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Ian C. Lucas (Wrexham) (Lab)
I beg to move,
That this House has considered Wales and the Shared Prosperity Fund.
It is a pleasure to see you in the Chair, Mr Hollobone. I welcome the new Minister from the Wales Office; I think this is his first official appearance at the Dispatch Box. He will find us a welcoming but challenging bunch in Wales. I am sure that we will have a good debate, and that his noble Parliamentary Private Secretary, the hon. Member for Montgomeryshire (Glyn Davies), will look after him just as well as he has looked after the Minister’s many predecessors.
One of the extraordinary aspects of the Government’s approach to Brexit is their failure to address some of the fundamental reasons for the leave vote before the act of leaving. Obviously there is a lot happening as we speak on that issue, but on major areas of policy—such as immigration policy—we still do not know what the Government propose for the post-Brexit world. A hugely important area that they are not speaking about is regional funding, which we will address today. I hope that this will be the beginning of a debate about changes to regional funding that takes into account the views of Members right across the United Kingdom and right across Wales—this is a very important subject in Wales.
It is true that Wales has been one of the major beneficiaries of EU structural funding. Between 2014 and 2020, west Wales and the valleys will have benefited from investment of more than £2 billion from the European Union.
Nick Thomas-Symonds (Torfaen) (Lab)
I congratulate my hon. Friend on securing this important debate. My constituency in the valleys has benefited enormously from structural funding. Does he agree that one of the problems with UK priorities, and with the shared prosperity fund, is that areas that have benefited have no guarantee of benefiting to the same extent in the future?
Ian C. Lucas
Absolutely. Certain areas of Wales have benefited much more than others. East Wales received £406 million in investment between 2014 and 2020—a lot less than west Wales and the valleys. Investment is determined by rules set at EU level that govern the distribution of state aid and are intended to compensate for regional disparities.
Since the 1980s, one of the fundamental drivers of the UK national economy has been the inexorable rise of south-east England. The huge investment that it has received at the expense of the rest of the country has had a long-term negative effect on many of the areas that we represent. EU structural funds have gone some way towards compensating for its dominance, but have failed to check it altogether or to bring about a fairer long-term distribution of wealth and investment across the UK. If we are leaving the EU, we need that move to achieve a benefit for our constituents in the future. It is imperative that a system is put in place to benefit the regions of the UK that have been left behind by economic development.
It is unfortunate that notwithstanding the importance of the issue, the Government have given very little indication of how the UK regional prosperity fund will operate. I do not believe that they have even given a commitment that the amount of money distributed to Wales will not fall. I have asked the Secretary of State for that assurance and for more detail on what the fund’s rules will be, but I have had very little information from the Government. It is high time for it, because we are at a hugely important moment and lots of businesses and organisations in all our constituencies are interested in exactly what will happen. Will the Government please answer some of our questions?
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Does my hon. Friend share my concern that many regeneration projects in Merthyr Tydfil and Rhymney and across Wales simply would not have happened without EU structural funds? That makes it all the more important that we get some certainty about the prosperity fund. Wales needs to play a part in how the fund is managed.
Ian C. Lucas
Certainty is something that all our constituents and all the businesses in our constituencies crave, but it has been sadly lacking in the period since 2016, so I would like the Minister to provide some in his début today. First, can he assure us that Wales will not receive less in funding under the new UK regional prosperity fund than it does under EU structural funds? Secondly, and importantly, will the rules of the UK prosperity fund be set at UK level, with the same rules applying across the devolved nations and regions? Will there be any difference between rules in Scotland, in the regions of England, in Wales and in Northern Ireland, or will the rules apply in the same way as the current EU rules?
Wayne David (Caerphilly) (Lab)
I think we all welcome the fact that a prosperity fund is to be created. Following on from my hon. Friend’s argument, does he accept that the sensible and most effective thing would be for the Welsh section of the fund to be administered by the Welsh Government? That would ensure that the fund enhances the work that the Welsh Government have already conducted.
Ian C. Lucas
My hon. Friend must have read my speech on the quiet, because my next question is who will administer the fund—will it be administered by the UK Government or by the devolved bodies?
Luke Graham (Ochil and South Perthshire) (Con)
The hon. Gentleman is making a very interesting speech, but does he not see the advantage of having the UK shared prosperity fund administered centrally, to ensure that it has the depth and breadth to fund the projects that are needed around the United Kingdom? For example, tidal power schemes may need more than the amount that would be allocated on a devolved nation basis. Secondly, does he not appreciate that as we leave the European Union, it is a good time for Members of this House to strengthen our own Union by advocating that projects be funded directly here in Westminster?
Ian C. Lucas
It is interesting, isn’t it? The EU rules apply EU-wide, so there is a certain logic in a UK prosperity fund having UK rules that apply across a single market within the United Kingdom. I would not want a race to the bottom as a result of rules being applied differently in different countries of the United Kingdom, so I understand the argument for applying a single set of rules so that we do not have state aid in one area being weighed against another—just as the same general EU rules have applied across the UK despite devolution.
This debate is an important one, but we have not had it yet. That was a big mistake, because we could have spent the past 18 months or two years discussing these hugely important issues. I would like that to start today, and I will be very interested to hear the contributions of colleagues.
Guto Bebb (Aberconwy) (Con)
The hon. Gentleman is right to say that this is important. The issue is of concern to local authorities and further education colleges in north Wales, but does he agree that, as a result of the efforts to get the north Wales growth deal on board, it is at least being discussed by the relevant stakeholders there? It is therefore a very opportune moment to ensure that comments made in north Wales are listened to, both in Westminster and in Cardiff Bay.
Ian C. Lucas
The hon. Gentleman has read my speech, too—I was planning to go on to the north Wales growth deal. I am passionate about regional policy and devolving powers to the nations and regions, but the Government should be giving a lead. It is their responsibility to compensate for market failures with engineering investment to improve a part of our economy that the market on its own would leave behind.
There is agreement across the political spectrum that the present system has not worked as it should for the benefit of all the nations and regions of the UK. We need to reflect on the result of the referendum and ask why investment from the structural funds, for example, has not achieved as much as we would all have liked.
Stephen Kinnock (Aberavon) (Lab)
My hon. Friend is making an excellent speech. Surely the best way to ensure the best possible outcomes for our programmes and projects is to decentralise and devolve, empowering local authorities, local stakeholders and the practitioners who will ultimately deliver the projects to design measures and outputs. The people on the ground know best what works and what does not.
Ian C. Lucas
That is my next paragraph, which I shall read. As someone who believes in devolved decision making, I believe that decisions relating to investment in Wrexham and north Wales should be made by people who are close to our local economy and community. Historically, the EU’s structural funds system did not work well for my constituency of Wrexham.
Let me give one example. Wrexham Glyndwr University was established in 2008—the first time in our history that we had a university. That was a strategic moment for Wrexham and hugely important. As I said when I was a Minister within the Department for Business, Innovation and Skills, universities are at the centre of developing economies in the modern world. The establishment of Wrexham Glyndwr University was a really important period, but between 2008 and 2014 it received no structural funds at all. The Wales European Funding Office tells us that, in the same period, Swansea University received £89 million, the University of Glamorgan £41 million, Cardiff University £29 million and Bangor University £47 million. There was a lack of investment from the source that was supposed to be supporting the development of the economy in the area that I represent. That was a missed opportunity and will have had a negative impact on the university that we are developing as part of the local economy.
That lack of investment is mirrored in funding for north-east Wales generally. Neath Port Talbot Council received over £89 million between 2007 and 2014, while Flintshire received £3 million. Incredibly, Wrexham received only £446,000. After Brexit, we will need a new system of funding and a fair allocation across Wales. As the hon. Member for Aberconwy (Guto Bebb) said, we have shown the way in north Wales: from the bottom up, local government, MPs, Assembly Members and universities have worked together to produce a growth bid for north Wales to remedy the failings that we believe exist within our local economy. We put forward that growth bid on behalf of the community that we represent; it is very much devised and put together by the local players.
I still get frustrated at having to go with a begging bowl either to the Treasury across the road or to Cardiff Bay to beg for investment. I want those decisions about investment and the power to raise money to be devolved to places such as north Wales, because I have lot of confidence in the north-east Wales economy. Despite the fact that we have not benefited from a lot of the funding that other parts of Wales have had, the economy in north-east Wales has developed during the period that I have been privileged to represent Wrexham. We need to address the defects in our local economy in transport and digital infrastructure. In the future, we will have an insight into our local economy to see where the defects are and to begin to address them.
Anna McMorrin (Cardiff North) (Lab)
My hon. Friend is making an excellent speech. Do he and the Minister agree that we need to guard against reverse devolution? If we do leave the EU, we need to be guaranteed of those funds in Wales and across the UK. They must also be distributed by the Welsh Government, because they understand how our local communities work, and they can then further devolve such decisions to places such as Wrexham and local authorities across Wales.
Ian C. Lucas
Absolutely. I have already asked for an assurance that Wales should receive no less money. As I have just said, I do not want this decision made in Cardiff Bay or in the Treasury; I would like to see it made on a devolved basis. There needs to be more devolution. When I speak to my constituents in north Wales—my hon Friend knows the area well—I find that their perception is that we need to have more local decision making. The end of the restrictive and fixed rules that have previously existed could be an opportunity, as the Federation of Small Businesses in Wales has highlighted. It said:
“The removal of European boundaries also opens up geographical possibilities…Post-2020 there will be opportunities to refit the business support environment to modern economic boundaries, including…the emerging economic regions.”
I agree entirely with that. We need a structure that accords with the economic action plan of the Welsh Government, which is a very far-sighted document by the excellent Economy Minister, Ken Skates, who is contributing massively to creating a growth-driven, inclusive economy in north Wales. We need to develop that and work within the confines of that economic action plan, working with the Welsh Government rather than sticking to the outmoded geographical model that we had previously, which was restricted by inappropriate local government boundaries. Certain local government areas attracted funding, while others did not. For example, the journey to north-west Wales from north-west England requires going through north-east Wales, which could not attract funding for projects in that area, so the transport system in north-east Wales has not really developed in the way needed to develop the local economy.
I certainly want an assurance from the Government that under any new system they will commit to no less investment for Wales. I also want the new First Minister, when we know who that will be, to commit to a new funding formula that means fairer funding right across Wales. I have spoken many times before about devolution in Wales, the fact that north Wales sometimes feels left behind, and the need to create new structures by working with local government, local businesses and institutions such as universities across Wales to develop an inclusive economy. We must carry forward that devolved system of addressing economic failings in particular areas of Wales.
This is an important debate. We need to grasp and grapple with it in the weeks, months and years ahead. I will be listening intently to the Minister’s response, to try and get some flesh on the bones of what the prosperity fund will look like, and I will also be listening carefully to my Opposition colleagues to hear what they say on the matter. This is an overdue debate, but it is of enormous importance to our constituents.
Several hon. Members rose—
Mr Philip Hollobone (in the Chair)
The debate may last until 5.30 pm. I am obliged to call Her Majesty’s Opposition spokesman at no later than 5.12 pm, which gives us about 20 minutes of Back-Bench time. Five members are standing, so that means you each have four minutes. I first call David T.C. Davies.
David T. C. Davies (Monmouth) (Con)
Thank you very much for calling me to speak, Mr Hollobone.
I thank the hon. Member for Wrexham (Ian C. Lucas) for introducing the debate and add to his call for the Government to ensure that Wales continues to receive the same amount of money. We will certainly have that when we leave the European Union—we will have a lot more money to spend. I differ from him on one important point, though, because I think he was arguing for a system where we simply hand over money to the Welsh Government and allow them to get on with it. We know that at the moment the European Union has some control over how that money is spent in two ways: first, it sets the rules of the game on state aid or anything else and, secondly, it has the powers to investigate when money has been misspent. It is vital that we maintain some form of central control, and here I must be a little critical.
The Welsh Assembly Government have failed on numerous occasions properly to monitor how money that has been spent in grant funding has been used. We have seen some quite scandalous decisions taking place. Some might be down to monumental incompetence; others, I fear, are due to out-and-out corruption. I will run through a couple of them and I challenge anyone to suggest that this sort of thing is right.
There is the Lisvane land deal. The Welsh Government had £20 million-worth of land—if it were good just for agriculture—that was sold at agricultural value to an organisation based in the Channel Islands. Within a matter of months, it received planning permission for housing, meaning that the Welsh taxpayer lost out on tens of millions of pounds.
There is the decision by Welsh Assembly Ministers to go into the film business, which began, as the auditor’s report shows, with the decision to buy a premises down near Newport, in Wentloog. Approximately £40 million was spent making films, and the auditor’s report says rather coyly that not much money has been recouped. About £4 million has come back. The rest of the films have either not been made or have not been seen by anyone. One of the excuses for its failure was that the Welsh Government had decided to get involved in another film studio elsewhere in south Wales. They handed over a couple of million pounds in the form of a grant, much of which appears to have been paid to the directors. There is a string of these decisions going on.
David T. C. Davies
I will, but I am going to have my four minutes. I am coming to one of the more scandalous examples, but if the hon. Gentleman wants to intervene, he should feel free.
Wayne David
I recognise that the hon. Gentleman is using parliamentary privilege to the full here. Will he clarify how much of this is European money?
David T. C. Davies
I have not used parliamentary privilege to the full yet, but I might be about to. Some of the money certainly has been European money.
David T. C. Davies
I do not know the exact amount, because we are dealing with many millions of pounds here. What I do know is that if we are going to allow the Welsh Government to have a large amount of money to spend on giving out grants or putting it into infrastructure, we need to be absolutely certain that some central authority can monitor how that money is spent.
With all due respect, perhaps the hon. Member for Caerphilly (Wayne David) would like to cast his mind back to the disgraceful situation with Circuit of Wales, where £9 million was handed over to the director of a company—a director who had been making donations to the Labour party. Some of that money was then taken and given to another company, which that same director was also the director of. There was no proper tendering procedure. If anyone has any doubts about this, the whole thing is written up in the Welsh auditor’s report. What we saw happening was that £1 million went over, in the form of an untendered amount of money, to a company that was owned by the person who had received the grant in the first place. There were no proper checks and balances. The same person was able to go and buy a motorcycle company based in Buckinghamshire.
Wayne David
On a point of order, Mr Hollobone. We have a whole list of incredible accusations here, which have no relevance whatever to the debate. That cannot be in order.
Mr Philip Hollobone (in the Chair)
I would regard nothing that Mr Davies has said thus far as out of order, but I note Mr David’s objections and I am listening closely to all contributions made by all Members. I draw Mr Davies’s attention to the clock. He has just over a minute left.
David T. C. Davies
None of these is an accusation. They are all in the Auditor General’s report, which only came about as a result of the information that I gave them, because nobody in the Welsh Assembly—neither Members nor Government—was particularly interested in the fact that millions of pounds of their money was being spent. The reason I sent the information off was that the directors of that company came into my office and told me that their project was being backed by BMW and General Electric. It was not, because I checked with them afterwards. Then the directors sent their lawyer, Jonathan Coad, to try to take legal action against me, Martin Shipton and Trinity Newspapers, for falsely alleging General Electric and BMW’s involvement, but they did not realise that my tape recorder had accidentally been left on at the time and I had the whole thing on tape.
I say to hon. Members that the Welsh Assembly Government have failed over and over again. At least one civil servant’s name comes up every single time, many of the people involved in the decisions are all known to each other, and a lot of them have links back to the Labour party. I have touched on only three or four projects, but we all know that there are various others—Kukd was another one, as well as Kancoat and Blurrt. One after another, projects have received large amounts of funding, often running into millions, from the Welsh Government, and no proper checks and balances have been pursued.
Ben Lake (Ceredigion) (PC)
Diolch, Mr Hollobone. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Wrexham (Ian C. Lucas) on securing this important and much-needed debate. Those of us representing constituencies in Wales will be all too aware of the importance of regional and structural funding schemes, and consequently that the design of the new shared prosperity fund will largely determine the prospects for our communities for decades to come. It is essential, therefore, that the new fund serves the people and communities that we are elected to represent.
Almost four months have passed since the Secretary of State for Housing, Communities and Local Government confirmed in a written statement the UK Government’s commitment to the UK shared prosperity fund. The days are getting shorter, the autumn Budget has passed and, if nothing else, Christmas will soon be upon us, yet we are still awaiting quite basic details about the new fund. What will the total quantum be? When, and how, will the funds be allocated? What activities will be eligible for support, and which bodies will oversee the decisions?
As has already been mentioned, at present west Wales and the valleys receive a significant amount of funding, as our low GDP per head qualifies us as a less developed region. Over the current cycle, Wales will receive approximately £2.7 billion from European structural funds. A majority of the Welsh population—63% to be precise—lives in this less developed region of west Wales and the valleys, where the funding goes a long way to sustaining the rural and underdeveloped economy.
While it is good that regional and structural funding programmes have been available to us, it is nevertheless a shame that our constituencies have continued to qualify for them. That is not surprising, of course, when we consider that, on the whole, UK economic development has typically focused attention and investment on urban centres, and priorities for rural areas have amounted to little more than improvement of existing connections between the countryside and the cities, so as to accelerate the trickle of prosperity from the economic engines and powerhouses to the rural periphery. The result is that the productivity of rural areas is consistently below the UK average, in stark and rather depressing contrast to that of larger towns and cities.
As the MP for Ceredigion, and as there are few signs of there being a change to UK economic strategy in the near future, I must stress that whatever the methodology used by the new shared prosperity fund, Wales must not be left financially worse off. If rumours are to be believed, and the shared prosperity fund is also to finance other responsibilities such as the old pillar two programmes of the common agricultural policy, for example, its budget will need to be proportionally larger so as not to constitute a real-terms cut.
Albert Owen (Ynys Môn) (Lab)
The hon. Gentleman is making an important point. We should put it on the record that the funds should not be put through the Barnett formula, but should be protected at the current European level.
Ben Lake
I agree wholeheartedly with the hon. Gentleman. If the Barnett formula were applied to the shared prosperity fund, that would be nothing short of a disaster for our communities. We need to make sure that whatever the methodology, it is focused on the need of communities, rather than on simple population share.
I must labour the point: if the fund is to be used for other responsibilities, it cannot be reduced to a convenient tool for hard-pressed Departments to realise budget efficiencies via consolidation. The funding will be a lifeline for our communities, so it must provide Wales with no less, in real terms, than the total allocated by the EU and UK funding streams it replaces.
Furthermore, I believe the UK shared prosperity fund must operate on multi-annual financial allocations of at least seven years. Inconvenient though that may be for the Treasury’s spending review cycles, it would allow recipient organisations and groups the time for proper planning and implementation of larger scale and transformative projects—the types of project needed seriously to ratchet up jobs, wages and living standards in constituencies such as Ceredigion. We cannot settle for mere tinkering around the edges. What is required is a programme that allows for substantial and prolonged investment, so that our areas are no longer less developed and eligible for such assistance.
As the hon. Member for Caerphilly (Wayne David) mentioned, in terms of the shared prosperity fund’s administration, important aspects of economic development are devolved, so the Welsh portion of the new fund should be devolved to the Welsh Government, potentially, as the hon. Member for Ynys Môn (Albert Owen) just mentioned, as an additional, separate block grant from the Treasury, so that we may bypass the Barnett formula.
Time is against me, so I will conclude with a question to the Minister, who I welcome to his place in the Welsh Office. Will he guarantee that the UK shared prosperity fund will be, in real terms, at least equivalent to the funds that it is replacing, and that its budget will be proportionally increased if other EU—or, for that matter, UK—competencies are to be blended into the fund?
Jo Stevens (Cardiff Central) (Lab)
It is a pleasure to see you in the Chair, Mr Hollobone. I congratulate my hon. Friend the Member for Wrexham (Ian C. Lucas) on securing the debate. He has had far more luck in securing the debate than I have had in getting answers from the Secretary of State and his conveyor belt of Welsh Office Ministers to my 18 questions on the shared prosperity fund over the past 13 months.
Two years and five months on from the referendum, we know precisely three things about the fund. We know what it will be called; we know it will be run by the England-focused Ministry of Housing, Communities and Local Government; and we know that there will be a consultation at some point. That is it. I appreciate that the Minister is new to his position—I welcome him to it—but hopefully today he can give us more than the woefully superficial information we have had so far. The Government do not seem to appreciate that the fund will be replacing one of the biggest underwriters of investment in Wales.
The European regional development fund and the European social fund have alone provided £2.1 billion to Wales between 2014 and 2016, and inspired a further £1.1 billion in match funding. In 2016, when I spoke in the House about the importance of Cardiff University’s Brain Research Imaging Centre in my constituency, I made the point that that had only been possible thanks to £4.5 million of ERDF funding. European Union funding is the lifeblood of the three universities in my constituency and that is why, every single week, researchers from those universities contact me with their concerns about the Government’s failure to commit to underwriting funding after the end of Horizon 2020, which is already impacting on funding bids. They also tell me that the Government’s proposed salary cap on EU citizens permitted to work on research in the UK after Brexit will decimate international research collaboration because that cap would be too high.
Universities are the largest group of direct ERDF recipients; around £240 million of ERDF money has been awarded to Welsh universities for the period 2014 to 2020, to strengthen regional economic success and improve social cohesion. They have also received over £50 million from the ESF, which is an investment in people with a particular focus on improving employment and education opportunities. Those university-led ESF projects have promoted routes into higher education and supported graduate retention rates in economic growth areas that are so important to my city’s economy, such as professional services, creative and digital industries, and life sciences. That funding does not fund only big infrastructure projects. Last week, I went to four primary schools in my constituency—Adamsdown, Albany, Marlborough and Springwood—and I noticed in every school a sign that said that the children had a carton of milk every day through the European Union school milk scheme. We know that the Conservative Government have never been fans of children’s school milk, but can the Minister guarantee that those children will continue to receive their milk every day after 29 March 2019?
We know that we cannot rely on this Government for the green light to vital projects in Wales. The Swansea Bay tidal lagoon is one example, and electrification between Cardiff and Swansea is another. From a Welsh perspective, the shared prosperity fund will not be properly shared, will not deliver prosperity and will probably contain less funding for Wales than we receive as members of the European Union. That is why I hope we stay in the European Union.
Stephen Kinnock (Aberavon) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Wrexham (Ian C. Lucas) on securing this important debate.
The 2017 Conservative manifesto promised to set up a new UK shared prosperity fund to replace EU funds, with the intention that the new fund will
“reduce inequalities between communities across our four nations”
and will be
“cheap to administer, low in bureaucracy and targeted where it is needed most”,
so we know how to measure the promises that the Conservative Government are now making. Two and a half years later—not from the manifesto but from the referendum—we still do not know how much funding will be available, how it will be divided across the country, what activities will be eligible for support or who will take the decisions on how the money is spent. There is a huge fear that that will be not just a financial grab, but also a power grab, and that the Conservative Government will use this opportunity to reduce funding for areas that need it most and to claw back powers that sit naturally with the devolved Administrations.
That concern drove us to create the all-party parliamentary group on post-Brexit funding for nations, regions and local areas. In that spirit, we worked with the Industrial Communities Alliance and launched a national inquiry to help us understand the wide-ranging views on the key questions that I have highlighted. That involved inviting a large number of organisations to submit evidence to the inquiry about what they wanted from the shared prosperity fund. Respondents included local authorities, local enterprise partnerships, the TUC—including the Welsh TUC—mayoral combined authorities and devolved Administrations. Such was the huge interest and concern that we received submissions from over 80 different bodies across England, Scotland, Wales and Northern Ireland. Many hon. Members present here are members of the APPG. The report will be published on Friday, but I will give a brief summary of the key recommendations.
There is an overwhelming consensus that the shared prosperity fund must not comprise a penny less than what the EU would have invested in Britain from 2020 to 2024. The Government must, above all, prioritise narrowing the differences in prosperity across the UK. In England, the funding should be allocated to local areas on the basis of a robust formula and up-to-date statistics. In Scotland, Wales and Northern Ireland the UK Government should respect the devolution settlement and any guidelines should therefore be kept at a strategic and broad level, and agreed with the devolved Administrations, who should keep responsibility for detailed design and delivery. Those findings all reflect my own concerns. The report has been signed off by all vice-chairs of the APPG, so it is a cross-party report; we shall send it to the relevant Secretaries of State and seek follow-up meetings.
Westminster must not use Brexit and the end of the EU’s regional funding as an opportunity to short-change the poorest parts of the UK. The UK Government must not preside over a Westminster power grab, whereby devolved Administrations are denied the appropriate control over funds. The Government have promised their own consultation—I am sure the Minister will tell us more about that—which I understand will be launched before Christmas. It is very important that they take the recommendations in our report into account, particularly as they reflect the views of more than 80 organisations at the coalface of those issues. The design must not be dreamed up in Westminster or Whitehall bubbles, but driven by the practitioners—the people who really know what works, and what does not, in their communities.
Albert Owen (Ynys Môn) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Hollobone. I welcome the Minister to his place and congratulate my hon. Friend the Member for Wrexham (Ian C. Lucas) on securing the debate. I am disappointed that the hon. Member for Monmouth (David T. C. Davies)—the Chair of the Welsh Affairs Committee—chose to talk about other things when the topic of the debate is so important for the future of Wales.
My constituency has been a major beneficiary of both European structural funds and the European regional development fund. In the 1980s, my constituency had twice the national average of unemployment—mass unemployment and mass depopulation, which is why it qualified with low GDP for European structural funds. Objective 1 has been a success in my area and it has helped repair communities through its social cohesion funds. It has also helped port communities with infrastructure—the main gateway between Wales and the rest of Europe—and helped the agricultural, food and farming sector.
As my hon. Friend the Member for Cardiff Central (Jo Stevens) said, the further education and higher education sectors have also been major beneficiaries. There have been real, tangible outcomes in my constituency, such as energy centres, food technology centres and job creation, and Wales and the valleys are benefiting from this.
However, we still need to reflect on how we are going forward, because my area is still a low area of gross value added—GVA—and that needs to change. That is why we need a further commitment from the Government for post-2020: that the circumstances will not change and that there will be real growth. Unemployment in my area is now below the national average, when in the 1980s it was double the national average. That is job creation helped by European structural funds—real people benefiting from real jobs in my area. That is why I am a big supporter.
Even today, we have great investment coming in. In 2015, we had a brand-new, state-of-the-art, innovative science park, which was part funded by the Welsh Government and attracted private investment, but it would not have been possible without the grant from the ERDF. In 2017, we got a business park at Llangefni, which now works closely with colleges and universities to ensure that we get top-quality jobs coming to my area. Again, that did not happen in the ’80s, before the structural funds were put in place in the ’90s. A tourist package worth £1.7 million will help the port of Holyhead, which was damaged by storm—again, some of that money comes from the European social fund. It is a good thing. Energy companies are investing in my area, such as Minesto from Sweden, and a not-for-profit organisation has been set up—an indigenous company in Wales—because of ERDF funding.
Ian C. Lucas
Does my hon. Friend agree that the determination of companies and institutions throughout north Wales to work together is a massive attraction to outside businesses to come to our area? We have shown that we work very effectively together and can plan the north Wales growth bid.
Albert Owen
Absolutely. That is the next point that I want to move on to. I am a strong supporter of devolution—I have fought for it in referendums, and I have seen its enhancement—but devolution is no good just going from Whitehall down the M4 to Cardiff Bay. It needs to go throughout the areas of Wales, including to north-west Wales and north Wales generally. Real devolution is about empowering people in their local communities. My hon. Friend is right: we have a structure in the north Wales growth bid. We have a board set up, with business and local authority representatives, and they have the ability to be a mechanism for distribution of the new growth fund in the future. I hope that the Minister will take that on board. I know that he is visiting my constituency in north Wales shortly, and he will hear about that.
I want to quote the remarks referred to by the hon. Member for Ceredigion (Ben Lake), in which the Secretary of State for Housing, Communities and Local Government stated:
“The UK Shared Prosperity Fund will tackle inequalities within communities by raising productivity, especially in parts of the UK whose economies are furthest behind…It will have simplified administrative arrangements aimed at targeting funding effectively; and…It will operate across the UK. The UK Government says it will respect the devolution settlements in Scotland, Wales and Northern Ireland, and will engage the devolved administrations”.
I want those words to be put into action. I want the new Minister to take that on board and to work with us, as Welsh Members, to ensure that areas such as mine continue to grow and will benefit from the shared prosperity fund. I do not want to see this Government pull the rug from under the feet of the poor communities, education communities and farming communities that have benefited since 2000. Europe based its European structural funds on need, and that is what we need: to establish the needs of areas throughout the UK, including periphery areas such as the one that I represent, to show that we will go forward, that we do share prosperity and that we share it at a pace equal to that in the south-east of England. At the end of the day, we want a more equal society, economically and socially.
Mr Philip Hollobone (in the Chair)
We now come to the Front-Bench speeches, and the guidelines are five minutes for Her Majesty’s Opposition, 10 minutes for the Minister and the remaining time Mr Lucas may use to sum up the debate.
Chris Ruane (Vale of Clwyd) (Lab)
It is a pleasure to serve under your esteemed chairmanship, Mr Hollobone.
I welcome the Minister to his place, for the second time this afternoon. He is the fourth Minister in one year; let us hope he stays around during this crucial period in our political history. I give a big thank you to my hon. Friend the Member for Wrexham (Ian C. Lucas) for securing the debate and for speaking so lucidly. A reflection of the importance of this debate can be seen in the number of Labour Members who attended it—nine MPs, I believe, which is almost a third of the Welsh parliamentary party.
My hon. Friend the Member for Wrexham made an excellent speech in which he drew out some important issues, such as the lack of clarity in the whole Brexit process—I share that concern—and ensuring that Wales stays a net beneficiary of the funding. He also, rightly, talked about the disparity within Wales, between east Wales, and west Wales and the valleys.
The hon. Member for Monmouth (David T. C. Davies) went off on one, I think. He had an opportunity to highlight some important issues, but he made some unsubstantiated claims and did not even mention the issue of EU funding. He was one of two Conservatives who argued for extra centralisation of powers with the shared prosperity fund. That worries me.
The hon. Member for Ceredigion (Ben Lake) mentioned the importance of rurality—I share those concerns too, as I have a rural constituency myself—and the fact that he does not want the shared prosperity fund to be Barnettised. My hon. Friend the Member for Cardiff Central (Jo Stevens) mentioned the importance of funding for universities and schools. That is key, because our universities should be driving our 21st-century economy.
I pay tribute to the work of my hon. Friend the Member for Aberavon (Stephen Kinnock) on his all-party parliamentary group for post-Brexit funding, which is taking a cross-party approach, which is the way it should be. He drew out several points: that the devolution settlement should be respected, that there should be no power grab or financial grab, that we have had a lack of detail so far and that we do not want Wales to suffer financially as a result of voting for Brexit.
My hon. Friend the Member for Ynys Môn (Albert Owen) listed the many benefits of being a member of the European Union and a recipient of the highest levels of European grant in the whole of Europe. He is a great campaigner on energy, which is his specific focus, and he dreamt up the name “Energy Island” for Ynys Môn—he is Mr Energy Island himself. He said that there should be more devolution to the areas of Wales. All around, we had some excellent contributions.
From my own perspective, I am very worried about the slipping timescale for the consultation on the shared prosperity fund. There have been 113 written parliamentary questions about the shared prosperity fund, two of them from me about the timing. We were promised that the consultation would take place in 2018, but on the last day in Parliament before the summer recess, it was slipped out that the consultation would be by the end of 2018. We are now almost at the end of 2018 and there has been no mention yet. Please, may we have some detail on the timing?
I share concerns expressed around the Chamber about how much funding we will receive. Before the Brexit referendum, the Brexiteers came into Wales to say, “Wales will not suffer. It will have exactly the same funding after Brexit as it did before.” We want to ensure that that will be the case. Another of my concerns about the European funding is that we had both capital funding under the ERDF and revenue funding under ESF. We want to ensure that that continues. In Wales, we benefited tremendously from it.
This is not all just from a party political perspective, so I will finish with the words of the Federation of Small Businesses:
“The FSB calls for the devolved nations to retain the powers to set their own allocations and frameworks for how funding should be prioritised, which takes account of local economic needs.
Regional policy is fundamentally about balancing economic outcomes. As economic development is a devolved function, we believe Welsh Government are best placed to deliver any replacement funding through the Shared Prosperity Fund”.
So please, no power grab by the centre. Leave those powers and that finance in Wales.
The Parliamentary Under-Secretary of State for Wales (Nigel Adams)
It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Wrexham (Ian C. Lucas) on securing this debate. I know him from my time on the Select Committee on Digital, Culture, Media and Sport, but he probably does not realise that I visited Wrexham for the first time when I was eight, to watch my local non-league team, Goole Town, play Wrexham at the Racecourse Ground in the 1974 FA cup. We managed to get a one-all draw—sadly, we got stuffed in the replay.
Jo Stevens
With that remark, the Minister made himself what we call in Wales Western Mail Welsh.
Nigel Adams
It was my first visit to Wales, so I thought it was worth bringing up.
Nigel Adams
I do not think I have, but I am sure it will be on my agenda shortly. I am looking forward to going to north Wales, and I was in Cardiff on the second day of my appointment.
I thank all hon. Members for their contributions, and for their kind wishes on my appointment as Parliamentary Under-Secretary of State for Wales. It is a great honour to be asked to join the Department and to carry on the work of my predecessors. Although I have not yet been in the job a week, I understand and recognise many of the issues that have been raised. Someone said that they are a passionate lot in Wales; that has been exemplified this afternoon, and it is an incredibly important debate to have.
As the hon. Member for Wrexham pointed out, Wales has been a net beneficiary of funding from the EU. By the time the current cycle finishes in 2020, Wales will have received more than £5 billion. The hon. Gentleman’s constituency has benefited from that funding to the tune of more than £14 million between 2005 and 2016. Projects such as the community resource centre in his constituency, Coedpoeth Enterprise and Lifelong Learning Centre, and the west Wrexham learning project have received funding from Europe. It is understandable that they, like other organisations in Wales, both large and small, will want to know what comes next.
The hon. Member for Aberavon (Stephen Kinnock) mentioned that as part of our 2017 manifesto, we set out proposals for a UK shared prosperity fund, which would
“reduce inequalities between communities across our four nations”.
As part of that commitment, we recognise the role that the Welsh Government and other devolved Administrations have played in delivering structural funds over the last 20 or so years. We are absolutely committed to engaging with them as we develop the proposals. The Government have already begun discussions, which will continue, at official and ministerial levels.
Since 2016, we have worked together to agree deals; the Cardiff and Swansea deals are together worth £2.5 billion. We are working on a £120 million deal for north Wales, which I have already had a briefing on and am very keen to get involved in, to see what I can do to help deliver those projects. That was announced in the Budget, as Members will be aware, along with a commitment to start work on a deal for mid-Wales. Those are examples of our Governments working together across administrative boundaries to strike deals that will power economic growth throughout Wales.
The shared prosperity fund provides the UK with an enormous opportunity to redefine the way we invest our money in line with priorities unique to the people, communities and businesses across all nations of our Union, not least Wales. It is right that these groups be afforded the chance to express their views directly to all Governments on the priorities and most effective structures for future funding. Our forthcoming public consultation is an important first step in shaping those discussions, and will ensure that interested parties from across the UK are given the opportunity to inform the debate.
Chris Ruane
The Minister says that the consultation is upcoming; can he give us the exact date?
Nigel Adams
This debate is a starting point, but the consultation will begin before the end of the year. It will be for others in Government to announce the date, but given that we are halfway through November, it is probably easy to work out that the hon. Gentleman will not have long to wait for the consultation to begin.
Albert Owen
I am not criticising the Minister, because he has only been in the job a short time, but it is the duty of Wales Office Ministers to stand up for Wales. We are having this debate to put pressure on him, so that the Welsh voice is heard loud and clear in this debate. It is not for others to decide; it is for Government to decide, and he is our voice in that Government.
Nigel Adams
I completely agree. I see myself as a champion for Wales in Westminster. That is incredibly important and must be my priority. I cannot tell the hon. Gentleman the exact date, but I can say that it will be this year, which indicates that it will be incredibly soon. I hope he takes me at my word when I say that the consultation is about to start.
Given the significance of the shared prosperity fund, it is right that questions about the size, structure and priorities for investment develop as we approach next year’s spending review, which will determine the amount of money that will be discussed.
Ben Lake
On the spending review, should we be concerned that it seems that responsibility for this fund has been given to the Ministry of Housing, Communities and Local Government, rather than the Treasury? Might that suggest that it is not as big a pot of money as we would hope?
Nigel Adams
I certainly do not write the comprehensive spending review—well, not yet. I ask the hon. Gentleman to bear with, to coin a phrase. I do not think he has anything to be concerned about in terms of MHCLG being involved in this process—it is only right that it be involved.
In the time I have left, let me turn to specific points raised by hon. Members. In his eloquent speech, the hon. Member for Wrexham spoke passionately about his constituency and his area of north Wales. He asked whether the same rules would apply across the UK. We will absolutely respect the devolution settlement and work with the devolved Administrations. As I said, we are committed to consulting before the end of the year—in the next few weeks—and people will have that opportunity to set out their views on the fund.
The hon. Gentleman rightly commented that the system has not always worked as well as he had hoped. He said that investments had not always delivered the expected return in gross value added terms, that some EU funding had not worked particularly well for Wrexham, and that there had been a bit of a missed opportunity. That is absolutely right. That is why we should have this debate, and why we should all contribute to the consultation.
The hon. Gentleman and the hon. Member for Aberavon, whom I thank for his work on the all-party parliamentary group on post-Brexit funding for nations, regions and local areas, said decisions should be made locally. They both made very valid points in that respect. In my view and that of the Government, EU exit provides an excellent opportunity to reconsider how funding for growth is delivered across the UK. The consultation will be a great opportunity to start that conversation.
The hon. Member for Ceredigion (Ben Lake) and others asked when we would publish the details of the fund. As I said, we will do that in the next few weeks, before the end of the year. We are absolutely committed to that. That will give everyone across the UK the opportunity to contribute their views, and to help those views to form Government policy on this issue. Decisions on the actual spending will be made in the spending review next year.
I would have liked to respond to one or two other hon. Members, but I want to give the hon. Member for Wrexham the opportunity to respond to the debate. I thank everyone for contributing. We want an economically strong Wales in a prosperous United Kingdom. Working alongside the Welsh Government through the shared prosperity fund, we can ensure that becomes a reality.
Ian C. Lucas
A number of Members asked for a commitment that Wales would not receive less under the UK shared prosperity fund than it currently receives. I note that this commitment, which has been asked for ever since the general election, still has not been given. There is great concern about that.
Ian C. Lucas
I will give way to the Minister if he wants to give me that commitment.
Nigel Adams
The hon. Gentleman will appreciate that the exact amount must be considered as part of the comprehensive spending review in due course.
Ian C. Lucas
It is pretty fundamental that we do not want Wales to lose out. I think I speak for everyone who participated in the debate when I ask the Minister to convey to the Government, on behalf of Wales, that the sum must not be less than it is currently. As we heard, there are different views about how the fund—