Leading Article: Putting Europe's funds to work

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BY TRADITION, Conservative politicians in Britain have not favoured the idea of aid inside the European Union. Taking taxpayers' money from the richer parts of Europe and spending it on roads or bridges in the poorer corners, they complain, too often provides only a short-term economic stimulus that brings inflation in its wake. Some of the billions, they add, are badly spent or siphoned off by corrupt local officials.

As Britain has descended the EU's economic rankings, these attitudes have begun to change. Britain is now the fifth poorest member of the Union after Spain, Ireland, Portugal and Greece; and it has two areas - Merseyside and the Highlands and Islands of Scotland - that have been accorded the dubious honour of priority status because their inhabitants' average income is less than three-quarters of the EU average.

Furthermore, Whitehall has come to recognise that the money can be wisely spent. The rules require national governments to match, often ecu for ecu, what Brussels gives; and they require those matching funds to be real new money, not merely accounting tricks.

The revival of the public row between the Government and the Commission over EU aid funding is therefore surprising. Bruce Millan, the Commissioner responsible for the portfolio in Brussels, has warned that Britain may lose more than pounds 300m of aid unless a list of projects can be agreed before the end of the year.

Part of the problem arises from tension between the Department of Trade and Industry, which is responsible for dealing with Brussels over the funds, and the Department of the Environment, which supplies 80 per cent of the budgets of the local councils responsible for the projects. Poor relations between the Government and Labour councils in depressed areas have not helped. Nor has an earlier dispute between London and Brussels over whether Whitehall's contributions were genuinely new.

In its dispute with the local councils, at least, the Government has half a point. Under its agreement with the Commission, London already provides matching funds for European Regional Development Fund money. Local councils are free to come up with ideas for worthwhile projects for which the EU is willing to pay half. But local and central government should share the bill between them for those projects. If they consider them worthwhile, the councils must provide not all the money the Government demands, but at least a share of it.

The Department of Trade and Industry claims to be confident that the row will be resolved by the end of the year, and that Britain will thus use all the money that is its due. Given the urgent need for retraining redundant workers and for putting back to work the parts of the country where manufacturing industry has declined, that is as it should be. The Government will be justly damned if it misses the deadline.