Wales: European Structural Funds

Baroness Bloomfield of Hinton Waldrist Excerpts

Wednesday 5th February 2020 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

Hoffwn i ddiolch i’r Arglwydd Wigley am ei ddadl heddiw. My Lords, let me begin by thanking the noble Lord, Lord Wigley, for tabling and so ably introducing this debate, and all noble Lords for their contributions and their warm welcome. As with all debates to do with Wales, the contributions have been of the highest quality and the arguments beautifully crafted, as the noble Lord, Lord Griffiths of Burry Port, observed. I believe we all agree that the question of future funding for Wales following our withdrawal from the European Union is critical to the people, businesses and institutions of Wales.

Last week, the UK left the European Union and in doing so the democratic decision of the British people was respected. It is important to remember that in Wales the 2016 referendum vote was clear. Our departure from the EU brings to an end far too many years of argument and division. We have the opportunity to concentrate on what the people want now that Brexit has been achieved. The UK shared prosperity fund is one such initiative that will benefit the whole United Kingdom, including Wales.

Earlier this week, the Prime Minister outlined how the Government want a relationship with the EU based on friendly co-operation between sovereign equals and centred on free trade. We will be making our own way in the world with the vast potential that that offers. Of course, Wales, as part of the greatest union in the world, the United Kingdom, will benefit.

Wales is a great place to do business, and our strengths will put us in a good place to benefit from the free trade deals that we will strike across the globe. The UK shared prosperity fund will help to build further on the natural strengths that Wales has economically—the noble Lord, Lord Jones, mentioned the excellence of Broughton. It gives us a great opportunity to design a fund that works for the whole UK and levels up the most deprived areas. Notwithstanding the potential strengths and opportunities of Wales, the noble Lord, Lord Anderson, was right to set things in context: Wales has the lowest GDP per head in the UK and the lowest growth rate, which is why it has always qualified for European support. Indeed, Wales has received more than £4 billion in European structural fund support since 2000, half of which has accrued in the current spending round. There is no part of Wales that does not currently receive financial support from these funds, and it is therefore imperative that a replacement for them becomes available once the support provided by EU structural funds has drawn to a close.

The Government recognise the vital role that European structural funds have played in Wales over the past two decades. Leaving the EU provides us with an opportunity, for the first time in more than 40 years, to determine how we invest our own money and tackle the inequalities that exist between our nations and regions. We shall now be able to target funding to where it is most needed and to the economies that are the furthest behind.

Since European funding was introduced, spending and delivery of current EU structural funds in Wales have been in the hands of the Welsh Government. The creation of the UK shared prosperity fund is an opportunity to level up the whole United Kingdom and tackle deprivation across our four nations. I know that a number of those present, including the noble Baroness, Lady Humphreys, are concerned either that the UK Government are looking to circumvent Welsh devolution or that the priorities of the shared prosperity fund will not accurately reflect the interests of the people of Wales. To those who share those concerns, I shall endeavour to provide some reassurance.

The Government are committed to the relationship between the UK Government and the Welsh Government, and fully respect devolution and the devolved institutions. The Secretary of State for Wales has expressed a sincere desire to collaborate closely with colleagues in the Welsh Government to ensure that the UK shared prosperity fund can deliver for the people of Wales. He has already had productive discussions with the First Minister, Mark Drakeford, and Welsh Government Brexit Minister, Jeremy Miles, on how the UK and Welsh Governments can work together to make a success of the fund. He has also been clear that the Government have no intention of using the fund to, in his words, drive a coach and horses through the devolved settlements. Government officials also have regular discussions with counterparts in the devolved Administrations about how the prosperity fund should operate, and these discussions will continue.

I should also remind noble Lords that it was a Conservative Government who brought forward the Wales Act 2017 to expand and clarify the powers of the devolved institutions in Wales. These are not the actions of a Government seeking to wrest power back from the Welsh Government or to undermine Welsh devolution.

Collaboration has proved positive and productive: witness the city and growth deals. We have already seen the UK Government, devolved Administrations and local authorities working together over the years to agree such deals. These deals support growth across the United Kingdom and are an example of what we can achieve when we work together towards a common goal. This shows how the different Administrations in the UK can put aside political differences to power up local economies. It demonstrates the strength of collaborative working. I mention this here because the UK shared prosperity fund gives us a great opportunity to continue this type of co-operation and deliver for the people of Wales.

I can assure noble Lords that the needs and views of stakeholders in Wales will have a pivotal role in determining the priorities and objectives of the shared prosperity fund. Leaving the EU is our chance to ensure that the way we spend our money aligns with our priorities, our aims and our visions to level up all parts of the UK. Local people are at the heart of this vision, and the UK shared prosperity fund is a key instrument that we will use to achieve it.

The noble Baroness, Lady Humphreys, and the noble Lord, Lord Thomas of Gresford, asked when the consultation will begin. It is important to recognise that some engagement has already taken place with Welsh stakeholders including businesses, all local authorities, universities and the third sector; 25 engagement events have already taken place. These stakeholders are already playing a huge part in shaping the policy for the fund. The Government recognise, however, that many people are concerned that there has been a lack of engagement. I would simply say in response that this should not be misunderstood as the Government not being fully committed to the UK shared prosperity fund, because they are.

Turning to the allocation of funding in Wales, I emphasise the commitment that was made in the 2019 Conservative manifesto on the UK shared prosperity fund. It committed to, at a minimum, matching the size of European structural funds in each nation of the UK. The Government are determined that Wales will not be out of pocket now that we have left the EU. Indeed, during the 2016 referendum, the people of Wales were promised that they would not be one penny worse off as a result of leaving the EU; the UK shared prosperity fund will be instrumental in making good on that promise. The 2019 Conservative manifesto also committed to, at a minimum, matching the current allocation of structural funds in each of the four nations. It also committed to ensuring that £500 million of the UK shared prosperity fund is used to give disadvantaged people the skills they need to make a success of their lives.

The noble Lords, Lord Wigley and Lord Griffiths of Burry Port, and the noble Baroness, Lady Humphreys, all raised the question of the allocation of funds. The Government are very well aware of the need to reassure the people of Wales that the UK shared prosperity fund will be delivered on the basis of need, not simply on population metrics. The great advantage of replacing EU structural funds domestically is that we can not only cut down on bureaucracy, but decide how we want to spend our money and ensure that funding is delivered to the places where is stands to effect the greatest change and truly tackle deprivation in that area. It is perhaps important to remind the House that this is British taxpayer cash, top-sliced and recycled back to us with strings attached. There is no such thing as European Union money.

I have been made aware of arguments both within and beyond this House in relation to the various formulae that could be used to distribute the shared prosperity fund across the United Kingdom, including, most notably, the Barnett formula. I acknowledge the fears of many noble Lords, including the noble Lord, Lord Thomas of Gresford. The Government recognise the potential implications of distributing funds based purely on population but, given the manifesto commitment to protect the level of funding in the devolved nations, this should not be a worry for Wales—it will get the fair deal that the noble Lord, Lord Jones, rightly demands.

I cannot speculate publicly on future spending, but what I can say, in answer to the question on timing from my noble friend Lord Bourne and the noble Baroness, Lady Humphreys, is that final decisions on the overall quantum and allocation of the UK shared prosperity fund will be taken by the Treasury during a cross-government spending review, the timetable for which is due to be announced by the Chancellor in his Budget speech on 11 March.

The noble Lords, Lord Murphy of Torfaen and Lord Davies of Gower, my noble friend Lord Bourne and others voiced criticism of the restrictions on current EU funding. My noble friend Lord Bourne mentioned how Ystradgynlais could not benefit from the funds that west Wales and the valleys received. The noble Lord, Lord Davies, mentioned the limitations of overspend and oversight on infrastructure projects.

It is worth asking why many of the places in Wales that have received a significant amount of European structural funding voted to leave the EU. I get the sense that the people of Wales may have started to lose faith. They know that they are receiving substantial sums of money but feel that funding has not always reached the places it should have done. With the UK shared prosperity fund we are not interested in financing pet projects or building dragons in town squares. We want to see real improvements that will truly help tackle deprivation. The shared prosperity fund will be designed to address exactly these issues.

I thank all noble Lords who have contributed to today’s debate, in particular the noble Lord, Lord Wigley, for tabling it. As I stated at the beginning of my speech, the UK’s departure from the EU has provided us with a considerable opportunity to reconsider how we invest our money in a way that helps to reduce inequality across our four nations and strengthen the whole of the United Kingdom.

Through the UK shared prosperity fund, the Government look forward to seeing an economically prosperous Wales within an economically prosperous United Kingdom. It is this Government who are determined to preserve and strengthen our union. The UK shared prosperity fund is a key plank to this, as it provides a great opportunity to level up all corners of our country. For Wales, it will be through close and collaborative working between the UK and Welsh Governments that this commitment will become a reality and promises will be honoured. Diolch yn fawr.

House adjourned at 8.36 pm.