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Last Updated:  Thursday, 6 March, 2003, 16:04 GMT
UK demands control of EU funds
European Union flags
The proposals could cause a stir in Brussels
Chancellor Gordon Brown is demanding Brussels hands power over European Union regional aid money to the UK and other nations.

Under new UK proposals, it would be the Treasury and not the European Commission, which would distribute the 1.4bn the UK currently receives from the pot for Europe's poorest regions.

They have already come under fire from the former Labour minister who helped set up the regional aid system.

Mr Brown, along with Trade Secretary Patricia Hewitt and Deputy Prime Minister John Prescott, launched their proposals at a breakfast meeting with business leaders on Thursday.

Ten new states are set to join the EU in 2004 and the UK officials say that means the 20bn regional aid budget will need to double by 2006 unless changes are made.

He does risk playing right into the hands of the Eurosceptics
Lord Thomson of Monifieth
Ministers also want the UK and other leading countries to contribute less to central EU funds and say the cash should be focused on helping Eastern European nations "catch up".

The measures are likely to anger some other nations, especially as the UK is also pushing for more economic reforms and is trying to the EU's future shape.

Central power?

In an article for Thursday's Times newspaper, Mr Brown said he was attempting to reverse "decades of centralisation".

"A recurrent theme in the European convention is that an enlarged Europe will work well only if it is a more centralised Europe. I disagree," he said.

He sees repatriation of the funds as necessary to ensure more devolution to Europe's regions and nations.

Valery Giscard d'Estaing
Giscard d'Estaing's convention is looking at the shape of the new Europe
The UK would supervise its own regional aid budget according to its own policies, say the ministers, who face years of negotiation before any decisions are made.

Mr Brown is promising that no UK region will be left worse off by the changes and having the funds controlled in Whitehall will bring more flexibility.

He says the best way forward is for the regional development agencies to decide their priorities.


Mr Brown told BBC News: "What we are proposing is not only that the power to make decisions - which is held in Brussels at the moment - comes back to the United Kingdom and to other members states.

"We should have the power and resources in the regions and nations of Britain to have maximum devolution to do it ourselves."

He said what had been happening in Brussels had been "inflexible", with it taking a year for the UK to get permission to abolish stamp duty for its most deprived areas.

Liberal Democrat peer Lord Thomson of Monifieth, who as a Labour minister helped forge the regional aid plans, warned Mr Brown of the consequences of his words.

"He does risk playing right into the hands of the Eurosceptics on the bigger argument about Britain's role at the heart of the European Union," said the peer.

"That stirs up all sorts of the most fundamental xenophobic feelings about British membership of the Union."


Conservative shadow chancellor Michael Howard was unimpressed, saying: "It is ridiculous for Gordon Brown suddenly to start talking about repatriating powers from Europe when it was his initiative that chose to give up the UK's power to opt out on social chapter legislation."

Treasury officials acknowledge the European Commission will need some persuading of the merits of the change.

A shake-up of funds likely to focus help only on the poorest areas is also set to cause concern in countries such as Spain, Greece and Portugal - who particularly benefit from current regional aid.

Draft plans from the convention on the future of Europe, headed up by former French President Valery Giscard d'Estaing, say the union should be run "on a federal basis".

British officials have called the plans bizarre and say they stand no chance of being part of the final treaty.

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