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Wales: Replacement Funding

Volume 810: debated on Wednesday 3 March 2021


Asked by

To ask Her Majesty’s Government how the money replacing funding previously provided by the European Union in Wales will be administered.

The UK shared prosperity fund will help to level up and create opportunity across the United Kingdom in places most in need and for people who face labour market barriers. The UK-wide investment framework will be published later this year. In addition, to help local areas prepare over 2021 and 2022 for the introduction of the UK shared prosperity fund, we will provide £220 million of additional UK funding to support our communities to pilot programmes and new approaches.

The Minister told the House last year that Wales would receive at least the same sums of money that it had previously received from the EU—that is, money that was administered by the Welsh Government to meet priorities they set in devolved areas. Can the Minister tell us what portion of this £400 million-plus annual funding will be administered by the Welsh Government? Will the UK Government make a portion biddable across the UK? Can the Minister reassure the House that they will not use these funds to cut across devolved areas of competence without the approval of the Welsh Government?

My Lords, the UK Government have a responsibility to support the economic health of people, businesses and communities across the entirety of our United Kingdom. The Government have committed that the devolved Administrations will be represented on the governance structure for the UK shared prosperity fund.

My Lords, will the Minister confirm that the Government are committed to

“at least matching current EU receipts for Wales”?

Since farming is an important way of life for so many in Wales and agriculture is a devolved matter, will the Minister give a specific assurance that funding decisions will be decided solely by the Welsh Government in this field?

My Lords, I am afraid I cannot give that assurance but we will continue to ramp up funding so that the total UK-wide funding will at least match EU receipts of, on average, around £1.5 billion per year.

During the passage of the Internal Market Bill in both Houses, Ministers committed to collaborate closely with the devolved Administrations, not simply to have them represented. Will the previous £375 million of EU structural funds now be built into the shared prosperity fund allocation to Wales, and will the Welsh Government’s framework for regional investment, which has been developed through extensive local consultation, be respected?

My Lords, I note the points made by the noble Baroness but I think we need to wait for the UK investment framework that underpins the shared prosperity fund for those sorts of details.

The Welsh Counsel General’s requests to meet UK Ministers leading the shared prosperity fund have unfortunately been met with silence. Meanwhile, the Welsh Government have engaged with hundreds of key stakeholders, as the noble Baroness, Lady Finlay, just said, on the development of successor arrangements. The framework for regional investment in Wales was published three months ago and it sets out high-level strategy for achieving prosperity and inclusive Wales-wide economic interventions. Will the Government agree to meet Welsh Ministers to use their consultative plan for moving investment into Wales, or is the lack of engagement with the Welsh Government a further example of this Government’s undermining of the devolution settlement?

My Lords, we are committed to working with the devolved Administrations. In fact, there have been 26 engagement events, attracting more than 500 representatives, all about the UK shared prosperity fund. Sixteen of those events took place in the devolved Administrations and I am sure Ministers will be meeting representatives of the devolved Administrations in due course.

My Lords, in 2019 the Conservative manifesto promised that the shared prosperity fund would, at a minimum, match the size of EU structural funds in each nation. In the last six years, Wales received £400 million a year in ESI funds. That is £123 per person on average. I ask the Minister again—to give him the opportunity to confirm today—to say that the Government will be keeping their promise to Wales and that this funding will be specifically identifiable over and above current UK sources of funding.

My Lords, again, we need to see the publication of the investment framework but I can commit to saying that the overall envelope of funding will be at least the amount that we receive from EU structural funds of around £1.5 billion per year.

My Lords, can the Minister confirm that, far from increasing funding through the Barnett formula to devolved Governments as was promised, money is being spent on priorities set in Whitehall, not Cardiff; that official-level meetings have involved no sharing of any information about Whitehall’s plans for the pilot shared prosperity fund in Wales; and that Welsh Ministers have not had a single ministerial-level meeting on this subject since the Government took office? Is this not yet another London power grab and betrayal of devolution?

My Lords, we need to recognise the improvements of moving away from EU structural funds. This will allow for quicker delivery of funding, better targeting and better alignment with domestic priorities and will certainly be less bureaucratic and burdensome than the current EU structural funds arrangements.

My Lords, the Minister will recall that the EU scheme for structural funds comprised two parts: the money that came from Brussels and match funding from the Treasury that had to be additional to normal spending programmes. Will he confirm that the UK Treasury will henceforward make available, additional to the Barnett-based block, two sums of money to be wholly administered by the Welsh Government, one corresponding to the EU allocated funding and the other to the match funding based on the additionality principle?

My Lords, I cannot make specific funding commitments. However, I point out that as well as the UK shared prosperity fund we have talked about the additional funding of £220 million. There is also the levelling-up fund, which provides further opportunities for funding in the devolved Administrations. All of this will go to ensure that we deliver the levelling-up agenda between and within areas.

My Lords, I associate myself with the comments of the two previous speakers. I want to ask the Minister a specific question. When Brexit was being discussed, we heard of European companies which might be shutting down or withdrawing from Wales, particularly south Wales. Have the Government made any assessment of whether that has come to pass and should not money go to those areas that might be very deprived now?

My Lords, the whole purpose of the UK levelling-up fund of some £4.8 billion is precisely to provide the funding to underpin the regeneration required to make areas in Wales as competitive as possible. Of course, we keep changes in the industrial landscape under close scrutiny.

My Lords, the partnership between local communities, the devolved Governments and other local authorities in England inside the UK and the European Commission was a real strength of the old structural funds. They had their problems but they also had those strengths. Why have the Government moved away from that model? There was a real opportunity here to set a structural fund-type analysis for the whole of the UK and priorities that could be shared within this shared prosperity fund, and then to implement it in practice with the devolved Governments and regional and local authorities throughout the UK. That partnership will be missing from this new model and simply sticking a UK flag on a fund then distributed straight to Scotland or Wales will not solve the problems the United Kingdom has in terms of respect in Scotland and Wales right now.

My Lords, I underpin the commitment to collaborate very closely with the devolved Administrations. That is why they will be an important part of the governance structure of this new fund. The new fund gives us opportunities to improve on the funding approach used by the EU structural fund, not least because there are now only two layers of government that need to work closely together.

Will the Minister explain how EU funding for Cornwall will be replaced, given that Cornwall would have received around £600 million over the next seven years? Cornwall is still some way from being as prosperous as our south-west neighbours. When does the Minister expect the shared prosperity fund to be designed and funds made available for growth and investment?

What applies to Cornwall will apply to other areas. Further details on the operation of the fund will be set out in the UK-wide investment framework for the UK shared prosperity fund that will be published in 2021. The funding profile for the UK shared prosperity fund will form part of the next spending review.