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Britain in the EEC
Page 52
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ewe ol policy ONE of the most .pressing problems confronting the EEC's policy-makers is to devise an effective regional policy. Huge disparities in living standards threaten the Community's stability and make the achievement of a "human face" virtually impossible until the situation is remedied.
The Paris summit meeting of Heads of State and Government invited the Commission to report on the problems of the enlarged Community and make proposals for the setting up of a Regional Development Fund. They also agreed to co-ordinate national policies.
A recent report of the Commission analyses the present situation and suggests some tentative guidelines for the future. Formal proposals are expected in June with the aim of setting up new instruments of regional policy by January 1, 1974.
Although the Treaty of Rome called for "continuous and balanced expansion". balanced expansion has been conspicuously lacking. The Six — the founder-members — averaged over 5 per cent increase in volume annually from 1960 to 1970 but the expansion was uneven and geographically unbalanced. "The richest areas in the Community enjoy an income per head about five times that of the poorest. Structural under-employment and high unemployment have been constant facts of life in certain regions. Migration has been the only alternative for many regions."
Quality of life
The Community's regional policy is not only designed to promote the interests of citizens in "backward" areas. It is intended also to serve the interests of those living in congested conurbations with poor environment. The Regional Development Fund, says the Commission, should not be seen by those better off as a subsidy by them of less fortunate regions but as a contribution to a richer quality of life for themselves. So efforts to develop problem regions must be matched with discouragement of industrial expansion in crowded areas.
It would appear from the report that regional policy is virtually the kingpin of the whole vast economic edifice. The Commission says that only when the under-developed regions have been helped to greater competitiveness can fuller use be made of resources, human and material, now wasted. "Economic and Monetary Union, itself the precondition for European Union, cannot come about without an adequate and effective regional policy backed by a fund with substantial resources." The report underlines that Community regional policy cannot replace national policies — it must complement them. But the Community is seen as the co-ordinator of the various common policies and instruments at its disposal as well as the national regional policies.
The Regional Development Fund will be the principal vehicle for mobilizing Comm unity resources for regional purposes — hence the intense interest in the amount of money that will be pumped into the Fund. Its operations will be devoted entirely to medium and long-term development in less developed and declining regions with the aim of bringing about self-sustaining growth. The Commission wants expenditure to be concentrated in the most needy regions, without consideration of juste retour.
Financial aid
The main elements of the fund will be direct grants and interest rebates on loans. A financial contribution to premiums for promoting creation of new jobs is also envisaged — presumably on the lines of the British regional employment premium. Financial aid should go principally to industrial schemes, service activities and infrastructure projects which have a particular regional importance or are directly designed to stimulate production.
A management committee will assist the Commission in running the Fund and flexible procedures are envisaged.
Smaller projects qualifying for Community aid could be decided on in advance by member countries in accordance with Community criteria, and under general supervision. Larger projects should receive prior approval by the Commission after consultation with the management committee. In both cases projects should tie in with specific regional objectives or regional development programmes.
Community finance, says the Commission, could progressively be granted not only to projects but to regional development programmes as a whole, which have Community approval.
Co-ordination is likely to be the responsibility of a regional Development Committee which will examine national regional policies and programmes and their links with intervention by the Regional Development Fund. The Committee's role would be: O Consideration of regional problems and policies of member countries so permitting co-ordinated aims and concerted action.
O Study of means available to the Community to reinforce the regional im
pact of its other financial actions in the light of overall regional objectives.
O Consideration of regional development programes drawn up by member States.
O Comparison of systems of aid.
D Initiation of better information of public and private investors on problems and policies of regional development.
O Study of national "decongestion" measures with a view to coherent Community policy.
Beneficiaries
It is interesting to note that service activities, such as road transport, and infrastructure projects — which could include roads, ports, bridges, lorry terminals, distribution depots, etc — will be among the possible beneficiaries of the Regional Development Fund.
The high cost of transport is often given as the reason for underdevelopment, and there are periodic suggestions that fares and freight subsidies would encourage industry to settle in remote areas. Hence, it is important that transport operators should watch the developing regional policy.
Quite apart from the likelihood of invidious comparisons being drawn if Britain's contribution to the Common Agricultural Policy vastly exceeds the sum paid out to stimulate development in our backward areas, it is likely that there will be major political arguments about the split of funds between the remote areas of high unemployment and the densely populated urban areas.
Timetable
The submission of applications for regional aids by member governments is to an agreed timetable. The original member countries should have notified the Commission by April 1 1973 about cases of application which had been the subject of a decision or a discussion in 1972.
The cases subject to notification are those in which the investment for which aid is granted is equal to or exceeds 4m u.a. (units of account) for the creation of new firms and the extension of existing firms involving the creation of new jobs; and 3m u.a. for operations involving restructurization, modemiztion, rationalization or extension of a firm without the creation of new jobs.
The Commission is taking steps to ensure that the submission of applications for aid does not harm business secrecy. Confidential information will not be published in the annual report submitted by the Commission to the Council of Ministers, nor will such details be communicated to other member countries.