Details on Wales’ replacement EU funding still up in the air
Despite last week’s Budget and Spending Review, there is still no clarity about whether the UK Government will keep its promise that Wales will not lose a penny in regional aid money because of Brexit. Political editor-at-large Martin Shipton reports
IN November last year, the UK Government indicated that in spring 2021 it would publish an “investment framework”, setting out in detail how it would replace the EU structural funds (regional aid money) that used to be allocated to less prosperous areas of the UK.
That didn’t happen and our repeated attempts to find out when the framework would be published have been met with no more than a vague response.
Wales did well out of the EU, certainly in cash terms. The region West Wales and the Valleys, covering about two thirds of the country, received three successive allocations of EU top regional aid funding.
Latterly, Wales as a whole has been receiving £375m a year of EU structural funds.
The European Commission has a transparent mechanism for distributing such funds.
Only regions that on an individual earnings measure known as Gross Value Added (GVA) per head perform below 75% of the EU average can benefit from the highest tier of aid.
The post-Brexit replacement funds announced so far by the UK Government do not have a transparent formula in the same way, but involve a bidding process under which local authorities compete with each other for funds to undertake the projects they have nominated.
Unlike the EU aid system, which saw a branch of the Welsh Government deciding which projects should be approved, decisions will be taken by UK Ministers, with the Welsh Government sidelined.
Statistics relating to the 2014-20 EU regional aid round show how much Wales has to lose if the UK Government fails to match what the country received from the EU.
Over that period England was allocated €7.1bn, or €130 per person; Scotland €940m, or €180 per person; Northern Ireland €510m, or €280 per person; and Wales €2.4bn, or €780 per person.
So compared with England, allocations of EU structural funds per person were a little over a third higher in Scotland, more than twice as high in Northern Ireland, and six times as high in Wales.
Several UK Government ministers, including current Welsh Secretary Simon Hart under questioning at the Senedd’s Finance Committee, have promised that Wales will receive “not a penny less” than it received from the EU.
But so far the UK Government has not published detailed allocations relating to Wales to back up such claims. The main UK Government regional aid programme will be known as the UK Shared Prosperity Fund (UKSPF).
It has been described as a “£1.5bn fund”, which is worrying from a Welsh perspective given that it is meant to be for communities across the UK and Wales alone was receiving £375m from the EU.
Following the failure of last week’s Spending Review to spell out how the funding promise to Wales would be kept, we asked the UK Government for an explanation.
In response, a spokesman provided this statement: “Last Wednesday, the Chancellor of the Exchequer announced the first priority for the UKSPF, Multiply.
“Multiply is the UK Government’s new programme for improving adult numeracy, with £560m allocated UKwide over the Spending Review [three-year] period.
“UKSPF will be ramped up over the next Spending Review period to £1.5bn across the UK in 2024-25, and total funding will at a minimum match the size of EU funds.
“The ramping up of UKSPF takes account of the ‘tail’ in EU structural funding from the 2014-20 programme. EU structural funds will continue to be spent in Wales over the next few years.
“Further details on the UKSPF will be published later this year.”
The spokesman added: “Wales is central to the UK Government’s plans to level up. On Wednesday, we announced over £121m of investment in Wales in round one of the Levelling Up Fund (LUF), funding 10 projects right across Wales to improve transport connectivity, upgrade cultural facilities and regenerate town centres.
“Wales is receiving over 7% of total funding for the LUF in the first round – well above population share.
“The UK Government is also making good on its promise that no community is left behind.
“Wales will receive over £464,000 in round one of the Community Ownership Fund, ensuring that communities in Wales can continue benefiting from local community assets for generations to come.
“Again, Welsh communities are doing better than we could ever have expected, receiving a whopping 9% of the total funding pot for the first round for projects in Llandwrog (Gwynedd), Penywaun (Cynon Valley) and Tredegar.
“All of this is in addition to the significant investment Wales will receive through the UK Community Renewal Fund which will be announced in due course.”
Plaid Cymru’s Westminster leader Liz Saville Roberts said: “The Tory manifesto in 2019 promised nothing less than previous EU structural funding for Wales, but we are shortchanged by the Autumn Budget.
“The UK Government’s refusal to publish its investment framework for the Shared Prosperity Fund is evidence enough of that.
“From the outset, Plaid Cymru said that post-Brexit regional funding must be the responsibility of the Welsh Government and that funds are fairly pre-allocated on need rather than doled out using a competitive bidding process.
“By forcing local authorities to fight among each other for a smaller pot of money, Wales as a whole is losing out.
“There is still an opportunity for the UK Government to match its ‘levelling up’ rhetoric with action – by committing to a needs-based funding formula for the Shared Prosperity Fund, administered by our devolved government in Wales.”
Caerphilly Labour MP Wayne David said: “The UK Government’s failure to be candid about how it will keep its funding promises to Wales is shocking.
“They are trying to fool people with smoke and mirrors.
“Last week’s Spending Review was their perfect opportunity to reveal the details of post-Brexit regional aid allocations, but they didn’t do so.
“There is enormous frustration in local communities.
“Dishing out public money on the basis of bids to UK Ministers is a recipe for American-style pork barrel politics, where decisions are made not on need but on political favouritism.”