Wales: European Structural Funds

Lord Anderson of Swansea Excerpts

Wednesday 5th February 2020 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords, I welcome to the Front Bench the noble Baroness, Lady Bloomfield, and I warmly congratulate the noble Lord, Lord Wigley, my noble friend, on his initiative. He is well aware that there is a danger of the Government replying that the debate is premature, that the details of the new fund will be announced later, and that in any event, finance will be part of the comprehensive spending review next month, so we should wait for that, and that they have sought all necessary assurances on quantum, consultation, liaison with the Welsh Government and so on. Equally, the Minister should be aware that there is a truthfulness problem—a question of trust. The recent past is littered with the abandoned promises of a Prime Minister who has so often proved himself to be a stranger to the truth. I am reminded of the adage about Lloyd George:

“Count not his broken promises as a crime. He meant them, oh he meant them at the time.”


This debate, which has been very consensual so far, surely is to raise legitimate concerns in Wales on a matter that is fundamentally important to our interests, partly because of the amount involved, a point well made by my noble friend Lord Murphy. In this current cycle of 2014-20, soon to end, we receive an allocation of £1.2 billion from the regional development fund and £800 million from the social fund. Therefore, we rely heavily on EU funds.

The second point is surely the context of our need. Wales is at the bottom of all the relevant indices of deprivation in the UK. On national income per head, Wales had a lower GDP per head in 2018 according to the Office for National Statistics than any other country or region in the UK. Three of the 10 UK areas with the lowest GDP per head are in Wales. Most recently, the ONS data suggested that Wales had the lowest growth rate of any UK region in the first quarter of 2019, at -0.5%, although they did caveat this. On tax bands, HM Revenue and Customs data showed that Wales had the joint lowest proportion of taxpayers in the UK on the additional and higher rates, and the joint highest proportion on the basic rate for countries and regions in the UK in the year 2019-20.

The ONS figures on household disposable income are clear that for countries and regions of the UK, on a per-head-of-population basis in 2017—the latest date available—again Wales was the poorest region. Households Below Average Income, a government publication, examined the percentage of individuals living in low-income households by region and county in 2015-16 to 2017-18. On one measure Wales has the joint highest proportion of such households and, only because of the higher costs of housing in London, the second highest after London on another. Whatever indices of deprivation we take, Wales is at the bottom of the table. That is the context about which we should be ashamed and which we should trumpet as representatives of Wales in this Chamber.

There is therefore deep concern in Wales about the effect of the move from structural funds to the proposed prosperity fund. I commend to the Government two recent publications on this issue. The first is the initial report from the APPG on Post-Brexit Funding for Regions, Nations and Local Areas on the UK shared prosperity fund and the Industrial Communities Alliance on the UK shared prosperity fund. The concerns raised have already been mentioned in a very consensual debate. On the assessment of the criteria, like the EU fund that was based on the additionality principle, which has already been raised by other noble Lords, including my noble friend Lord Murphy, the new fund needs to be outside the Barnett formula, which disadvantaged Wales. The annual budget of the fund should be no less in real terms than the EU and UK funding streams that it replaces and fundamentally should operate on the basis of multiannual allocations of the longest practical duration to give a degree of confidence in long-term planning.

Other questions are related to the management of the framework and partnership, which was a point made by the noble Lord, Lord Bourne. The devolution settlement should be respected and the opportunity taken to change it within the spirit of the Government’s recent pronouncements on the importance of the regions and nations. The Government should transfer responsibility for the detailed design and delivery on the agreed guidelines to the Welsh Government, and local authorities should be engaged. It will be interesting to learn from the Minister how he sees the Welsh local authorities fitting into the structure.

My conclusion is clear: there is clearly now a fork in the road—either we proceed to greater centralisation of funds or greater devolution. This is surely a golden opportunity for the Government to show greater flexibility—certainly flexibility beyond the Barnett formula—greater initiative and a greater faith in the governance of Wales by the Welsh Government.