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Last Updated: Tuesday, 25 May, 2004, 11:19 GMT 12:19 UK
The benefits to NI from Europe

By James Kerr
BBC Northern Ireland business editor

Right across Northern Ireland there are roadside signs detailing how the EU has part-funded major infrastructure projects.

Recent examples include the Toome bypass and the Limavady bypass.

Millions in European grants was poured into NI road building
The latter opened last year at a cost of 11m, of which the European Union provided up to 8m.

The road has made things better for motorists on the main Coleraine to Londonderry route; but questions arise as to whether the region has really felt the benefit of the EU money, or whether it is really an accounting exercise, where the Treasury has been the winner.

Over the past 15 years, Brussels has allocated us a total of 2.3 billion under its programmes for funding Europe's poorest regions.

On top of that regional aid, there's also been more than 500m to help bolster the peace process.

However, things are changing.

While the peace funding may be continued, the regional aid is beginning to tail off quite rapidly.

That reduction is because the rising economic tide, that can be felt in Limavady and right across Northern Ireland, means it is no longer one of Europe's poorest regions.

It's probably always been a misconception to see Brussels largely as a pile of cash - in future it would simply be wrong
In future, most of the EU's regional aid, or "structural funding" as its known, will go to alleviate the disparities in the 10 accession states.

On average these have wealth levels of 50% of the EU mean.

"We've had our turn over the past 20 or 30 years, and while we will still be eligible for some funding, now it is for these states to get the advantage that we have had in the past," says Eddie McVeigh, head of the European Commission office in Belfast.

"While we may have seen Brussels as a pot of money in the past, what we must do now is seek to inform the debate on policy issues, which will be extremely important here."

As to whether we've had real benefit from the EU funding that has been allocated in Northern Ireland, that is a debate about a thorny issue called additionality.

The concept is that EU funding should be "additional". In other words it should be on top of planned government expenditure, not a substitute for it.

However, how additionality is defined has caused arguments between the EU and national governments stretching back over many years.

Additionality has now been accepted to work at a national level.

EU offices in Brussels
EU 'peace money' has brought extra benefits to NI
This means that the Treasury in London is in receipt of a sum of money that can be used to top up its regional spending across the UK.

This does not mean that it must have plans to spend a certain amount of its own money in Northern Ireland, and then agree to spend more to get the EU cash.

According to economic commentator John Simpson, this confusing concept means that while we may not have felt the obvious boost of additional cash, we will also not feel the draft when it stops.

"It would be wrong to say that had we not had the EU money we would not have had this or that bypass.

"The level of funding for the regions is driven by a formula and unless the Treasury takes a different attitude on regional funding then we will not lose out.

"What we have brought in as a region is additional receipts for the Treasury."

Peace fund

However, he too echoes the need to inform the policy debate.

"This is very much back to basics. This is about taking advantage of a single market of more than 400m people, and shaping the framework that makes that work."

The one exception to the additionality rule is the EU peace fund which is truly additional - there is extra money at a regional level.

There is also the question of paying for the regional aid that will be allocated to the accession states in future.

Under EU proposals the UK could face a bill of 2.5bn, which at worst could mean a cut in spending in Northern Ireland of about 70m.

That may be a worst case scenario, but it's giving senior civil servants something to think about.

It's probably always been a misconception to see Brussels largely as a pile of cash.

In future it would simply be wrong.

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