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INDUSTRY MINISTER ANNOUNCES UK'S LISTS FOR EUROPEAN FUNDS

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Parts of London with high unemployment, many other urban areas, and large parts of rural Britain will be considered...
Parts of London with high unemployment, many other urban areas, and large parts of rural Britain will be considered for European aid, said Industry Minister Tim Sainsbury today. Areas suffering from industrial dereliction and fishing towns are also included. Mr Sainsbury was announcing the lists of areas the British Government want the European Commission to designate either 'Objective 2' - industrial and urban areas; or 'Objective 5b' - rural areas. Such areas can apply for grants from the EC Structural Funds.

Commenting on the lists, Mr Sainsbury said: 'Most of the current Objective 2 and 5b areas, with the exception of Merseyside and the Highlands and Islands, are included in the new list. These two areas, like Northern Ireland, have already been designated 'Objective 1' areas.

'A number of new areas are included. Parts of London, and other large towns and cities, are included under the Objective 2 criteria which allow for urban areas with high unemployment. Areas hit by closures in important local industries, like pit closures and the shipyard run-down at Barrow, are also new on the list.

'And we are proposing a significant increase in the Objective 5b coverage for British rural areas. This is made possible both by Highlands and Islands' promotion to Objective 1 and the increase in financial allocations agreed at the Edinburgh Council last December.

'I have taken careful account of the many representations received. 'We will now be consulting with the EC before a final decision is reached. The Commission may want to reduce the coverage of the UK - and other member states' - proposals to keep allocations across the Community as a whole to a reasonable limit. We believe, however, that our proposals are realistic.'

The European Structural Funds came into operation in their present form in January 1989. They now make up one third of the EC budget. The three funds are the European Regional Development Fund [ERDF], the European Social Fund [ESF] and the guidance section of the Agricultural Guidance and Guarantee Fund [EAGGF]. The funds provide grants towards the cost of infrastructure, vocational training, agricultural and fisheries restructuring and other measures to help diversify economic activity in areas suffering from structural problems.

The Foreign Affairs Council agreed new regulations on Structural Funds on 20 July this year. The new regulations revise the five numbered Objectives which have operated since 1989.

The UK's share of Objective 1 funding [which attracts highest rate of grant available from the Structural Funds] is 2430 mecu or £2 billion [at 1992 prices]. The UK's share of Objective 2 and 5b funding will be decided when the maps are agreed.

Objective 2 and 5b areas will be designated by the Commission on the basis of proposals by the Government of each member state. The criteria for eligibility, contained in the new regulations, include: Objective 2 - unemployment, a high share of industrial employment, a fall in industrial employment, high unemployment in urban areas, and areas with job losses in key sectors; Objective 5b - low GDP, peripherality and low population density. The Objective 2 list will last for 3 years and the Objective 5b for six.

The next stage is a period of consultation between the Commission and each Member State before the Commission, taking account of national priorities, takes final decisions on which areas will be eligible. The Commission hopes to reach decisions in November. The new lists will apply from January 1994.

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