Cameron defends plan to strip regions of funds

Speaking to the Yorkshire Post during a visit to the newspaper’s head offices in Leeds yesterday, the Prime Minister said it was right to “top up” the money each of the devolved nations receive from Brussels at England’s expense, to ensure no individual country within the UK suffers more than the others as the EU budget shrinks in the years to come.

“What we have done is a fair deal across the nations of the United Kingdom, in saying there should be a five per cent cut for everybody,” Mr Cameron said. “That’s a fair way of spreading the less money coming from the EU.”

Britain will receive around £8bn in “structural funds” from the EU over the rest of the decade – money which will be made available to local business and council leaders to invest in small business growth, skills training and infrastructure.

European officials have made clear how they believe the money should be divided up around the country, based on an assessment of each local area’s economy. But the Government plans to override those proposals, handing £650m earmarked for the English regions over to Scotland, Wales and Northern Ireland instead.

That move means each of the four nations of the UK will receive a five per cent cut overall from the EU’s recently-reduced budget.

But disparities within England mean South Yorkshire – still one of the poorest parts of the country – will receive little more than £150m over the six-year period – a 56 per cent cut compared with its last allocation.

EU Commissioner Johannes Hahn said this week South Yorkshire would “suffer” as a result of the Government’s plan, which he stressed was still subject to negotiation over the weeks to come.

Business Secretary Vince Cable offered a glimmer of hope yesterday during a separate visit to Yorkshire, accepting the proposal could yet change as talks with Brussels continue.

“If the European Commission have a view on it, and have got suggestions for doing things in a better way, we will obviously listen to them,” Mr Cable said. “We are trying to do our best for all the parts of the United Kingdom in relatively deprived positions.”

Mr Cable claimed the Government had “little choice”, however, and said finding extra money for South Yorkshire would mean “robbing Peter to pay Paul”.

He added: “Obviously if you are in those areas of the country – I realise Sheffield has been quite badly hit in the recession – obviously anything that makes life more difficult isn’t popular.”

But Mr Cameron appeared unequivocal. The Prime Minister was keen to stress that part of the reason South Yorkshire will see its funding from Brussels reduced was his own success in cutting the EU budget earlier this year – a move he said would reduce public expenditure, and so ultimately put “money in people’s pockets”.

“Let’s not forget why this is happening,” Mr Cameron said. “One of the reasons this is happening is that I managed for the first time in history to cut the EU budget.

“Britain is a major net contributor to the EU budget. So cutting the EU budget means less Government spending; means less taxes; means more money in people’s pockets.”

He also highlighted that South Yorkshire’s previous £350m tranche of funding was designed to taper off towards the end of the 2007 – 2013 period, meaning the amount it received this year from the EU was relatively small.

“If you look at what’s going to happen in 2014 compared with 2013, actually there’s a 15 per cent increase,” he said. “South Yorkshire was on a declining path from 2007 to 2013. The money in 2014 is going to be higher.”

The Prime Minister insisted that overall, his Government’s policies are now helping to narrow the North/South divide.

“I think we are having an impact – but I want the impact to be even greater,” he said.