Labour `buying back votes with aid'

THE GOVERNMENT yesterday rejected Tory charges of gerrymandering as it unveiled the new regional aid map of Britain and pledged pounds 785m in industrial support for depressed areas over the next three years.

John Redwood, the Conservative trade and industry spokesman, claimed the new map was designed to favour regions where the Government is concerned about falling support, such as the North-east.

But Stephen Byers, the Secretary of State for Trade and Industry, dismissed Mr Redwood's accusations as having been made before he had even seen the new map.

"It targets resources on areas of greatest need and delivers exactly what we set out to achieve," Mr Byers said.

The new map creates three new "tier one" regions, where firms are eligible for grants of up to 40 per cent towards investment projects. Under the old regime, only Merseyside qualified. Under the new one, Cornwall, South Yorkshire and West Wales and the Valleys will be eligible for the first time.

Companies in "tier two" regions can apply for grants of up to 20 per cent. The Government has also created a third tier of enterprise grant areas in England, where small firms can apply for assistance. Only pounds 45m has been earmarked for them over the next three years.

The new arrangement will come into force in January 2000 and last for seven years. It covers 29 per cent of the population - about a fifth less than the existing system - but ministers insisted that the aid would be better targeted.

For instance, areas qualifying for "tier two" status have been built up on a ward-by-ward basis so that an area of high unemployment is not disqualified if it includes a pocket of affluence: under the old regime, Cornwall did not have "tier one" status, because it was lumped together with Devon, which is relatively prosperous.

Tory critics argue that Devon has been largely ignored under the new map because there are few Labour votes to be garnered there.

Labour subjected the Tories to the same accusations of gerrymandering after the regional aid map was last redrawn, in 1993, when John Major's government gave "assisted area" status to a number of Conservative-voting south-coast towns.

The new map has to be submitted to the European Commission for approval. Areas qualify for "tier one" status if their output per head of population is less than 75 per cent of the EU average.

Richard Caborn, the minister for Regions, Regeneration and Planning, said that for Britain now to have four such areas, rather than one, was not something to be proud of: "It just shows how bad we are relative to Europe," he commented.

Other "tier one" areas in the EU include eastern Germany except for Berlin, all of Greece, north-west Ireland, central and southern Spain except for Madrid, southern Italy and the Burgenland region of Austria.

Officials said that the aim under the new system would be to focus aid on projects that provided skilled jobs; in the past it had been targeted at projects that maximised employment, such as car plants.

In a separate development, the Deputy Prime Minister, John Prescott, announced funding of pounds 1bn over the next seven years for 160 community projects in England, from the Single Regeneration Budget. The schemes, ranging from employment and training programmes to community safety and drug abuse projects, are expected to create or safeguard 118,000 jobs.

The Government aims to publish shortly details of the areas that will benefit from a further pounds 2.6bn of European structural funds available between 2000 and 2006.

Mr Prescott shrugged off recent criticisms of the performance of his Department of Environment, Transport and the Regions, saying: "They can mumble, but I am dishing out the cash."