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European Regional Development Fund

Volume 455: debated on Thursday 25 January 2007

To ask the Secretary of State for Trade and Industry to what extent Cumbria’s economic circumstances contributed to the North West’s allocation of European Regional Development Fund resources from the regional competitiveness programme for the UK. (117058)

To ask the Secretary of State for Trade and Industry what account was taken of Cumbria’s economic circumstances when calculating the North West’s allocation of European regional development funds from the regional competitiveness programmes for the United Kingdom. (116276)

[holding answer 17 January 2007]: The Government recognise that Cumbria, with a GDP per capita of 73.2 per cent. of the UK average, faces significant economic challenge.

Cumbria did not qualify to receive the highest level of Structural Funds support under the Convergence Objective for 2007-13. It also narrowly missed out from receiving transitional Convergence funding for regions in the older member states who would have received full Convergence funding if enlargement had not taken place. Cumbria’s GDP was slightly higher than the threshold to receive this funding (77.2 per cent. of the EU15 average, compared with the 75 per cent. threshold).

Cumbria will be eligible to receive a proportion of the North West’s allocation of Competitiveness funding, which is €1,164 million (in 2004 prices) in 2007-13. The Government believe that their allocation formula for the Competitiveness Objective provides an accurate measure of each region’s economic needs. The Government have also decided to apply a 20 per cent. cap and safety net to each region’s allocation. This means that no region will receive an increase or reduction in its proportion of funding of more than 20 per cent. in comparison with its proportion of mainstream Objective 2 European Regional Development Fund (ERDF) receipts in 2000-06.

In making the regional allocations, the Government used sub-regional data in their allocation formula to take account of economic performance at the sub-regional level, including Cumbria. Within the North West, Cumbria had a GDP per head of 77.2 per cent. of the EU15 average and 84.6 per cent. of the EU25 average, compared with 92.5 per cent. and 101.3 per cent. for the North West region. These figures help to explain why the North West will receive the second highest allocation of mainstream Competitiveness funding of all the English regions. It has also benefited from the application of the safety net for the ERDF.

The Government have noted the arguments of Cumbrian stakeholders for additional funding for their sub-region. However, the Government have decided not to top-slice the totals to provide specific funding for any sub-regions. The allocation of the Funds will be a matter for the Operational Programme, which is currently the subject of consultation in the North West.