UNRAVELLING THE KNOT
The Interaction of UK Treasury and European Union Funding for Wales
There should be a radical shake-up
in the way the National Assembly is funded says a major new report
from the Institute of Welsh Affairs.
The present formula which distributes money between Scotland, Northern
Ireland and Wales on the basis of population has proved unfair and
worked to Wales's disadvantage, argues the report. Instead
the funds should be allocated according to a new and independent
assessment of public expenditure need. The report says the Australian
method of distributing funds between its states on the basis of
need should be followed.
The report, Unravelling
the Knot: The Interaction of UK Treasury and European Funding for
Wales, has been prepared by Dr Gillian Bristow, of the Cardiff
Business School, and Dr Nigel Blewitt, the IWA's Research Officer.
It has involved a year's detailed research, unearthing information
from the Treasury and unravelling what the researchers describe as
a "funding knot" between Cardiff, Whitehall and Brussels.
Central government and EU sources of funding for the National Assembly
are calculated according to very diffferent criteria, but nonetheless
they interact directly with one another through the public expenditure
system. The report recommends that in its own interests the Assembly
should argue for them to be separated.
The relationship between the Assembly's block grant from the
Treasury and EU funding is complicated by the UK continuing to benefit
from the rebate negotiated at the Fontainebleau European Summit
in 1984 (the Fontainebleau Agreement). This rebate amounts to approximately
two-thirds of the difference between the UK's gross contribution
to the European Union and the European Union's spend in the
UK. As a result the greater the contribution the UK receives from
European funds, the lower the rebate from Europe received by the
UK Government. At the very least, therefore, the Fontainebleau Agreement
acts as a disincentive to the UK Government to the drawing down
of EU funds.
As Wales seeks to access
its fair share of European Structural Funds during 2000 to 2006,
with up to 50 per cent matching funds from the UK being a requirement,
these have become questions for controversial political debate.
"This is the background to this
report", says the Chairman of the IWA's research Panel Dr
Gareth Jones. "If we are to have a political debate it will benefit
from greater and more transparent information. This study literally
unravels the complex knot of UK and European funding coming into Wales."
Copies of the Summary Report
are available from the IWA, priced £10 (£5 to IWA members)
+ £1.50 p&p. |
