Brussels backs Rogers over funding of Britain's regions

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The Independent Online

Brussels is quietly urging the Government to adopt a raft of measures contained in Lord Rogers's controversial report into urban regeneration.

Brussels is quietly urging the Government to adopt a raft of measures contained in Lord Rogers's controversial report into urban regeneration.

For more than a year Mario Monti's Competition Commission and the Department for the Environment, Transport and the Regions have been at loggerheads over the funding of England's nine ailing Regional Development Agencies (RDAs).

In the latest twist in the dispute, it is understood that European Commission officials have suggested that if some of Lord Rogers's proposals are taken up, this would strengthen the Government's case.

The news will have delighted Deputy Prime Minister, John Prescott. His department is drafting the Urban White Paper, and his officials are understood to be keen to contain proposals from the report.

This could include abolishing VAT on the conversion of property, reducing stamp duty in poor areas or creating "Urban Priority Areas" that could receive a cocktail of tax incentives.

However, until recently these ideas have been resisted by Chancellor Gordon Brown, who has maintained that regeneration should be promoted through capital spending.

While the Chancellor invested heavily in the regions in this month's comprehensive spending review, Mr Brown has also shown signs of warming to Lord Rogers's proposals. It is understood that Mr Brown is planning to meet members of Lord Rogers's team in September to discuss the matter.

The row with Brussels over RDAs dates back to May 1999. The commission launched an investigation into a £200m grant system - Partnership Investment Programme - which was to be transferred from the regeneration quango, English Partnerships, to the new RDAs.

It is understood that the investigation was partly fuelled by the row over the grant paid to BMW to safeguard the Rover factory at Longbridge. Last December, just days before Christmas, the commission ruled that the grant was an unlawful form of state aid and ordered the Government to withdraw it.

Since then officials from Mr Prescott's department have been negotiating with the commission to come up with an alternative system. A final decision is expected to be made in the autumn.

However, RDA chiefs and property industry groups have become frustrated with the Government's lobbying effort.

Last month this sparked a Commons select committee inquiry into the matter. And last week local government minister, Hilary Armstrong, gave evidence. However, she failed to impress many observers.

Said one: "She seemed to give the impression that the Government had given up the fight with the commission. On the Government's record on regeneration she didn't seem to know what the difference was between fact and fiction."

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