To ask the Secretary of State for Environment, Food and Rural Affairs (1) what matched funding will be raised in 2006-07 to permit the rural development programme in England to be adequately funded; (74872)

During 2006, the England rural development programme will continue to be funded by EU rural development money from the European agricultural guidance and guarantee fund (EAGGF) and by transfers from Pillar 1 direct payments through voluntary modulation. Receipts from both of these funding sources will continue to be co-financed on an equal basis by the UK Exchequer and the EU.

From 1 January 2007, a new rural development programming period will commence with slightly different rules. The EAGGF will be replaced by a new fund called the European agricultural fund for rural development (EAFRD). This will include funds transferred from the 5 per cent. compulsory modulation applied in the old EU-15 member states. Any money from this fund must be co-financed by the national exchequer. This will normally involve equal funding by the Exchequer and the EU, although new rules allow this to be set at a ratio of 45 per cent. exchequer funding to 55 per cent. EU funding for some schemes.

The December 2005 EU budget summit agreed that from 2007, member states could decide at what level to match-fund any receipts from voluntary modulation. However, final decisions have yet to be taken about the levels of voluntary modulation and co-financing which will apply during the period 2007-13.