Errors 'may have cost' EU aid
Copyright 2000 The Financial Times Limited
Financial Times
June 26, 2000, Monday
Ed Crooks
Miscalculations of official statistics may have led to the poorest regions missing out on hundreds of millions of pounds in European Union aid over the past decade, according to two Oxford academics.
The European Commission is expected today to confirm its approval of the so-called single programming document that could bring up to Pounds 1.2bn of Objective One funding to the new region of West Wales and the Valleys over 2000-06.
The exact amount will depend on the level of matching funding committed by the Treasury in the spending review, which will report by the end of next month. In a report in the latest Economic Journal, Gavin Cameron and John Muellbauer of Nuffield College argue that the money could have begun to flow a decade ago, but for errors made in calculating official statistics.
Mr Cameron and Mr Muellbauer say mistakes during the 1980s in the use of tax records to calculate regional incomes led to an underestimate of income in the south-east of England, and a corresponding overstatement for Wales, Scotland and northern England.
As a result, Wales may have lost an estimated Pounds 130m a year in EU structural assistance for which it could have been eligible between 1989 and 1999.
During the 1980s, the Inland Revenue was unable to allocate 12 per cent of its tax records to a specific region. The academics argue that the taxpayers with unallocated records were concentrated disproportionately in the south-east, and the failure to realise that led to an underestimate of south-eastern earners and incomes and an overestimate of income elsewhere.
The problem of allocating records was largely solved by the mid-1990s, and the regional income figures are now much more reliable. But the statistics may have greatly understated how far the north-south divide widened during the 1980s.
Rhodri Morgan, first secretary of the Welsh assembly, said that even if the true figures had been known they might have made little difference to Wales' prospects of receiving EU aid.
"Even if the figures had been right, the government did not really want to claim. From the late 1980s to the mid-1990s, the Welsh Office and the Welsh Development Agency believed that the important thing to do to be successful was to claim you were already successful".
He expected to hear today "very good news" about the planned EU aid for Wales.
You can email me at Gavin.Cameron@economics.ox.ac.uk
Last updated: 9 November 2003.
