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 Monday, 20 January, 2003, 16:23 GMT
Q&A: European Objective One funding
European Funding has been described as a one-off opportunity for Wales to benefit from billions of pounds of extra cash.

It has been hailed by economists and politicians from all parties as a key factor in the transformation of the Welsh economic landscape, from its post-industrial shell, to a modern, vibrant economy.

But how does it work, who is it supposed to benefit, and crucially, is it living up to expectations?

So what exactly is "European Funding?"

The phrase "European Funding" covers lots of different pots of money, and lots of different ways of withdrawing that cash from Europe.

For example, a grant for "Objective One" could come from any one of four different pots of money.

That's the European Regional Development Fund; the European Social Fund; the European Agricultural Guidance and Guarantee Fund; or the Financial Instrument for Fisheries Guidance.

But while that may sound a bit daunting and complicated, the aim of all these funds is simple - to revive areas where the decline of traditional industries has caused serious economic and social problems.

So what are these different funds specifically designed to do?

  • The European Regional Development Fund (ERDF) is aimed at reducing regional imbalances and assisting disadvantaged regions, particularly, run-down areas facing restructuring problems and industrial decline and rural areas.

  • The European Social Fund (ESF) aims to improve employment opportunities in the European Union by providing financial support towards the running costs for vocational training schemes, guidance and counselling projects, job creation measures and other steps to improve the employability and skills of both employed and unemployed people. It also provides support for research and improving the capacity of organisations to better help their target communities.

  • The European Agricultural Guidance and Guarantee Fund (EAGGF) finances the common organisation of the agricultural markets, the processing of agricultural products and the structure of agricultural holdings.

  • The Financial Instrument for Fisheries Guidance (FIFG) finances measures for the adjustment of fisheries and aquaculture structures and processing and marketing of their products.

    What will the money be spent on?

    The European funds will be spent on hundreds of different projects, all of which are aimed, in one way or another, to regenerate the Welsh economy.

    Specifically, the aim is to:

  • Promote sustainable economic growth
  • Increase prosperity in all parts of Wales
  • Reduce disparities within Wales
  • Tackle inequality, inactivity and social exclusion.

    Why does Wales qualify for this extra funding?

    Very simply, many parts of Wales are eligible for European funding because these areas are amongst the poorest parts of Europe.

    The reason why this is has been described as a one-off opportunity is that the borders of Europe are about to expand dramatically.

    Many poorer countries in Eastern Europe, such as Poland, will soon become eligible for these funds, making if highly unlikely that Wales could benefit to such an extent in the future.

    What is Objective One?

    Objective One is often used as a catch-all phrase to describe all European funding - and although this is a useful short-hand for politicians and the media, it can lead to confusion.

    In fact, Objective One is just one of the routes being used in Wales to draw down European funding.

    And while it is true to say that Objective One is the most significant programme of European Funding, it only applies to west Wales and the Valleys.

    Objectives Two and Three apply in east Wales.

    So what's the difference between Objectives One, Two and Three?

  • Objective One: Development Lagging Behind The priority is to promote the development and structural adjustment of regions whose economic development is lagging behind - usually those regions whose per capita GDP is less than or close to 75% of the European Community average.

  • Objective Two: Industrial Areas and Regions in Decline The priority is to convert the areas hardest hit by industrial decline, where traditional industries such as coal and steel, textiles and shipbuilding can no longer compete successfully, causing major social and economic hardship and dislocation for the local workforce. Areas where the average rate of unemployment and the percentage of industrial employment is higher than the community average.

  • Objective Three: Combats long term unemployment The priorities are to assist young people and those at risk from exclusion from the workforce; to promote equal opportunities and improves womens position in the workforce; to promote adaptability and entreprenuership in the workforce; and to improve training, education and counselling for lifelong learning.

    How much has been spent so far?

    This isn't as easy to answer as it seems.

    Over the six year period of 2000-2006, Wales should benefit by over 2bn of extra cash - 1.2bn from Europe matched by another 1.2bn from other sources.

    So far, the Welsh Assembly Government and the Wales European Funding Office say they have allocated or "committed" over 1bn to various projects.

    However, it will take some time for these projects to actually spend the money - indeed, they have two years to spend their allocation of funding, after it has been allocated to them.

    To date (according to the official figures on 18 December 2002) 206.5 million has been spent on Objective One projects.

    How many jobs has that created?

    Again, this is difficult to calculate, because the information is still being gathered, and as more and more projects get off the ground, the goal-posts keep changing.

    According to Andrew Davies, Assembly Economic Development Minister, the figure on 20 January was 6000 jobs created, and another 7,000 jobs safeguarded.

    These figures are dramatically at odds with an official report placed in the assembly library just before Christmas that noted only 44 jobs created.

    The Welsh Assembly Government says that this was due to a "minor computer glitch."

    A full and comprehensive report on the number of jobs created will be made available by the Assembly Government, in early March.

  • See also:

    20 Jan 03 | Wales
    Links to more Wales stories are at the foot of the page.


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