Minister slashes UK's regional aid map

Britain's regional aid map was cut by a quarter yesterday as the Government abolished financial support for six regions of the country, including Ellesmere Port, the home of the closure-threatened Vauxhall car plant.

The reduction in the number of UK areas eligible for regional selective assistance (RSA) follows European Union moves to redistribute more of the aid budget to poorer regions in accession countries.

From the start of next year, the percentage of the UK population covered by the RSA grants will fall from 31 per cent to 24 per cent. Apart from Halton and Ellesmere Port, the other areas which will no longer qualify are: South Manchester, North Warwickshire, Lowestoft, Brighton and Hove and Edinburgh and West Lothian. Eligibility is based on a region's employment rate, level of skills, numbers claiming incapacity benefit and percentage of jobs in manufacturing.

The Government hands out about £200m a year in RSA - which accounts for about 20 per cent of the total aid budget. Companies in eligible regions can receive between 10 per cent and 30 per cent of the cost of a project to help create or safeguard jobs.

Margaret Hodge, minister for industry and the regions, said that although the decisions about which areas to axe had been difficult, the shrinkage of the regional aid map was partly a reflection of Britain's strong economic performance.

The Department for Trade and Industry also pointed out that other member states had fared far worse than the UK. Coverage in France, for instance, will decline from 37 per cent to 18 per cent while in Ireland it will halve from 100 per cent to 50 per cent.

The whole of Northern Ireland will continue to qualify, as will Cornwall and the Scilly Isles, West Wales and the Valleys and the Scottish Highlands and Islands.

A DTI spokeswoman said that although Ellesmere Port would no longer be eligible, the offer of aid already made to Vauxhall to help it build a replacement for the new Astra would not be affected. The Government has offered to provide between £5m and £15m to help Ellesmere Port win the new model, which is due to go into production in 2009-10. Without the car, the plant will almost certainly close, having cut 900 jobs in May with the scrapping of its night shift.