Wales: Regional Development Funding

Debate between Stephen Kinnock and Carolyn Harris

Tuesday 7th May 2019 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab)]

I beg to move,

That this House has considered the future of regional development funding in Wales.

It is a pleasure to serve under your chairmanship, Sir Graham. I take this opportunity to welcome the Minister to his place. I have lost count of how many have preceded him. I have not counted how many days he needs to get through to exceed his predecessor, but I am sure that one of my colleagues will work that out as we speak. We wish him well and we wish him good luck—he is going to need it.

Regional development funding has been absolutely critical in boosting less prosperous areas across the United Kingdom, including in Wales. It is crucial in an era in which the divides in terms of wealth and prosperity in British society are so evident for all to see. We are witnessing a growing trend whereby our cities attract investment, create wealth and offer high-quality jobs, whereas our smaller towns are left behind or, worse still, buffeted by the winds of globalisation without any real support from the UK Government.

That has been the story of the last 40 years. UK Governments have stood by and watched the forces of globalisation and new technology destroy our industrial base and decimate our high streets, and they have been intensely relaxed about the impact of those changes on the pride, identity and prosperity of constituencies such as mine and others across Wales and the United Kingdom. First, Margaret Thatcher sold out the miners across south Wales, the English midlands and northern England, offering no state support to those who needed it to retrain in other fields. Then, although new Labour injected much-needed investment into our public services, it did not manage to deliver fundamental structural reform through a bold, radical industrial strategy. Then came Osborne-omics, which inflicted utterly self-defeating austerity on the areas that could handle it least.

As a result of this triple whammy, manufacturing has collapsed, from 30% of UK GDP to just 10%, since the 1970s. In comparison, Germany’s manufacturing base has remained stable, at 23% or above. The vast differences between the UK and German experiences of the last 40 years demonstrate conclusively that globalisation is not an unstoppable force of nature; it is a man-made phenomenon. The repeated failure to harness globalisation and make it work for our communities was caused not by force majeure but by repeated failures of political leadership.

The collapse of our manufacturing base has of course led inexorably to our skills and productivity crises. No recent Prime Minister has come up with any kind of half-decent strategy to support the so-called forgotten 50% who do not go to university or get good jobs and training. For those graduates living in the big cities, the last 40 years have delivered wealth, opportunity, diversity and the excitement of technological change, but non-graduates who live in our towns and villages have simply been ignored and left behind. Younger, diverse cities full of graduates continue to thrive; older, smaller towns with close-knit communities of non-graduates continue to suffer. Wales is a case in point. Despite the efforts of the Welsh Government—I will come to the vital support the Welsh Government have delivered for constituencies such as mine—many parts of our great country have experienced hardship due to inept government at the UK level.

The gap in GDP between Wales and London makes the UK the most unbalanced EU member state in terms of regional economic disparities—a truly shocking statistic that shows the size of the challenge we face if we are to reduce inequality and spread opportunity. In Aberavon, we have had absolutely no regional development support from Westminster. The Swansea bay tidal lagoon would have put south Wales at the forefront of a 21st-century industry, marrying our desperate need to produce more green energy with the creation of genuinely high-quality jobs across the region.

Wales was the cradle of the first industrial revolution, and we could have been the cradle of a new, green revolution, but the Tory Government ran scared, spending £1 billion to buy the votes of each Democratic Unionist party Member but not a single penny for a long-term strategic infrastructure project that could have boosted wealth and opportunity for my constituents and so many across south Wales. I cannot help wondering whether that £1 billion would pass a value for money audit, given the voting behaviour of the DUP over recent months, but I digress.

The tidal lagoon decision followed hot on the heels of another broken promise: to electrify our railway lines. That promise made it only as far as Cardiff, with the line down to Port Talbot and Swansea still firmly embedded in the 20th century. With everything the Transport Secretary has achieved in his quite remarkable tenure, it feels that too little attention has been paid to this kick in the teeth for Welsh commuters and travellers and for the Welsh economy. Maybe handing a £50 million ferry contract to a company with no ferries was in fact a cunning plan to distract us from the fact that the Government he represents were holding Wales in contempt.

Thankfully, where the UK Government have failed, other tiers of governance have stepped in to give the Welsh economy a much-needed boost. The Welsh Government and local councils have combined to deliver so many crucial projects, but many have relied on the funding that we receive from the European Union—the EU structural fund.

[Carolyn Harris (Swansea East) (Lab)]

Although the Swansea bay campus is in my hon. Friend’s constituency, the £60 million EU investment in it has benefited my constituency incredibly. Does he agree that, given that we have missed out on the tidal lagoon and electrification, we now deserve assurances from the Government that structural funding will come to our region and to our communities?

[Stephen Kinnock]

I agree with every word. As I will come on to, the key point is that we must not receive a penny less; there must not be any sleight of hand in the shift from EU structural funding to the shared prosperity fund.

EU structural funds are distributed to regions throughout the European Union based on their relative GDP. Areas where GDP per capita falls below 75% of EU GDP are placed in the first tier, and therefore receive the maximum funding. The poorer the region, the higher its priority and the more funding it receives. West Wales and the valleys is ranked as a region of the highest priority, and therefore received £2 billion for the 2014-20 cohort. No other area of the UK received more than £750 million, showing the scale of the challenge for the economy in that area of Wales. We are talking about a serious amount of funding here.

Like much of Wales, my Aberavon constituency has benefited hugely from European money, and from the strong vision and partnership working formed between the Welsh Government and our local Neath Port Talbot Council. Take, for instance, the new integrated transport hub—a Neath Port Talbot Council project in partnership with the Welsh Government, using EU money—or the sunken gardens and toddlers’ play area on Aberavon beach, which is a Neath Port Talbot Council project using EU funding granted by the Welsh Government.

There are more, from the bay campus, as my hon. Friend mentioned, to the Croeserw community enterprise centre, to the Cognation mountain bike trails in the Afan valley, to the Port Talbot magistrates court regeneration project. Those projects would not have been possible without European funding and strong political leadership of a type we see consistently from the Welsh Government and our local councils, but too rarely from Westminster. That is why Brexit raises a number of concerns regarding the future of regional development funding.