23.10.06
Margaret Hodge announces the national strategy for future EU structural funds spending in the UK

The Government today announced how €9.6 billion of European Structural Funds will be distributed across the United Kingdom over the next seven years.

Every region of the UK will be given a share of European money, according to how much they need it, on a formula worked out after a detailed consultation earlier this year.

When the allocations were announced by Brussels at the end of last year, the UK received a total of €9.6 billion for 2007 to 2013. In the current seven year period the UK was given €15.85 billion.

The poorest regions of the UK (Cornwall, West Wales and the Valleys and the Highlands and Islands) get €2.6 billion. The allocations for these regions (Convergence funding) were agreed at the EU level in December 2005. The UK's remaining regions will share €6.2 billion of Competitiveness funding. The Government has developed a methodology for distributing these funds. There is also €0.6 billion for cross-border and trans-national projects.

Two regions – Merseyside and South Yorkshire - lose their special status, but have been allowed extra transitional arrangements.

Margaret Hodge, Minister of State for Industry and the Regions, said: "All the richer countries in Western Europe have been allocated a reduced slice of the cake this time round. That is partly because the British economy has been such a success in the last seven years and partly to allow money to be given to the new states joining in Eastern Europe.

"Our job has been to make sure this European funding is distributed around the United Kingdom in the best way to ensure that all parts of the country benefit from our increased economic prosperity and employment.

"We are confident the rules we have drawn up will mean the money is used in the fairest way for every region. No one is excluded.

"Whilst we are proud of our economic record, we know we have more to do to tackle regional disparities in economic performance. These funds will help us to bring the performance of our poorest regions up to the performance of the best. It is only by doing this that we can increase the UK's long-term growth rate and ensure jobs and prosperity in every region. That is why it was vital to establish the right framework."

Today's announcement follows a nationwide consultation on future Structural Funds spending in the UK, which closed on 22 May 2006. The Government has also published today a response to the consultation including a summary of stakeholders' views.

The Structural Funds play a major role in supporting regional development and employment across the EU. They only account for a minority of total spending on regional development in the UK.

The new National Strategy establishes three broad priorities for future Structural Funds spending: Enterprise and Innovation, Skills and Employment, and Environmental and Community Sustainability.

The response to consultation sets out the Government's approach to allocating funding between the UK's nations and regions and the principles adopted for delivering the funds from 2007-2013. The allocation methodology will ensure that Competitiveness funding is divided fairly between the UK's Competitiveness regions on the basis of objective evidence of economic need. It will also ensure that funding supports the Government's domestic priorities for regional development and employment.

ALLOCATIONS TO UK STRUCTURAL FUNDS PROGRAMMES: 2007-2013

All allocations for 2007-2013 are in millions of Euros at 2004 prices. These allocations will be up-rated in due course to current prices for each year of the 2007-2013 programming period.

Editor's notes:

On 28 February, the Government launched a nationwide consultation on future Structural Funds spending from 2007 to 2013. The consultation invited comments on three issues: a draft National Strategic Reference Framework for future Structural Funds spending; the Government's approach to distributing the UK's Structural Funds allocations under the new Competitiveness Objective; and administrative arrangements for delivering the funds from 2007 to 2013.

The consultation attracted 320 responses. The Government's response to the consultation and the UK's National Strategic Reference Framework are available on the DTI website at:
www.dti.gov.uk/consultations/page28796.html.

The allocations for the UK's Competitiveness Programmes are set out in an Annex to the National Framework.

Under the new EU Structural Funds Regulations for 2007-2013, the Government must draw up a National Strategic Reference Framework establishing the broad priorities for future Structural Funds spending in the UK. Under the Regulations, the Government must also decide how to allocate its Competitiveness funding across the UK. The allocations are subject to agreement by the European Commission.

Government spending on regional development has increased significantly in the last six years. For example, Government expenditure on the Regional Development Agencies has increased more than threefold from £0.6 billion in 1999 to £2.15 billion in 2005.

Government expenditure on the Neighbourhood Renewal Fund has more than doubled from £0.2 billion in 2001 to £0.5 billion in 2005

The DTI has developed the UK's National Framework in close collaboration with other Government Departments responsible for the Structural Funds, the Scottish Executive, the Welsh Assembly Government, the Northern Ireland Administration and the Government of Gibraltar.

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