Britain to lose EU aid to regions

SOME of the poorest regions in the United Kingdom reacted with dismay yesterday at the prospect of losing hundreds of millions in European Union funding as Brussels announced a radical shake up of its aid programme.

London's protests about the scale of poverty in the United Kingdom were brushed aside yesterday as the European Commission unveiled proposals which would see British regions from Scotland to Cornwall deprived of massive shares of aid. Overall, the country could lose almost 80 per cent of the sum it gets at present.

Britain was also warned by commission president, Jacques Santer, that its budget rebate negotiated by Baroness Thatcher in 1994 would have to be reviewed in the autumn when the European Union's next six-year spending plans come up for renegotiation.

The commission says that reform of the system under which pounds 23bn is given to the regions was inevitable with the EU's decision to admit up to 10 poorer countries from Eastern Europe, and Cyprus.

Detailed changes announced by EU regional policy commissioner, Monika Wulf Mathies, will see Northern Ireland and the Scottish Highlands and Islands disqualified from the priority aid bracket they currently enjoy after 1999. Because of improvements in living standards, they no longer pass the test that income per head is below 75 per cent of the EU average.

Merseyside will retain its claim for top rates of funding and for the first time South Yorkshire, which has sunk to levels of poverty on a par with eastern Germany, will see its share of aid doubled. But 13 regions with so-called Objective 2 status - areas of industrial decline - will see their funding slashed because unemployment will be the main yardstick of poverty and jobless rates in most UK regions have fallen.

Commissioners overruled demands from the British government to have gross domestic product per capita also included as one of the criteria. Low- paid jobs mean that income per head in many British regions is well below the EU average. A last-minute attempt by commission member Neil Kinnock to blunt the worst effect of the cuts provoked angry debate among his colleagues. In the end, Mr Kinnock limited the damage slightly by ensuring that the fall in the percentage of Britain's population covered by EU aid would be no greater than one-third, but he failed to secure the fall of just one-quarter that he wanted.

Negotiations between EU governments on the share-out of a total package worth pounds 126bn will now begin and could take up to a year with every member state fighting for a better deal. The size of the aid cake is down 12 per cent on what it was in 1993 when negotiations last took place.

For the years of 1994 to 1999, Britain's share came to pounds 9.7bn, pounds 6.5bn of which went to regions in England, pounds 1.3bn to Scotland, pounds 636m to Wales and pounds 1.1m to Northern Ireland. But the British government points out that, despite being the fifth largest contributor to the EU budget, it is 11th in the league table when it comes to handouts.