Brown bids to cut Brussels red tape

By Daily Mail Reporter
Updated: 19:00 EDT, 5 March 2003

GORDON BROWN will today begin the historic task of redefining Britain's economic relationship with the European Union. As exclusively revealed by the Daily Mail last week, the Chancellor will unveil the first move in a campaign to cut the burden of Brussels red tape on British business.

Together with Trade and Industry Secretary Patricia Hewitt, he will set out plans for Whitehall to regain control of the system under which the EU hands out subsidies to poor regions. The initiative is spoken of within the Treasury as an effort to 'repatriate' powers to Britain - a phrase more often associated with Tory eurosceptics.

Brown is expected to call for Britain and other member countries to take back from Brussels the powers to spend £20bn in their regions. He is proposing the dismantling of the EU's regional policy in its present form, which takes a third of the organisation's £70bn budget.

The Chancellor's move is largely in response to the possibility that Britain will lose EU funding when ten, mainly former communist, countries join the union by 2004. Without change, Britain will have to find an extra £ 1.4bn to help meet the £10bn to £14bn cost of payments to the new members through the EU's so-called Cohesion and Structural Funds.

Britain receives £1.4bn in regional assistance from Brussels, but its net contribution last year was £2.5bn.

Brown, writing in today's Times, said: 'A recurrent theme in the European convention is that an enlarged Europe will work if it is a more centralised Europe. I disagree. With our plans to increase UK funding for regional policy...the future control of economic policy is moving from Brussels to London and then from Westminster to the nations and regions themselves.'

Brown and Hewitt will argue that Britain and other leading nations should pay less into the central EU pot, and demand that the cash be spent only on the very poorest regions. At the same time, Britain would grab back the power to supervise distribution of its own regional aid budget, according to its own regional aid policy.

The changes would affect the Cohesion and Structural Fund payments which are eagerly sought after by UK regions. Brown is extremely unenthusiastic about these handouts, which require the Treasury to put up exactly the same amount in 'matching' cash before any of the EU funds are handed over.

It is just the first move in a fundamental drive to shake-up Britain's involvement with the community. Brown also plans to contest rules imposing a 48-hour working week as well as demanding a shake-up of EU state aid to industry.

The Chancellor will make the first formal move in his offensive, which is bound to create massive controversy, in a keynote paper to MPs.