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Objective Problems [February 2000; Socialist Outlook 31] OBJECTIVE 1 is currently the big issue in Welsh politics. Having secured Objective 1 status for West Wales and the valleys, from 2000 to 2006, Labour is under pressure to provide funds to match those being allocated by Brussels. If this funding is not announced in the final Assembly budget on February 8, the three opposition parties have threatened to vote together on a motion of no confidence in Assembly first secretary Alun Michael. Under the Assembly rules, Michael will be obliged to resign. So what is all the fuss about? Objective 1 status is awarded by the European Union (EU) to those regions whose Gross Domestic Product (GDP) is less than 75 per cent of the EU average. By dividing Wales on an East-West basis, rather than the traditional North-South divide, then all of the western seaboard and the South Wales valleys qualify. This reflects a very real growth in inequality between those areas and more prosperous parts such as Cardiff and Newport in the south and Flintshire and Wrexham in the north. A report written in support of Wales' Objective 1 application by Kevin Morgan and Adam Price highlighted the depth of social problems in what they called 'The Other Wales'. In terms not only of GDP but of other, more socially sensitive indices, such as economic activity levels and household incomes, then the west and the valleys are falling behind. In their words: 'Wales is the poorest part of Great Britain [and] the west contains what can properly be called "the poorest of the poor".' But securing Objective 1 status was only half the battle, as many people now realise. In order to fully utilise the available funds, the British government, or in this case the Welsh Assembly, must provide matched funding. With £1.2 billion allocated to Wales over six years, the Assembly will have to find between £0.5 and £1 billion of additional funding. At present, the block grant allocated to the Welsh Assembly is allocated according to the Barnett formula. The Treasury has made it very clear that there will be no automatic increase in this amount to meet the needs of Objective 1. The Labour administration is refusing to give any assurances on matched funding ahead of the announcements on the comprehensive spending review, expected next October. This leaves the very real possibility that money will be cut from other, already over-stretched parts of the Assembly budget to release matched funds. In this, Wales would be emulating one of the worst aspects of the Irish experience of EU funding, where cash was diverted from health and social spending to finance infrastructure and economic development projects. This approach, of robbing the poor to pay the 'poorest of the poor', is completely unacceptable. The campaigning group Welsh Labour Action and a number of senior Labour figures have already raised their opposition to this course of action. Local Labour parties and trade union branches must begin to add their voices to the protest. Nothing less than full matched funding, over and above the Barnett formula, is acceptable. At the same time, it is important not to overplay the significance of Objective 1 money, not to foster illusions in what the money can achieve. Plaid Cymru have made great political capital out of matched funding, and justifiably so. But they have also talked of a 'Euro cash bonanza' and a 'once in a lifetime chance to transform the Welsh economy'. Objective 1 is not a cash bonanza, amounting to some £350 million a year compared to the Assembly budget of over £8 billion. Such a quantity is not sufficient to address the long term social and economic problems in Wales. While maximum unity is required in demanding full matched funding, the debate on Objective 1 must not deflect from the very necessary discussion on developing truly redistributive social and economic policies for Wales. The Welsh Assembly does not have the power to implement such policies: this does not mean that it shouldn't talk about them.
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