis for doing so, as I worked for him for several years in the 1990s when I ran Standard Chartered’s merchant bank in south-east Asia and got to know him very well. The Minister’s reputation is widely known. Suffice it to say that when he joined Standard Chartered in 1993, it was emerging from one of several damaging crises—this time, I think, in India. Long before he left it, he had taken it, by dint of his rare combination of energy, enthusiasm, leadership, inspiration, intellectual horsepower, decisiveness and sheer hard work, to the position of one of the leading emerging-markets banking organisations in the world. A champion of charitable work, especially in sight restoration and breast cancer, he is a fundamentally good person. He is indeed a very big man in a small package. With considerable foresight, the Minister seems to have kept Standard Chartered away from the businesses and products that have so deeply damaged so many other banks. In my view few people are as well qualified to give a Government of this country, of whatever political hue, the benefit of their advice. That he has chosen to join the Benches of a Labour Government is a matter of passing regret for me personally, but I will get over it, because I know that he has taken this step in the sincere hope that he will be able to help our country. There was a rumour, around the end of last year, that the Government were trying to persuade him to take the chair at the Royal Bank of Scotland. He will not have accepted a ministerial post in your Lordships’ House in the expectation that it will be an easier ride, and we will not disappoint him. He is a keen supporter of Spurs, a club which is consistent with the Prime Minister in its plans to spend its way out of the recession, reportedly spending £45 million in the transfer window, including on buying back Robbie Keane. We look forward to the Minister’s speech and indeed to many future speeches. I turn now to the future of EU regional policy. Matters relating to the EU are well known for their complexity—several noble Lords have already referred to that. It is therefore to the sub-committee’s credit that it has produced a report of such clarity on the subject. I thank all noble Lords who served on the sub-committee for their hard work. There is a great deal in the report with which we would agree, and I hope that the Minister will be able to reassure your Lordships that the Government will study and study again the sub-committee’s recommendations. The support for the report this evening will perhaps go some way towards encouraging the Government to press unrelentingly in Europe for its important recommendations to be implemented. Both the sub-committee and the Government appear to recognise that, in the words of my noble friend Lord Trimble, it is irrational for the more developed EU countries to receive funds intended to redress economic inequalities across the EU. The circular system of sending money to Brussels only to see a portion of the sum returned is neither sensible nor effective. It involves wasting resources on administrative bureaucracy, as several noble Lords—my noble friend Lord Steinberg and the noble Lords, Lord Woolmer and Lord Teverson, among others—said. Although the report says that such spending might not be hugely significant for a richer country such as ours, I am sure that noble Lords will agree that any waste of taxpayers’ money on bureaucracy is particularly unacceptable in the current economic climate. The sub-committee noted that a reduction in contributions from these funds would be unpopular in some circles. However, the sub-committee was also quite right to note, as the noble Baroness, Lady Cohen, said, that a reform of the CAP—I must declare an interest as a beneficiary of various of its schemes—would more than offset any displeasure felt. I hope the Minister will ensure that the Government do everything in their power to secure a sensible result from the imminent review of the EU budget. The committee’s recommendation in paragraph 64, that the 2008-09 budget review should result in reduced spending on agricultural price support, is welcome, and I hope that it is fully shared by the Minister. The committee’s recommendation that richer member states should remain responsible for the majority, if not all, of their own regional funding is also one that the Government should pay heed to. Indeed, the Prime Minister himself called a few years ago for the repatriation of regional funding. It is regrettable that he did not pursue it more vigorously. We agree with the conclusion that regional policy will never be the primary vehicle for encouraging economic competitiveness. Many of the poorer EU countries’ inefficiencies, especially of those which have recently joined, are the consequence of national problems. Although these EU funds can of course be very useful, they must complement national policies if any real improvement is to be seen. There needs to be better control of funds at national level. It would be very helpful if the Minister could tell your Lordships, first, what level of auditing and ex post assessment has taken place and does take place; and, secondly, whether any UK local authorities have been censured by the EU Court of Auditors over the handling of EU money, and if so, which ones. I will understand if he cannot answer me today, but if he could able to write to me afterwards it would be appreciated. Many of the other recommendations in the report are sensible, too. Using loans instead of grants—to which the noble Lord, Lord Watson, referred—as a vehicle for encouraging development would not only ensure that the projects concerned were viable without permanent public funding but would also, over time, allow limited funds to go much further. Similarly, we would echo the sub-committee’s support for co-financing. If a national Government retain a financial interest in the success of a project which they are considering funding with EU money, there is less likely to be any lowering of standards at the end of the year as a result of having to spend the money to avoid returning it. The committee has made a considerable number of recommendations, of which I have mentioned only a few. I look forward to hearing the Minister’s response. I again thank the noble Baroness, Lady Cohen, and her sub-committee for this report, and your Lordships for an interesting debate.