Wales: European Structural Funds

Lord Davies of Gower Excerpts

Wednesday 5th February 2020 Lords Chamber

[Lord Davies of Gower (Con)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Anderson of Swansea, who has a long and distinguished career as a politician. Indeed, as a teenager growing up in Gower, I followed him with great respect and interest. As a new Member of your Lordships’ House, it is a real privilege to follow such experienced voices from Wales. I congratulate the noble Lord, Lord Wigley, on securing this important debate.

It is clear that some replacement must be created to fill the gap left in the Welsh infrastructure budget by the withdrawal of the UK from the European Union; indeed, it is essential. It is key to define what current structural funds are intended for when we think about what form their replacement will take. There are two strands of funding: the European Regional Development Fund and the European Social Fund, which were designed to strengthen economic and social cohesion between the regions of the EU and to support workers across Europe. I see no reason why the principle of these funds should change. I therefore support the Government’s plans to move towards a shared prosperity fund, funded to similar levels by the money we would otherwise have sent to Europe. Wales still has important and unfinished infrastructure projects, so this funding is still vital to local communities there. However, instead of integration with the EU, the purpose of new funds should be to connect Wales more efficiently with the rest of the United Kingdom.

There has been some question—indeed, debate—over the method which will be used fairly to distribute the shared prosperity fund across the country. Wales will no doubt be following the outcome of those deliberations with great interest, as we currently receive the largest share of infrastructure funds. However, to my mind, speaking from my perspective as a humble citizen of Wales, it does not really matter if the Government use the Barnett formula or any other formula; all that simply matters is that levels of funding are maintained and that Wales receives its fair share of UK prosperity.

Turning to the real crux of the debate, the main question being posed here is about who will inherit the responsibility for administering this funding. Will it be a UK Government matter or will be up to the Welsh Government to prioritise? Currently, the allocation of funds is decided by the European Commission, while member states and their regions implement and manage the programmes. The Commission is then involved in overall programme monitoring, pays out approved expenditure and verifies the national control systems.

After Brexit, I see the UK Government and the Westminster Parliament fulfilling this role in relation to Welsh funds, with the Government replacing the Commission and the devolved Assemblies taking on the role of member state Governments in the current structural funding system. The Welsh Government would propose projects to receive shared prosperity funding and collaborate with the UK Government on the administrative details. The Welsh Government would then implement these projects in conjunction with the national Government.

Having been a Member of the Welsh Assembly for quite a few years, I know first hand its importance. It is entirely right that as a devolved institution, it should have the power to access and administer infrastructure funding. However, being in Welsh politics for some time now has given me real insight into the limitations of the current Government in Cardiff Bay. I cannot allow this debate to pass without mentioning that in recent years, funding rightfully allocated to Wales has in a number of cases been squandered through inefficient practices. Yes, there have been many successes, which the noble Baroness, Lady Humphreys, spoke of, but I can think of many examples of EU structural funds being mismanaged, leading to delays, overspend and misery for residents. The A465 Heads of the Valleys road scheme proudly displays signage indicating that the project received funding from the European Union. Poor oversight has meant that the project is now facing embarrassing delays and an overspend of £51 million. I could mention many more things, but I do not think there is sufficient time this evening. I could talk about the £221 million spent on uncompetitive enterprise zones, the £50 million propping up Cardiff Airport and other issues associated with mismanagement. In all, Welsh Conservatives estimate that the Labour Welsh Government have wasted more than £900 million on various infrastructure project overspends over the past 10 years.

Despite all this, the Welsh Minister for Economy and Transport, Ken Skates, said only last week that his Government want more powers over rail infrastructure. This clearly shows that they have ambitions for greater autonomy over funding of the infrastructure projects, which would be bankrolled by a replacement for EU structural funds. I raise this simply to caution the Government on the manner in which they administer responsibility. I am keen to discover from the Minister how this can be safeguarded against. It is vital that structural funding carries on in some form post Brexit. It is also important that the Welsh Government have a say in where this funding is allocated. However, Westminster and Cardiff must work together in partnership to deliver projects that deliver for communities. After all, the most important thing is to deliver for needy communities in Wales, for whom this funding is crucial.