Ian Lang – 1986 Statement on the European Social Fund

Below is the text of the statement made by Ian Lang, the then Parliamentary Under-Secretary of State for Employment, in the House of Commons on 3 March 1986.

I beg to move,

That this House takes note of European Community Documents Nos. 7711/85, a Commission Decision on guidelines for the management of the European Social Fund in the financial years 1986 to 1988; 9901/85, a Commission proposal to amend Council decision 83/516/EEC and Regulation (EEC) No. 2850/83 on the tasks of the European Social Fund, in view of the accession of Spain and Portugal; and 9854/85, Thirteenth Report from the Commission on the activities of the European Social Fund (financial year 1984), and welcomes the contribution to employment and training schemes made by the European Social Fund.

I should like to begin by thanking the members of the Select Committee on European Legislation for having provided us with the opportunity to debate the activities of the European Social Fund. The last time its activities were debated at length in this House was in 1983, and we should clearly have been remiss had we allowed much more time to elapse before we debated the fund again.

We shall, of course, want to consider during the debate the specific Commission documents set out in the motion before the House, which cover the fund guidelines for 1986 to 1988; the amending regulation following the accession of Spain and Portugal; and the Commission’s own annual report on the fund’s activities in 1984.

Before doing so, however, it would perhaps be as well to remind ourselves why the fund is in existence and what its objectives are. It was established in 1957 under article 123 of the treaty of Rome, which defined its main purposes as:

“to improve the employment opportunities for workers in the Common Market and to contribute thereby to raising the standard of living … by rendering the employment of workers easier and … increasing their geographical and occupational mobility.”

The fund is thus essentially concerned with employment and training measures and provides financial support for schemes to help people who are unemployed, threatened with unemployment or under-employed.

There can be little doubt that those activities can never have been more relevant than they are today. In our debates in the House there is often a tendency to believe that unemployment is a uniquely British phenomenon. In fact, if we look — as we must tonight — at the Community as a whole, we see that it is a problem that besets the entire Community. Unemployment in the member states has risen from 2·4 per cent. in 1973 to 11 per cent. today. Indeed, since 1980, unemployment in the Community has doubled, reaching 13 million in 1985 — or 16 million if Spain and Portugal are included. Within these overall totals both youth and long-term unemployment have continued to increase. Between 1981 and 1983 long-term unemployment in the Community increased as a proportion of total unemployment from 25 to 39 per cent.

It is true that if we look at employment as opposed to unemployment we see a slightly more encouraging picture. In 1984 — the last year for which complete figures are available—there was an increase of 0·3 per cent. in total employment within the Community. In the United Kingdom in that year the increase in employment was 1·7 per cent. and our overall employment has continued to rise since then, as the House will be aware.​

Mr. John Prescott (Kingston upon Hull, East)

Does the Minister accept that in the 1950s, 1960s and 1970s, Britain’s unemployment was always the average of the Organisation for Economic Co-operation and Development European level? Since 1979 it has risen to about 2 per cent. above the average, which is equivalent to 1 million more people unemployed in this country due not solely to the world recession.

Mr. Lang

The hon. Gentleman will have to bear in mind that the work force in Britain has been growing at a faster rate than in most European countries and the percentage of unemployment in the past four years has increased by less in the United Kingdom than in France, Spain or Germany. It is also worth pointing out that the United Kingdom has 65 per cent. of its working age population in work. That is 7 per cent. above the OECD average.

Clearly, no fund can hope to solve the problem of unemployment in Europe. That problem has too many deep-seated causes for it to be capable of being removed simply by more spending—whether that spending be at Community or national level. The reality is that for too long all over Europe we forgot that jobs are created only when businesses produce goods and services that people want at prices they can afford. That in turn requires a stable economic framework in which both inflation and public expenditure are kept under sustained control, not least so that business can plan with confidence in the future. It also requires a concerted attempt to introduce greater competition; to encourage enterprise and remove unnecessary burdens; to reshape our education and training policies to ensure that they are relevant to tomorrow’s world; and to work towards a more flexible labour market that encourages small firms, the self-employed, part-time and temporary work and the removal of outdated working practices. It is now very notable how those priorities are shaping the policies not just of the United Kingdom Government, but of the Community and the member states as a whole.

Within that overall framework, however, it is clearly necessary at the same time to take more direct action to remedy the immediate and pressing problems of unemployment. The European social fund is a major instrument to that end, and I should like, without the slightest hesitation or qualification, to express the Government’s appreciation of the contribution that the fund has made for some years past to both Government and non-Government programmes of employment and training in this country.

Last year the United Kingdom’s total allocation from the social fund was some £300 million — that is approaching 25 per cent. of the total funds allocated in that year.

Mr. Eric Forth (Mid-Worcestershire)

Is my hon. Friend yet able to tell us what he estimates will be the impact on the United Kingdom’s share of the social fund of the accession of Spain and Portugal to the Community? He may recall that during the debate on the accession no one was able to give an estimate of that impact. Is my hon. Friend now able to tell us how he believes our share of the social fund will be affected by the entry of the new members?

Mr. Lang

There is no doubt that our share is likely to decline, not just because of the entry of Spain and ​ Portugal, but because several other countries are making increasing applications to the fund. However, the fact remains that we have derived substantial benefit out of proportion to our contribution to the Community over the past few years, and we continue to do so.

The United Kingdom is thus among the leading beneficiaries of the fund, and it is one of the most clearest and tangible benefits of our membership of the Community.

Among the major programmes to which the fund made a substantial contribution last year were the youth training scheme, the training opportunities scheme, the community industry scheme and training programmes for the disabled and for women. As from this year, as a result of decisions taken at last December’s meeting of the Heads of Government of the Community, the fund will also be helping us to expand the enterprise allowance scheme— which, as the House will know, is proving enormously successful in encouraging the unemployed to set up new small businesses or to become self-employed.

At a different, but no less important, level, the social fund administration last year approved applications from the United Kingdom for support in respect of 1,500 projects being run by local authorities, charities, training institutions and private companies. There is no doubt that, without that support, the many programmes and projects in question would have had to be drastically curtailed and, in many cases, abandoned altogether.

So the importance of the fund to the United Kingdom is clear. It will be obvious from what I have said that the United Kingdom Government are naturally concerned that we should continue to secure the substantial benefit from the fund in the future that we have obtained from it in the past.

Of course, no situation is ever static, and the entry into the Community of Spain and Portugal — which we greatly welcome—means that there are now two more countries with major problems of unemployment bidding for the available funds. That is as it should be, for the fund is there to help alleviate problems of unemployment in all member states. Nevertheless, it is extremely important that the fund should continue to reflect the clear and undoubted needs of the older industrial areas of northern Europe alongside those of the Mediterranean regions when it comes to setting priorities for its future support.

I would also hope that the fund might be able to give a somewhat higher priority in future to the needs of the long-term unemployed. As I said, long-term unemployment in the Community — by which I mean those people who have been unemployed for over a year — has risen dramatically throughout the Community in recent years. In most member states of the Community it is now more than a third of total unemployment and in many it is closer to, or even above, 50 per cent. In the United Kingdom, some 40 per cent. of those unemployed have been without work for over a year. That is roughly in line with the Community average.

It is now, I think, generally accepted that the longer a person is unemployed the more difficult it becomes for him or her to get back into employment. That is why I should like to see a somewhat greater degree of priority given within the rules of the fund to support for measures ​ in member states which are helping the long-term unemployed, whether through work experience, training or participation in work of benefit to the community.

As a Government, we should also like to see—as we have made known to the Commission—some redrawing of the priority areas boundaries which effectively set which areas of the United Kingdom are likely to benefit most from the fund. As with all decisions on boundaries, inevitably some arbitrary lines have to be drawn. There are, none the less, some clear anomalies, such as the exclusion of Powys and the Western Isles from the list of priority areas, which we should like to see the Commission look at again. We shall continue to urge the Commission to re-examine its present guidelines in this respect.

I turn now to the specific documents which the Select Committee has drawn to our attention. The first concerns the Commission guidelines for the management of the European social fund in the financial years 1986 to 1988.

As the Committee noted in its report of 23 October last year, there is no doubting the importance of the activities which the fund supports which are in turn largely determined in any one year by the fund guidelines. The guidelines, adopted annually for a three-year programme, say which types of scheme will be given priority in different regions of the Community. I should make clear at the outset that they are adopted by the European Commission on its own responsibility, though the Commission naturally takes account of such views on the guidelines as member states may put forward.

Because of the heavy demands on the fund, the Commission proposed stricter limits on the types of scheme to be given priority in 1986. In slightly more detail, the guidelines gave priority to substantial training schemes involving at least 200 hours training. They also required training to contain an element of introduction to new technology, recognising the vital importance of this to people’s future work prospects. Priority was also given to training in small firms adapting to new technology, and the existing priority for schemes for women, migrant workers and the disabled was reaffirmed.

The second Community document before the House contains the Commission’s proposals for accommodating the needs of Spain and Portugal within the fund’s budget following their entry into the Community. Before their entry, 40 per cent. of the fund was devoted to a number of regions within the Community judged to have special priority status. These included the whole of Greece and the Republic of Ireland, the mezzogiorno region of Italy and the whole of Northern Ireland. The Commission proposals were to extend these special priority areas to include the whole of Portugal and a number of regions of Spain. The Commission also proposed an eventual increase from 40 per cent. to 44·5 per cent. in the proportion of the fund allocated to these special priority areas.

At the December Social Affairs Council, which was attended for the United Kingdom by my right hon. Friend the Paymaster General and Minister for Employment, there was pressure from a number of countries to raise the percentage of the fund devoted to these areas to 50 per cent. While mindful of the needs of Northern Ireland, we were at the same time also conscious of the needs of the rest of the United Kingdom, and I am pleased to say that the eventual decision to raise the percentage of the fund to 44·5 per cent. but with immediate effect, was one which we judged to be a fair balance between the differing interests involved.

The third document before the House — the Commission’s annual report for 1984 — has inevitably become a little dated with the passage of time. This was the first year of operation of the fund after the 1983 review. It was a particularly good year for the United Kingdom, since we secured some 32 per cent. of the available commitments, and 38 per cent. of the payments made were to our schemes. We cannot expect to do so well every year, but the outline of the type of projects supported makes it clear that, as a nation, we are both imaginative and persistent in the variety and scope of the schemes we are putting forward to help the unemployed. The United Kingdom is very much in the lead on this aspect of Community policy, and we are pleased to see other countries following our example and getting support from the fund for similar programmes.

One statistic that emerges from the report is the increase in the applications to the fund—an increase of about 90 per cent. in 1984 compared with 1983—to a total of about 3,300. That figure rose again in 1985 to nearly 4,800 —a further increase of about 40 per cent. It is fair to say that the fact that this volume of applications is processed within the Commission by relatively few staff is a considerable compliment to those concerned in the Commission. At the same time—as they will know only too well—the continuing increase in applications has heightened some of the administrative problems associated with the fund’s operation — not least the fairly long delays that can occur between applications and payments. These are matters which my Department continues to take up with its counterparts in the Commission with a view to identifying ways in which the administrative process might be made easier, and I hope that some useful changes may emerge as a result.

I hope that I have said enough to demonstrate the importance that the Government attach to the European social fund and to the clear benefits that it has brought to the United Kingdom. As well as leading to numerous local initiatives, it has helped us to mount at Government level several major programmes—such as YTS—which have much to offer not only within the United Kingdom but, by way of example, to the Community as a whole. At the same time, it is clear that the social fund, in attempting to ameliorate some of the worst problems of unemployment in the Community, has an especially valuable role to play as a positive expression of the Community’s commitment to many of the less fortunate members of our society. Therefore, I welcome tonight’s debate and I look forward to listening to the views of other hon. Members.