EU Commission Endorses Labour In British Election

by Jason Gorringe, Tax-News.com, London

06 June 2001

The European Commission will today follow the Economist, the Times, the Financial Times and the Sunday Times in giving its support to Britain's Labour party in tomorrow's elections.

OK, not really, but how about the timing of today's announcement from Brussels approving a government-backed £250m scheme to give state-backed venture capital to business start-ups in English regions that find it hard to attract private funding? Couldn't they have left it until Friday? Could it be that they're desperate to butter up Gordon Brown in advance of another push to get majority voting on fiscal affairs during the Belgian presidency?

The decision will end a dispute which began last October when Mario Monti, the competition commissioner, launched an inquiry into whether the scheme breached European Union rules barring the use of state aid.

During the enquiry it seemed as though the scheme would be outlawed, causing the Chancellor to describe the Commission's attitude to his plans as "completely unacceptable". The dispute has been resolved in discussions between Stephen Byers, the trade and industry secretary, and Mr Monti.

Under the scheme, the government will provide £50m to top up private funding of £200m. Schemes will be set up in each region under the auspices of regional development agencies and the Small Business Service. Fund managers and draft rules have already been approved in principle in several regions.

The state aid will be aimed mainly at regions with the lowest birthrates for new businesses, including the north-east, north-west and parts of the Midlands. Naturally, these are the regions in which Labour's core voters are concentrated, causing the Tories to brand today's announcement as electioneering.

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