The Statement on Regionalisation issued by the Government yesterday:

The Government decided today to pursue an application to EUROSTAT, the Statistical Service of the European Commission, for a change from Ireland's current status as a single region to one comprising two regions. The application involves reclassification of Ireland's statistical regions in the European Nomenclature of Territorial Statistical Units. One region would comprise the current sub-regions of the West (to include Clare and Kerry), Border and Midlands. The other region would comprise the rest of the country.

The inclusion of Clare and Kerry in the regional authority area of the West, which was under consideration from the outset of the examination of Regionalisation and was mooted in documents circulated to Departments during the summer, will ensure that the new Objective 1 region will encompass the Western seaboard from Donegal to Kerry, an area on the very periphery of the European Union.

Reasons for Regionalisation

DUE to our increased prosperity, the country as a single region no longer qualifies for Objective 1 status for Structural Fund purposes (average per capita income in the region as a whole would have to be below 75 per cent of the European average income, which is measured by GDP). Under EU rules, regions which have a per capita GDP below this 75 per cent threshold, are classified as Objective 1 and qualify for the highest level of EU support.

This strategy has been adopted by the Government for the following reasons:

In the past, no difference existed between regions in their eligibility for Structural Funds - negotiating support and managing the funds on a national basis gave maximum flexibility without compromising our capacity to target regional inequalities; in fact, expenditure per head in the West exceeded the national average. However, the regions of the West (including the two counties mentioned), Border and Midlands, because of their low GDP levels in comparison with the EU average, would continue to qualify for Objective 1 status in the next round of Structural Funding from 2000 to 2006. This reflects the fact that they have not developed the industrial and service industries which have strengthened the economic base of the rest of the country. This points to the need to adopt a new approach to regional development, including the management of Structural Fund transfers.

A key feature is that this region would also qualify for a higher level of assistance by way of industrial grants from national agencies (e.g. IDA Industrial Promotion grants), in line with EU state aid rules. This is in line with the Government's commitment in An Action Plan for the Millennium to bring about improved targeting of the problems of regions of the country which, despite Ireland's recent economic progress, are lagging behind. The development of an economic base for the future in the West will therefore be facilitated.

This strategy will also keep open the possibility of continued EU assistance on a transition basis for this region in the period following the next round of funding, i.e. post 2006.

Social Exclusion and Urban "Black-spots"

The Government is especially anxious to emphasise that the regionalisation approach will not in any sense deflect it from its commitment to tackle social exclusion whether urban or rural.

In relation to those programmes in the area of social exclusion which are eligible for EU co-financing under the current round, the Government will, within the overall parameters of EU and other funding available in the two proposed new regions, ensure that the objectives of these programmes remain a priority in both regions. Assistance for initial education and training and re-skilling opportunities for the unemployed and those with inadequate qualifications will continue to be available in both regions. There will continue to be support for early school-leavers, local enterprise development and the integrated development of disadvantaged areas within the new regions, and in particular in urban black-spots.

The Government will also press at European level for the retention of the URBAN Community Initiative. The Commission's proposals do not provide for retention this initiative, but the Government believes that the initiative, which funds important schemes in urban black-spots in Dublin and Cork, should be retained.

Other Deprived Areas

The Government are also conscious of the position of traditionally deprived areas bordering on counties in the proposed new Objective 1 region. In their discussions with the Commission on Structural Funds, the Government will seek to have account taken of these areas. In addition, the Government will, in drawing up the National Development Plan, pay attention to the needs of these areas.

Investment

The Structural and Cohesion Funds have played a very important role in developing Ireland's infrastructure, encouraging industrial development, fostering human resources capabilities and in countering social exclusion. More investment in these and other areas is needed throughout Ireland.

This application, if successful, does not change the situation that Ireland as a whole is facing a drop in its Structural and Cohesion Fund receipts as compared with the current round. The Government recognises that Ireland must, reflecting its increased prosperity, be able to meet more of our investment needs from our own resources. However, it remains the Government's intention to continue to press in the Agenda 2000 negotiations to maximise the share-out for Ireland as a whole and for the proposed two new regions.

The Government's programme contains a wide range of policy initiatives designed to secure Ireland's economic and social development.

The Government has already put significant additional resources into key programmes designed to improve services in areas such as health and education. The Government's expansion of the capital investment programme - up 23 per cent in 1999 - will continue to develop Ireland's economic potential, while at the same time improving facilities in social services.

Our Budgetary situation means Ireland is now in a strong position to continue these programmes throughout the country in future. As long as we continue with the prudent policies which have played a major part in securing the economic growth of recent years, we should have the ability to manage the appropriately phased reduction in EU aid for the country as a whole.

Revised Regional Structures

The Government has decided that a revised regional structure is needed in the context of the regionalisation proposal. This will be the subject of discussion with the Commission and will take account of the views of regional interests. Accordingly, the Government will be initiating early contact with the existing Regional Authorities. The Government stresses that a major consideration in this general regard is that the efficient and effective administration and control of Structural Funds spending, for which Ireland enjoys a just reputation, must not be jeopardised, particularly in the coming period for declining overall assistance from Europe.

An application will shortly be lodged with EUROSTAT and will, the Government hopes, be settled satisfactorily in a short time to enable preparations for the next National Plan to go ahead.