European Structural and Investment Funds and the European Agricultural Guarantee Fund

Baroness Penn Excerpts

Tuesday 21st March 2023 Lords Chamber

[Lord Kirkhope of Harrogate]

To ask His Majesty’s Government whether they have matched the funding previously provided by the European Union to the United Kingdom for the European Structural and Investment Funds and the European Agricultural Guarantee Fund in 2014–20; and if not, what is the extent of the shortfall.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

The 2021 spending review announced the £2.6 billion UK shared prosperity fund, which improves on the European structural funds by empowering local places. The Government have also introduced farming and rural support worth a cumulative £3.7 billion annually over this Parliament and £33 million annually to support fisheries. This meets our 2019 manifesto commitments to maintain the levels of funding for farmers, fisheries and local economic growth in ways that are less bureaucratic and better targeted at local priorities.

[Lord Kirkhope of Harrogate (Con)]

I thank my noble friend for that partial reassurance, but I ask her to consider very carefully two elements. One is the farmers and members of agricultural communities, who are seeing an erosion of direct payments right now against a future sustainable farming incentive, and their deep concern to keep food production at a high level. The other is structural funding; many local authorities and regions in our country have had expectations for the new UK shared prosperity fund, but that is not coming in for some time. Can my noble friend give us further reassurances that these gaps will be filled?

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[Baroness Penn (Con)]

My noble friend is right that, in both schemes, as the EU funding falls away, the UK funding comes in to replace it. We are seeking to do that in as smooth a way as possible. When it comes to support for farmers, we will continue to set out next steps on our environmental land management schemes, including the sustainable farming initiative, Countryside Stewardship and landscape recovery. On the shared prosperity fund, I reassure my noble friend that that fund is ramping up as EU funding falls away; its profile is faster than the way in which previous EU funding had been distributed.

[Lord Wigley (PC)]

My Lords, is the Minister aware that, when Wales first received structural funds from the European Union in 2000, that money was accepted by the Treasury in the UK and was not initially passed over to the beneficiaries, on the basis that they were already getting adequate money from the Treasury? It needed the intervention of Michel Barnier, the regional commissioner at that time, to get the Treasury to pass that money over. Will she give a guarantee that all money that is supposed to be equivalent to structural funds will be additional to the base spending for the areas that need it?

[Baroness Penn (Con)]

My Lords, the commitment that the Government have made is that the replacement of EU funding in each nation will meet the levels that they previously received. That is the commitment that we are delivering through the shared prosperity fund.

[Baroness Randerson (LD)]

My Lords, Wales was a beneficiary of EU funding, as one of the poorest parts of the EU. The Welsh Government used a big slice of that funding to support university support partnerships across Wales and beyond. Because the new shared prosperity fund is administered by the UK Government and local authorities, there is no scope for universities to benefit in the same way, leaving a big hole in the amount available for university research, which is of course essential for levelling up. Will the Minister undertake that she will, with her colleagues, examine this problem and amend the UK’s funding mechanisms in order to solve the big hole that is appearing in university research funding? I declare an interest as chancellor of Cardiff University.

[Baroness Penn (Con)]

My Lords, the UK shared prosperity fund was designed to give local areas more discretion about how they spend that funding, aligned with local priorities. The UK Government provide significant support to our research sector, including through universities, but I am happy to take the noble Baroness’s feedback back to the Treasury.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, many social economy projects in Northern Ireland have relied on the European Social Fund for many years. Because that funding is due to end next week, they face a cliff edge, and they have not received any communication about funding allocations from the UK prosperity fund. To enable such social economy projects to continue with their good work, right across the communities, will the Minister ensure that this funding is made available to such projects that do such good work for the benefit of all?

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[Baroness Penn (Con)]

I am aware that there are elements of funding from the European Social Fund in Northern Ireland that are due to come to an end at the end of this month. The Department for Levelling Up, Housing and Communities is administering a competition to replace that funding, and it received strong and positive responses from organisations across Northern Ireland seeking to deliver the aims of that programme. It is working very hard to make the final selection decisions as quickly as possible.

[Baroness McIntosh of Pickering (Con)]

My Lords, does my noble friend accept that, for two categories of farmers—particularly hill farmers and tenant farmers—the level of income from the European funds is falling faster than initially expected? Will she work with Defra to ensure that their incomes are protected, and that they continue to produce the excellent food that they do for this country?

[Baroness Penn (Con)]

My Lords, I am sure that Defra will want to support the work of all farmers in our economy. My noble friend referred to two different categories of farmer: I know that my noble friend Lady Rock did an excellent review into tenant farmers, and a number of her recommendations have been taken forward. As Defra develops its programmes for the sustainable farming incentive and other replacements for EU funds, it will want to take into account the needs of different farmers across the UK.

[Baroness Hayman of Ullock (Lab)]

My Lords, the Government made a very simple promise to the nations and regions of the UK, as well as to farmers: European funding would be matched pound for pound, and the mechanisms used to allocate funds would be simpler and fairer. Several years on, we are still waiting for the shared prosperity fund, environmental land management schemes and the UK Infrastructure Bank to get fully up and running and to hit the targets they have been set. How have the Government managed to get this so badly wrong? Why is progress so slow? Does she acknowledge that this is a difficult time for farmers and that the Government really need to crack on with it?

[Baroness Penn (Con)]

My Lords, as I have explained to the House, as European funding tails away, UK funding ramps up. For example, the shared prosperity fund will reach £1.5 billion a year by the end of the spending review period. For each of the sectors that the noble Baroness mentioned, we have provided clarity around the funding available for the full three years of the spending review and the mechanisms by which it will be distributed. I know that my colleagues in Defra continue to work hard with farmers to ensure the successful rollout of the replacement schemes.

[Lord Jones (Lab)]

My Lords, will the Minister acknowledge that, in recent times, Wales has lost a great foundation industry, which was mining? It provided tens of thousands of jobs and created some prosperity. In recent times, the once mighty steel industry of Wales has also all but disappeared—it has shrunk. We are more and more in need of investment. It was from the privy counsellors’ Bench over there that former Prime Minister Harold Macmillan, Viscount Macmillan, paid tribute to the miners and steelworkers who, in two world wars, defeated first the Kaiser and then Adolf Hitler. Wales now needs more and more government funding. In the lovely heartland of Wales—cefn gwlad—there is great distress among the farming communities. We are in need of investment.

[Baroness Penn (Con)]

My Lords, we had a discussion last week about the needs of Wales when it came to government funding. I told noble Lords then that we took into account the greater needs of Wales as calculated by the Holtham commission. Indeed, the funding that goes to Wales is over and above the assessed needs of Wales at the present time.

[Lord Hannan of Kingsclere (Con)]

My Lords, will my noble friend the Minister confirm that we now have the advantage of being able to start with an identified need and then look for how to fund it rather than, as necessarily happened under the European funds, to start with a figure of money and then cast around for ways to spend it?

[Baroness Penn (Con)]

My noble friend is right that one of the opportunities that we have, having left the EU, is to look at programmes and make sure that they deliver against our policy priorities in the UK. That is exactly what we are seeking to do with our agricultural support schemes, for example, and we will continue to look for opportunities to do that.