Brussels: Reviewing aid budgets

Rhodri Morgan has pledged to continue fighting for a share of the European Union's development cash.

The Welsh first minister was responding to a European Commission report on the future of so-called "cohesion" funding.

Morgan said the report was the "start of full-blooded negotiations over future funding for Wales' least prosperous areas".

The Commission says that West Wales and the Valleys should continue to qualify for development funding beyond the current programme, which ends in 2006.

"West Wales and the Valleys is right in the middle of their £3 billion Objective One programme now," said the first minister.

"I certainly would not want to see that programme come to a juddering halt on January 1, 2007."

Objective One funding is awarded to regions of Europe whose GDP is below 75 per cent of the EU average

Morgan said the adminsiration would " seek the best possible deal for Wales beyond 2006".

"We need to consider the EU proposals, as well as what the UK government is counter-proposing, to enable us to put us in the driving seat to secure the best deal for Wales."

With the EU enlarging to the east this May, the Commission has considered the effect on those regions which would otherwise have qualified for Objective One cash.

The Commission's offer amounts to a gradual phasing-out of funding over
the years 2007 to 2013.

Rather than end abruptly in 2006, programmes would continue but at a reduced level of funding, said the first minister.

"Objective One should never be seen as a prize, but the programme is already delivering real benefits," he added.

"Since 2001 West Wales and the Valleys has seen improvements across a broad range of economic and labour market indicators.

"Over 1,000 projects worth a total investment of £1.7 billion so far have been approved. Money spent so far has created or safeguarded almost 55,000 jobs.

"We have also been awarded an additional £58 million from the performance reserve in recognition of our good management of the programme so far."

The Commission will now bring forward draft regulations this summer, which will be negotiated over a 12 to 18 month period and subject to majority vote of the European Council.