‘Brexit means the UK government must find newWales funds plan to show level of need’
BREXIT means it is time for the UK government to finally “bite the bullet” and find a new way of funding Wales and the other devolved nations, a major report claims today.
A cross-party investigation into the impact of Brexit on devolution flags up dangers for Wales and calls for a new funding system that reflects the real level of need in the nation.
The Lords EU Committee warns that the Welsh economy – agriculture and manufacturing in particular – is “highly reliant” on membership of the single market.
Its report also argues that an end to the free movement of workers could put the “NHS, agriculture, tourism and some parts of the manufacturing sectors” in Wales under strain.
It states that the UK government must “raise its game” when it comes to talks with the devolved governments and warns against using Brexit to stage a “power grab”.
Warning that Wales could be “profoundly affected” by Brexit, the committee states: “Two-thirds of Welsh exports go to the EU, and single market membership has been an important driver of foreign direct investment. The Welsh economy is therefore particularly vulnerable to the effects of any diminution in the UK’s unfettered access to and ability to trade freely with the single market.”
The report also warns that hill farming and sheep farming are “particularly dependent on EU funding” and that rural communities which make “an important contribution to Welsh culture and language” are “also at risk”.
The peers could not be clearer that they believe it is time to get rid of the Barnett formula, stating: “Brexit means that it is now time finally to bite the bullet and replace the Barnett formula with a needs-based funding arrangement.”
They highlight the “widespread concern that the Barnett formula is ill-suited to recompensing Welsh communities for the loss of needsbased EU funding”.
Stressing the need for a new funding system to be devised, they state: “This will be a complex task, but the prospect of Brexit means that reform of the Barnett formula can be delayed no longer.”
Brussels today has powers over agriculture, the environment and fisheries. There have been strong calls for these to be transferred to the Assembly and the other devolved legislatures and not held by Westminster – and the committee is clear responsibility should go to AMs “at the moment of Brexit”.
The report states: “It follows that without any change in UK law, Brexit will lead to a significant increase in the powers and responsibilities of the devolved institutions. Any attempt to amend the devolution settlements ahead of Brexit would be complex and politically controversial, and we doubt that either the UK government or Parliament has the capacity to undertake such a task at the same time as achieving a successful Brexit.”
The peers argue: “In the absence of changes to the devolution settlements, responsibility for policy areas that are already devolved, but are in practice exercised largely at EU level, notably agriculture, fisheries and the environment, will fall automatically to the devolved jurisdictions at the moment of Brexit.”
There are concerns that Wales lacks clout when it comes to Brexit.
The peers write: “[While] Brexit presents major challenges to Wales, it appears to have less leverage over the UK government than either Northern Ireland or Scotland.”
They heard concerns that Wales “may be overlooked in the Brexit negotiations” and called on the UK government to “take action to assuage these fears”.
They say the UK government should reciprocate the “good faith” of the Welsh Government and “seek to protect Wales’ interests in the Brexit negotiations”.
The report also raises the possibility the Assembly could get new immigration powers.
It urges the UK government to “look for opportunities to enhance the role of the devolved institutions in managing EU migration” and wants it to ensure “maximum flexibility is granted to the UK’s nations and regions”.
Ministers from the different governments have met on the Joint Ministerial Committee (JMC) but the Welsh Government has raised deep concerns about its effectiveness.
Taking on board the criticisms of how the JMC has worked, the peers say it must be more “than a talkingshop” and should be “authorised to agree common positions on key matters affecting devolved competences in time to inform the UK government’s negotiating position”.
First Minister Carwyn Jones and his Scottish counterpart, Nicola Sturgeon, last week condemned the UK government’s Repeal Bill as a “naked power-grab” which undermined the
devolution settlement.
The peers warn: “Brexit will be a major constitutional change for the United Kingdom, and thus potentially a source of instability.
Any attempt to use Brexit to make a power grab, either to ‘re-reserve’ powers previously devolved, or to claim more devolved powers, could compound such instability: this is not the time to embark on controversial amendments to the devolution settlements.”
They are also clear the UK government can’t dictate how the UK’s four nations will work together after Brexit.
Just as the different countries in the EU have been able to trade together by agreeing common standards within the single market, the UK’s four nations will have to find a way of working with one another after Brexit.
The report warns: “Common standards will be needed to maintain the integrity of the UK single market, but these cannot be imposed top-down by the UK government. They must be developed in partnership with the devolved governments, respecting national, regional and local diversity.
“The belated acceptance by the UK government that it will seek the legislative consent of the devolved legislatures to the Repeal Bill is a step in this direction, but more is needed.”
The committee notes that Assembly Members and MSPs could cause major problems if they refuse to consent to Brexit legislation.
The report states: “The political and constitutional consequences, were legislative consent to be withheld, while unclear, are likely to be serious. We therefore call on the UK government and the devolved governments to engage positively in developing solutions that work for the whole of the UK and all its constituent nations and territories.”
First Minister Mr Jones responded: “I welcome this report, which supports the Welsh Government’s position on the future governance of the UK. As the report notes, we have repeatedly tried to engage with the UK government and have put forward constructive proposals about how we can deliver a Brexit which honours the result of the referendum, safeguards the economy and respects devolution.
“I once again urge them to give serious consideration to our policy paper on Brexit and Devolution, which offers a workable blueprint for a major constitutional renewal of the UK.
“We have also repeatedly made clear to the UK government that there is now an overwhelming case for a major and immediate revision of the Barnett formula, to take into account Wales’ needs arising from EU withdrawal.
“These are undoubtedly challenging issues, but the UK government cannot simply continue to put its head in the sand.
“If they continue down this path, they risk destabilising the United Kingdom – but, if we work together, we can use this as an opportunity to reinvent and strengthen our Union.”
Plaid Cymru Arfon MP Hywel Williams said: “This is a damning report on the British government’s approach to Brexit.
“The report repeats arguments made by Plaid Cymru that the British government shouldn’t use the excuse of leaving the EU to justify centralising power in Westminster, reversing devolution.
“Westminster has no right to intercept powers as they return to the nations from Brussels and the Repeal Bill’s blatant disregard for the national borders within the British State makes the bill wholly unacceptable.
“Plaid Cymru will use any means necessary to stop this bill, be it through Parliament or the courts.
“The report also supports Plaid Cymru’s calls for the UK to reform the outdated and unfair Barnett formula and warns that Wales will lose heavily if the EU’s needs-based funding is replaced by the British government’s funding arrangements.
“It is clear to all, including the British government, that the current approach to Brexit being taken by Westminster will put Welsh agriculture, Welsh exporters, and ultimately the jobs and wages of Welsh citizens at serious risk and it’s time the British government took stock and changed course.”
A UK government spokeswoman said: “We have been clear that the Repeal Bill will not take away any decision-making powers from the devolved administrations immediately after exit.
“Instead, to protect the UK internal market, some decision-making powers being transferred into UK law will be held temporarily to allow intensive discussion and consultation with the devolved administrations.
“As the Secretary of State has made clear, it is our expectation that the outcome of this process will provide a significant increase in the decision-making power of each devolved administration and we are committed to positive and productive engagement.”