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COUNCILS WELCOME PROPOSED EU FUNDING FOR WALES TO 2013

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The economic and social cohesion report* from the European Commission, setting out its vision for a single regional...
The economic and social cohesion report* from the European Commission, setting out its vision for a single regional policy for an enlarged European Union of 25 members, has been welcomed by the Welsh Local Government Association.

The WLGA has vigorously lobbied the European Commission to provide a special level of funding for regions such as West Wales and the Valleys, that are not likely to qualify for full support in an enlarged Europe, and is delighted to see that the report reflects this.

Ronnie Hughes, chair of the WLGA cohesion group, said:

'The WLGA has been lobbying hard for the needs of Wales to be reflected in the third cohesion report and we are delighted that these are addressed in the commission's proposals. The guarantees offered by Europe to Welsh communities are something we would want to keep in place'.

Under the cohesion report's proposals, West Wales and the Valleys would be set to receive around 74% of full Objective One support over the next six year period of funding, beginning at 85% in 2007 and tapering down to 60% in 2013. This would mean that programme would be worth approximately£930m, in comparison to the current£1.2bn.

Moreover, the association is pleased that preferential state aid rules are being proposed for statistically affected regions, which govern levels of public sector support for businesses.

For non Objective One areas of Wales, the report proposes a new Objective 2 programme aimed at boosting employment and regional competitiveness. The association is pleased to see that a new mechanism has been proposed but awaits further detail on the likely implementation at member state level.

The WLGA has consistently stated the need for strong and reformed European regional policy after 2006, as we believe this will deliver longer-term funding and more localised delivery than the renationalised system of funding being proposed by the UK government.

* EC report

< p/="">NOTES

1.The Statistical Effect category is being proposed to compensate those Objective 1 areas that would otherwise be eliminated from Objective 1 on the basis of statistics alone when the EU enlarges in May. With 10 new countries joining the EU, the average Gross Domestic Product of the EU will drop by around 13% of its current average. To qualify for Objective 1 after 2006, regions will need to have a regional Gross Domestic Product of 75% or less of the Unions new average. Rules for the new Objective 1 or 'Convergence category' will remain the same and will eliminate around 18 regions, including West Wales and the Valleys, whose economic growth, on current statistics, is at a standstill.

2.Regions likely to be affected by the 'statistical effect' include Asturias (ESP), Brandenburg (GER), Burgenland (AUT), Ceuta y Melilla (ESP), East Finland (FIN), Hainut (Bel), Highlands and Islands (UK), Madeira (PT), Mecklenburg-Vorpommern (GER), Merseyside (UK), Murcia (ESP), Namur (Bel), Sachsen-Anhalt (GER), Sachsen (GER), South Yorkshire (UK), Thueringen (GER), Wallonia (BEL) and West Wales and the Valleys (UK)

3.The commission is expected to issue the regulations for the reports proposals in June. 15 months of negotiations will then take place with the member states and the European parliament before final agreement is reached in late 2005. Only at that time can Wales be really certain of how much European funding will be available.

4.Under proposals published by the UK government in December 2003, more prosperous member states such as the UK would not receive European Structural Funds. The UK government has therefore made a commitment to all UK regions currently receiving funds to provide increased domestic resources equivalent to those that would have been received in an enlarged EU under 2000-06 rules. On today's figures, this would mean that West Wales and the Valleys would receive 50% of current Objective funding, whilst current Objective Two areas would receive two thirds of current funding.

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