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EUROPEAN UNION REFUSE TO IMPROVE STATE AID SUPPORT

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Cumbria CC leader Rex Toft today expressed his disappointment at the European Commission and UK government's decisi...
Cumbria CC leader Rex Toft today expressed his disappointment at the European Commission and UK government's decision not to support an approach by the Barrow Task Force to double the financial intervention rate from 10 to 20% for regional aid to the West Cumbria and Furness Assisted Area.

Mr Toft said:

'The Barrow task force put forward a very strong case for raising the intervention rate from 10 to 20% which would be a considerable help in attracting private sector investment and help overcome the difficulties currently facing the Furness area.

'Arguments were put forward to the minister of state for employment, relations and industry, Alan Johnston. His office has now written back to the Barrow task force telling them that having spoken to the European Commission they do not accept that such a change is possible.

'The current intervention rate operating in Cumbria limits public sector support for private sector investment to 10% when other areas, including Lancashire, are entitled to 20%. This rate was established using already out of date statistics that showed the Cumbrian GDP to be above the national average. Up to date figures published shortly afterwards demonstrated that the GDP in Furness and West Cumbria had fallen to 84% of the national average and Cumbria as a whole had fallen to 91%.

'We believe that Cumbria has seen a steady decline in GDP since then and current forecasts suggest that it is likely to deteriorate still further. If Cumbrian businesses are to be allowed to compete with those in other parts of the Country it is essential that they are not disadvantaged through a false state aid entitlement based on out of date statistics.

'Let's be plain, we're not seeking to change the Objective 2 boundary for the area, nor are we seeking any additional resources from government or the European Commission. All we were asking is to apply existing earmarked resources at a higher rate so that we can hopefully encourage earlier investment.

'Through the Barrow task force we will be raising this issue again with the new DTI minister Jacqui Smith when she visits Barrow on 11 September. In the meantime we will continue to work with as much determination and vigour as we can through the Barrow task force and other initiatives to help Furness and West Cumbria recover from the current economic problems they face.'

Notes

West Cumbria and Furness has for many years been part of the Objective 2 Assisted Area designation agreed by the European Commission. Assistance in developing specific projects under the Objective 2 status currently stands at 10%. The Barrow task force had requested doubling this percentage bringing it in to line with many other areas of the UK and Europe, including Lancashire. Advice from the minister suggests that changing the designation at this stage and negotiating with the commission will be disruptive and engender uncertainty. The commission further advise that there is no precedent for making such achange and would therefore have to resist such an application.

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