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The Parliamentary Under-Secretary of State for Wales (Kevin Foster)
It is a pleasure to serve under your chairmanship, Mr Brady. I will finish a minute early to allow the hon. Member for Aberavon (Stephen Kinnock) to respond to the debate. I congratulate him on having secured this debate, and I congratulate the hon. Members who have contributed today, showing their pride in, and passion for, the communities they represent here at Westminster. In particular, I thank those hon. Members who have welcomed me to my new post over recent weeks, and with whom I have already enjoyed discussions. My door is always open to those who want to engage constructively with the Government on issues that affect Wales and their constituents.
Although I have been in the Wales Office for only just over a month, I have managed to travel across the nation, so the issues raised today are already familiar. Particular highlights of the past month have been, first, the visit to Tata Steel in Port Talbot, in the constituency of the hon. Member for Aberavon. There, I heard first hand about the exciting prospects for carbon capture and not just storage but use. I was also in Monmouthshire recently to talk with the local authority about proposals for a Chepstow bypass to cut congestion through the town, improve economic growth and link our Union more closely, given that the bypass will literally cross the English-Welsh border. Only last week in north Wales, I met the innovative telecommunications business Moneypenny—familiar, I am sure, to the hon. Member for Wrexham (Ian C. Lucas)—which shows how Welsh firms compete on the global market.
I pay tribute to the hon. Member for Aberavon in his role as chair of the all-party parliamentary group for post-Brexit funding for nations, regions and local areas. From what he has said today, it is clear that he is passionate about that issue, as are his colleagues who have also spoken. That is why, as he mentioned, my right hon. Friend the Secretary of State for Wales met him and colleagues from the APPG on 11 March to discuss post-Brexit regional funding. I hope that the hon. Gentleman and his colleagues found the meeting helpful and that it reassured him that this Government are taking future regional funding in Wales seriously.
Nick Smith
I congratulate the Minister on his role, and say “Well done” for travelling around Wales and hearing people’s concerns about the future. When will the consultation on the shared prosperity fund begin?
Kevin Foster
I thank the hon. Gentleman; I will come on to the shared prosperity fund in a moment. Of course, if he invited me to visit his beautiful constituency of Blaenau Gwent, I would be more than happy to add it to my list of travels.
At this point, it is important to look to the future and at what the Government have committed in regional funding. In our 2017 manifesto, which I am sure was a popular read for everyone in this room, we set out our proposals for a UK shared prosperity fund to reduce inequalities between communities across our four nations. The UK’s shared prosperity fund seeks to provide the opportunity to move away from the old bureaucratic EU model, and to design a future regional funding model that truly benefits people across our United Kingdom in a way that reflects the specific needs and strengths of its different parts.
Kevin Foster
Not for the moment.
We will achieve our objective by strengthening the foundations of productivity, as set out in our modern industrial strategy, to support people to benefit from economic prosperity. As a Government, we have already begun engagement on the fund with the Welsh Government and key stakeholders in Wales. That engagement will continue, both at official and ministerial levels. Of course, a benefit of debates such as this is that we can hear the views of right hon. and hon. Members. It is important to recognise that direct engagement with stakeholders has already taken place, including with the third sector, universities and local authorities in Wales. Official-led events were held in Cardiff in November last year, and more recently in St Asaph on 30 January.
As has been referenced several times, the Government have committed to holding a public consultation on the design of the fund. The consultation will build on the conversations and engagement on the fund that have already taken place. That includes engagement with the Welsh Government, because we will respect the devolution settlements as part of the fund, as requested by Opposition Members.
I recognise that right hon. and hon. Members are concerned about the delay in the consultation. I make this point in response: the delay should not be misunderstood as the Government not being fully committed to the fund—we are. The dynamics of EU exit, not least in this place, often mean there is a fast-changing situation, so it would not be appropriate to speculate on specific dates for when the consultation will be launched.
It is worth reflecting on how constructive work has taken place between the UK and Welsh Governments on city and growth deals in Wales. By the end of the Parliament, every part of Wales will be covered by a growth or city deal. Cardiff and then Swansea, as well as, most recently, north Wales and then mid-Wales, are or will be benefiting from that collaborative approach to turbocharge economic growth regionally in Wales.
I listened with interest to the points made by the hon. Member for Wrexham. He may be aware that I was in Wrexham last week talking with local authority leaders and other members of the North Wales Economic Ambition Board. I respect the fact that it needs to be a collaborative effort, but what is key is that the proposals come from the region upwards, not Westminster downwards. Although we have to ensure that we are satisfied that the money will be transformative, it is about what the region thinks.
Ian C. Lucas
I encourage the Minister to engage with Members of Parliament, who have been very active in establishing the forum of the all-party parliamentary group, with which he has not yet engaged. It would be helpful if he would meet the all-party group to hear what Members of Parliament, who have the largest mandate, have to say to him on this important subject.
Kevin Foster
I thank the hon. Gentleman for his constructive intervention. I am more than happy to accept the invitation, although I have not been short of north Wales Members of Parliament wanting to come and see me. I have already met the hon. Member for Arfon (Hywel Williams) and the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), and spoken with my hon. Friend the Member for Aberconwy (Guto Bebb). As I said at the start of my speech, my door is always open to those who want to talk constructively, and I hope to meet on their patch as well, if possible. Certainly, I am more than happy to engage with Members of Parliament on these issues.
Nick Smith
The Minister seems reluctant to give us a date for when exactly the consultation will begin, but does he agree that it should begin, and finish, before the comprehensive spending review is delivered?
Kevin Foster
I thank the hon. Gentleman for his further intervention. As I said, I do not want to get into specific dates, but I am clear that the spending review will set out how we approach the fund in the future. I am not surprised to see such passion. We will ask people across Wales about the size, structure and priorities for the fund, and that will develop as we approach this year’s crucial spending review. Given the continuing debates about our EU exit, it is clearly hard to give a specific date, although, as the hon. Gentleman knows, constructive discussions are ongoing between our Front Benches as we speak.
Hywel Williams
I understand that the Minister cannot go into any detail about the fund itself, but can he give us some indication of the principles behind it? Will it be based on need, or on some sort of competitive tendering or competitive proposals, either between Wales and other regions and nations, or even within Wales itself?
Kevin Foster
I thank the hon. Gentleman for his intervention. Our clear emphasis will be on ensuring that it works for local communities and delivers prosperity and growth across the nation. The consultation will set out our plans, and I am sure that he and other Members will be powerful advocates in ensuring that the fund works for their communities in the way they envisage.
I am conscious that many Members have raised the future of EU funding. In 2016, the Government guaranteed funding for UK organisations in receipt of EU funds where projects are agreed before the day the UK leaves the European Union. In July, the Government announced an extension to that guarantee, which will underwrite the UK’s allocation for structural and investment fund projects under this EU budget period to 2020 in the event of the UK leaving without a withdrawal agreement. That ensures that UK organisations, such as charities, businesses and universities, will continue to receive funding over a project’s lifetime if they successfully bid into EU-funded programmes before December 2020.
Our overall message is therefore business as usual. We want all places to continue to sign contracts while we still belong to these funds.
Kevin Foster
Not for the moment.
The December 2017 withdrawal agreement means that Wales will receive its full 2014 to 2020 allocation, because we recognise the importance of short-term certainty on funding. As we transition to longer term arrangements, we will of course ensure that all parts of the UK are treated fairly and that their circumstances are taken into account. We have promised, as I have already touched on, to engage the devolved Administrations as we develop the UK shared prosperity fund.
Kevin Foster
Given the time, I need to make progress.
I fully recognise the importance of EU funds to Wales. The guarantees set out by the UK Government show the importance that we place on those funds, as does the position that we have since reached with the EU on participating in the 2014 to 2020 EU programmes until closure. Under the terms of the withdrawal agreement, UK entities ripe to participate in EU programmes such as Horizon 2020 and Erasmus+ during the current multi-annual financial framework period will be unaffected by the UK’s withdrawal from the EU for the lifetime of the projects financed by the current multi-annual financial framework. UK-based organisations and people will be able to bid for funding and participate in and lead consortia in 2019 and 2020.
In terms of our future participation, the joint political declaration published in November sets out a basis for co-operation in European Union programmes, subject to the conditions set out in the corresponding Union instruments, such as in science and innovation, culture and education, development and defence capabilities, civil protection and space. Of course, the UK would make financial contributions were we to participate in any EU programmes.
On the specific point made about Barnettisation and potential agricultural funding, direct payments will continue to be made on the same basis in 2019 and 2020. The Government have already confirmed that overall funding for UK farm support will be protected in cash terms until the end of the Parliament in 2022, providing more certainty than any other EU member state. Crucially, the Government are clear that they will not simply apply the Barnett formula to changes in DEFRA funding beyond this Parliament. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population size of each nation, which in each case is significantly smaller than that of England.
In the beginning, EU funding was seen as something of a panacea for all Wales’s ills and as an opportunity that needed to be grasped with both hands. However, we should question whether, given the way that money was spent, it has reached those communities. We can all think of examples of projects that did not succeed, such as Techniums, the Ebbw Vale funicular railway and the All Wales Ethnic Minority Association.
I hear the passion with which many Members representing their communities have articulated what they see as the benefits of EU funding. However, we need to contrast that with the fact that some of the areas involved returned some of the highest leave votes. That was not based on whether a consultation was going to take place, but on what people perceived in their areas. It is a challenge for us as politicians to ensure that people see the benefit of what is done in their area.
As I set out at the beginning of my speech, the UK’s exit from the EU provides us with a considerable opportunity to reconsider how we invest our money in a way that helps to reduce inequality across our four nations. The current system is bureaucratic, inefficient and difficult to access. With the UK shared prosperity fund, we would have the opportunity to design a fund that works in the interests of Wales and the UK as a whole. I am clear that we will do that while respecting the devolution settlements and continuing to engage with the devolved Administrations, as we have successfully and productively done and continue to do on growth deals, and as I have done personally since my appointment, in the shared interests of those we serve.
Ultimately, the Government want to see an economically strong Wales, within a prosperous and strengthening United Kingdom. Working alongside the Welsh Government, through a future shared prosperity fund and other initiatives such as the growth deal, we can ensure that that becomes a reality.