25 February 2000

Special status for Wales is a once-in-a-lifetime chance

LARGE parts of Wales have a "once in a lifetime opportunity" which must not be squandered after being granted special status in an effort to boost the local economy, MPs have claimed.

West Wales, including Conwy and Denbighshire, and the South Wales Valleys, were granted Objective 1 status under the European Unions new structural scheme. Over the next nine years, the regions are entitled to £1.2bn of EU money for business development and infrastructure improvements

Combined with an estimated £163m under the other structural programmes, the whole of Wales could get £1.36bn of EU money – more than double the amount it received in the last funding round.

Making full use of the money is imperative, said a report from the House of Commons Welsh Affairs Committee. "By the time of the next programming period, structural funds will be targeted on the new EU members in eastern Europe."

But there are fears the chance could be wasted. "Much will depend on the endeavour and imagination of people in Wales developing projects which really make a difference. But there is considerable concern that Wales will not be able to benefit fully because of funding constraints imposed by the UK government."

Part of the problem is that public expenditure is required from the Treasury before any European money can be spent.

Discouraging applicants

Doubts about how much will be available from Whitehall, and when, is discouraging potential applicants from putting together appropriate projects, says the committee.

Another concern is match funding. Payment of structural fund money depends on the government putting in a share, the exact proportion depending on the project. Business development requires a 50% input from the Treasury, while community regeneration programmes are 75% Brussels-funded.

Estimates suggest about £855m of public money will be required for match funding, and the committee had grave doubts this would be forthcoming.

"Unless the UK government provides a substantial increase in the Welsh Assemblys expenditure limits, Wales will not be able to take full benefit of the European funds available," warns the report. "It should not be forgotten that the award of Objective 1 status is a sign of how far parts of Wales lag behind the rest of Europe. This is a test of the governments commitment to Wales."

Responding for the government, secretary of state for Wales, Paul Murphy said Labour was reviewing all aspects of funding in Wales, including schools and education. It was wrong for the committee to consider one aspect in isolation.

"It was the Prime Minister and the chancellor who stayed up through the night at Berlin to win Objective 1 status for West Wales and the Valleys. They are not about to see that work go to waste." &#42