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New Open Europe report: Devolving EU regional policy could save the UK £4.2 billion over seven years

27 Jan 2012
Open Europe has published a new briefing looking at the arguments for and against the EU’s continued involvement in regional spending via the structural funds in Britain and other member states. Between 2007 and 2013, Britain will pay in around £30bn to the EU’s so-called structural and cohesion funds, but get back just under £9bn. Of the UK’s 37 regions in the EU’s classification scheme, only two are net beneficiaries from the structural funds. This means that some of the UK’s poorest regions are short-changed in that they pay in more than they get out; for example the West Midlands which has the lowest disposable income per capita in the UK, pays £3.55 to the structural funds for every £1 it gets back.

The report argues that the participation of richer member states in the EU’s structural and cohesion funds merely creates a circular flow of money which adds costs and channels money away from where it can have the biggest impact, and concludes that the Coalition ought to adopt the previous Labour government’s policy of scrapping the funds for richer member states and devolving regional policy back to the UK, which could save up to £4.2bn over seven years. (Telegraph 25 January)

Labour MP Thomas Docherty, co-chairman of the All-Party Parliamentary Group on EU Reform, endorsed the conclusion of the report, saying, “Labour's policy has been that structural funds should be spent by member states so that this important funding can be better targeted to make sure that some areas of real deprivation do not miss out due to the overly simplistic formula used to allocate funding.”
To read Open Europe’s report, click here.

To read the press release, click here.

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2. News in brief
EU Commissioner: UK will be hit by financial transactions tax anyway. EU Taxation Commissioner Algirdas Semeta has warned that the UK “would lose a lot if other [EU] members decide to move ahead with a financial transactions tax. Because of its design, [Britain] will be subject to the tax, but at the same time, it will not receive any money from it.” (FT, 23 January) 
David Cameron calls for reform of European Court of Human Rights. In a speech before the European Court of Human Rights earlier this week, David Cameron argued that it is the “right moment” for reforming the Court, adding that it was at risk of undermining its reputation by unnecessarily overturning credible judgements reached in national courts. (Mail, 25 January)
MEPs travel expenditure amounted to £230 million in 2010. An investigation revealed that the public cost of MEPs’ global travel expenditure for 2010 amounted to £230 million, including £850,000 for 50 MEPs to go on an eight-day trip to the Democratic Republic of Congo to discuss how to tackle poverty in the world's poorest regions. (Telegraph, 25 January)
3. Open Europe in the news
New Open Europe briefing: Bringing EU regional policy back to the UK could save £4.2 billion over seven years
27 January EurActiv Wales Online E-Gov Monitor 26 January West Morning News: Eustice Yorkshire Post: Leader 25 January Telegraph Press Association Yorkshire Post Western Morning News Belfast Telegraph 19 January Hansard
Open Europe’s Pawel Swidlicki was quoted in the Telegraph arguing, “If [these savings] were re-invested in the UK regions, along with the amount that is currently spent via the EU, the receipts of each UK region should increase by around 45% compared to the amount of grants they currently get.” Open Europe’s report on EU regional policy was covered by the Press Association, EurActiv, WalesOnline, E-Gov Monitor and big regional papers such as the Yorkshire Post, Western Morning News and Belfast Telegraph.
The report was also cited by a leader in the Yorkshire Post and by Conservative MP George Eustice in an op-ed in Western Morning News. Ahead of publication, some of the findings of the report were mentioned by Conservative MP Andrea Leadsom in a House of Commons debate.
Increasingly leveraged balance sheet further erodes ECB’s credibility
27 January Telegraph blogs: Persson 25 January WSJ blogs: Real Time Economics Telegraph blogs: Persson Xinhua 18 January Telegraph Il Sole 24 Ore 13 January Telegraph blogs: Persson
Open Europe’s Raoul Ruparel was quoted by the WSJ Real Time Economics blog discussing the potential for a significant increase in the ECB’s balance sheet over the next year. Raoul was also quoted in the Telegraph responding to reports that the IMF would seek extra funds to deal with the eurozone crisis. Open Europe’s Director Mats Persson posted a series of pieces on his Telegraph blog about the eurozone crisis and the possible outcomes of the next EU summit.
Open Europe’s Pieter Cleppe was quoted by Chinese news agency Xinhua discussing the eurozone crisis. Italian business daily Il Sole 24 Ore quoted Open Europe’s estimates from last year that, by 2014 and following a second Greek bailout, each household in the eurozone will be underwriting €1,450 in Greek debt.
Open Europe gives evidence on EU development aid
25 January DeHavilland (£)
Open Europe’s Research Director Stephen Booth gave evidence on EU development aid to the House of Commons’ International Development Committee.
Croatians vote to join the EU in 2013
24 January Christian Science Monitor
Following the low turnout in Croatia’s EU accession referendum, Pawel Swidlicki was quoted by American newspaper Christian Science Monitor as saying, “Croatia joining is certainly positive for the EU, but people see that the benefits of membership may have been overstated. They see the current situation with the eurozone crisis and the fiscal pact and…are reluctant to give up sovereignty.”

German Economy Minister suggests dropping EU-wide FTT in favour of a ‘bourse tax’
23 January WSJ: Nixon 21 January Telegraph
Raoul Ruparel was quoted in the Telegraph saying, “If it is imposed only on shares this bourse tax may not have such a big impact but if it covers, say, derivatives, then it would have a disproportionate effect on the UK because of the size of the City.” Open Europe’s latest report on EU financial regulation was cited by Simon Nixon in an opinion piece in the WSJ.
UK needs to look at radical options to fix EU working time rules
20 January Times: Leslie 18 January CNBC
In an op-ed in the Times, Conservative MP Charlotte Leslie cited Open Europe research estimating that EU social policy costs UK business and public sector £8.6 billion a year. Mats Persson appeared on CNBC, discussing the UK’s role in Europe.

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