Catherine Connolly (Galway West, Independent)
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81. To ask the Minister for Public Expenditure and Reform the status of Ireland's partnership agreement for cohesion funding for the period 2021 to 2027; when he expects to bring the agreement to the Government; when he expects to publish the agreement; the details of any engagement that he or his Department has had with the European Commission on the recently reported downgrading of the northern and western region of Ireland to a lagging region (details supplied); and if he will make a statement on the matter. [48382/22]

Catherine Connolly (Galway West, Independent)
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I ask my question in the context of the downgrading of the north-west region, which covers seven counties, including mine. I am specifically asking the Minister about the status of the partnership agreement for cohesion funds. When is it expected to go to the Cabinet? When will it be published? What exchange has the Minister had with the European Commission on the serious downgrading and the recognition of how the north-west is falling significantly behind?

Michael McGrath (Cork South Central, Fianna Fail)
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The partnership agreement sets out Ireland's investment strategy for its cohesion policy funds. Ireland will receive €1.4 billion in cohesion policy funding for the period 2021 to 2027. When this funding is co-financed at national level, it will mean cohesion policy programmes will add a total value of almost €3.5 billion to the economy. Using these funds, implementation of the partnership agreement will strengthen economic, social and territorial cohesion and further reduce disparities between different regions, including in the northern and western region.

In July, I secured Cabinet approval to formally submit a draft of Ireland's partnership agreement to the European Commission for its consideration. The Commission adopted the partnership agreement without change on 16 September, and I launched it with the Commissioner responsible for regional affairs, Ms Elisa Ferreira, on 20 September in Dublin. The Commissioner was in Ireland in September as part of a two-day visit to see European Regional Development Fund, ERDF, and European Social Fund projects and to engage with project participants. At a meeting of the Cabinet in July, I undertook to return to the Government with the final text of the partnership agreement. My officials are preparing this memorandum at present. I will bring the partnership agreement to the Government in the coming weeks. I intend to publish the document on my Department's website as soon as the Government has approved it.

Across the EU, the European Commission classifies regions within the Union as being less developed, in transition or more developed, based on their GDP per head of population relative to the EU average. As the Deputy has identified, the Commission recently reclassified the northern and western region from a more developed region to a region in transition on the basis that its GDP is between 75% and 100% of the EU 27 average. The other two regions in Ireland are classified as more developed as their GDP is above 100% of the EU average. Under the cohesion policy rules, regions classified as regions in transition, like the northern and western region, benefit from a higher co-financing rate, whereby the EU provides 60% of the funding for programmes, as opposed to 40% in the more developed regions.

Catherine Connolly (Galway West, Independent)
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I welcome the fact that the Minister is telling me the document will be published. I take it that it will be published in October or in the next few weeks. Will the Minister confirm that?

Will the Commission report itself be available? All we have are media reports of what the Commission has done. What it has done regarding recognition is very serious. It repeated its previous concern that the regional disparities in Ireland were among the highest in the EU and warned that if left unchecked, the trend of growing inequality between regions would have a damaging impact on the economic and social well-being of all regions in Ireland. We are talking about counties Galway, Mayo, Sligo, Roscommon, Donegal, Leitrim and Monaghan. Has the region been downgraded to a lagging region? The Minister referred in his answer to a transition. Could he clarify the terminology? It means there are significant challenges, including relatively lower productivity and educational attainment and a weaker skills base and business environment. Lagging regions are characterised by extremely low growth that is divergent from that of the rest of the country.

Michael McGrath (Cork South Central, Fianna Fail)
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I cannot answer the question on the European Commission publishing its assessment but will seek to find out the answer for the Deputy. As I said in my reply, the Commission classifies regions into three categories depending on their GDP output performance relative to the EU average. Based on that, the northern and western region has been reclassified from a more developed region to a region in transition. This is because of the band it now falls into in terms of economic output relative to the EU average.

Let me add a few points. I have designated the Northern and Western Regional Assembly as the managing authority for the development of the ERDF programme for the northern and western region for the period to 2027. It will benefit from a more favourable co-financing rate of 60%. I made the decision, in consultation with the regional assemblies, to transfer €20 million in ERDF resources from the two more developed regions to the northern and western region in recognition of the transition status of the region. My Department engaged with the Commission on this matter and secured its agreement on this use of ERDF funds.

To answer the Deputy's question on publication, I believe it will be within weeks. I expect to have the memorandum for the Government very shortly.

Catherine Connolly (Galway West, Independent)
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I welcome what the Minister is saying and the extra money; however, what is occurring is a damning indictment of Government policy, which is committed to balanced regional development. This has not come out of the blue. In 2020, a report by the European Parliament's Committee on Regional Development categorised the region as a lagging region. In the Northern and Western Regional Assembly's pre-budget submission for the most recent budget, it set out low levels of research-and-development expenditure and problems with an estimated gap in disposable income between that of the north-west region and the national average. It was really significant, being three times higher than the corresponding gap in 2010. This is all set out. The Minister has seen the submission. The assembly is clearly pointing out that, instead of going forward, the north-west region has gone backwards.

It is important for the reports of the Commission and the Minister to be published. We will then be able to see whether the money is meeting what the Northern and Western Regional Assembly is seeking so that we can have balanced regional development.

Michael McGrath (Cork South Central, Fianna Fail)
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I do not accept the Deputy's assertion that it is an indictment of Government policy. It is the European Commission that has reclassified the region because of its improved economic performance relative to the European Union average.

Catherine Connolly (Galway West, Independent)
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It has disimproved.

Michael McGrath (Cork South Central, Fianna Fail)
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The population is up in the northern and western region. Employment is up there, as, of course, are investment levels. It is because of its improved performance that it has been reclassified, not by the Government but by the European Commission. I do not suggest that the Deputy is trying to make a political football out of it.

Catherine Connolly (Galway West, Independent)
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No, it is a misunderstanding of-----

Michael McGrath (Cork South Central, Fianna Fail)
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This is not a national decision; it is a decision by the European Commission based on the three classifications it has for regions and it is based on the improved performance of the north and western region using that benchmark.