EC cash for Scots and Merseyside

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The Independent Online
THE EUROPEAN Community yesterday held out the prospect of hundreds of millions of pounds for Merseyside and the Scottish Highlands and Islands in recognition of their economic problems.

The two regions are counted alongside the poorest areas of Europe, such as eastern Germany and southern Italy, by being made eligible for so-called 'objective one' funds. The funds are aimed at areas where annual income is 75 per cent or less of the EC average. Although both regions are just above that threshold, the EC has decided to allow them access, Bruce Millan, the Regional Affairs Commissioner, said yesterday.

Merseyside was 'generally recognised to have the most serious social and economic problems of any of the regions of the UK,' he said.

The decision and the exact amount of funding have yet to be approved by the Council of Ministers, although it is unlikely that there will be any objections. Previously the only eligible British region was Northern Ireland. Other British areas stand to receive more cash from separate funds aimed at regions affected by industrial and rural decline. It is a grim recognition that Britain needs assistance to keep up in Europe's economic stakes.

The decision should bring hundreds of millions of pounds to Merseyside over the next six years. Northern Ireland, with a comparable population and economic problems, has received ecu800m ( pounds 663m) in the past five years. Merseyside has not finalised its plans for the money but they will include community projects and vocational training.

Merseyside has engaged in a long campaign of behind-the-scenes lobbying, including a flood of letters from private-sector companies in the past few days. The Highlands and Islands, by contrast, publicised its cause more visibly, opening a Brussels office and securing public commitments, notably John Major's support.

However, all this could be jeopardised if Britain does not resolve a long-running dispute over how EC cash is made available to local authorities, Mr Millan warned. The EC cash is supposed to be additional to money from national governments. Brussels and the local authorities accuse Whitehall of blocking the matching funds, but British officials say the problem is simply individual disagreements.

'It looks as though they have so arranged matters that there is no effective additionality in the use of EC funding,' said Jeremy Beecham, chairman of the Association of Metropolitan Authorities and leader of Newcastle City Council, who wrote to Mr Millan last autumn. Mr Beecham said that the Government's manipulation of finances looked like 'sleight of hand'.

There were only muted celebrations in Liverpool yesterday. Pernille Kousgaard, an official of the Merseyside European Liaison Unit set up in December, said: 'We haven't actually got the money yet.'