Shared Prosperity Fund: Wales

Albert Owen Excerpts

Wednesday 14th November 2018 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

Diolch, Mr Hollobone. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Wrexham (Ian C. Lucas) on securing this important and much-needed debate. Those of us representing constituencies in Wales will be all too aware of the importance of regional and structural funding schemes, and consequently that the design of the new shared prosperity fund will largely determine the prospects for our communities for decades to come. It is essential, therefore, that the new fund serves the people and communities that we are elected to represent.

Almost four months have passed since the Secretary of State for Housing, Communities and Local Government confirmed in a written statement the UK Government’s commitment to the UK shared prosperity fund. The days are getting shorter, the autumn Budget has passed and, if nothing else, Christmas will soon be upon us, yet we are still awaiting quite basic details about the new fund. What will the total quantum be? When, and how, will the funds be allocated? What activities will be eligible for support, and which bodies will oversee the decisions?

As has already been mentioned, at present west Wales and the valleys receive a significant amount of funding, as our low GDP per head qualifies us as a less developed region. Over the current cycle, Wales will receive approximately £2.7 billion from European structural funds. A majority of the Welsh population—63% to be precise—lives in this less developed region of west Wales and the valleys, where the funding goes a long way to sustaining the rural and underdeveloped economy.

While it is good that regional and structural funding programmes have been available to us, it is nevertheless a shame that our constituencies have continued to qualify for them. That is not surprising, of course, when we consider that, on the whole, UK economic development has typically focused attention and investment on urban centres, and priorities for rural areas have amounted to little more than improvement of existing connections between the countryside and the cities, so as to accelerate the trickle of prosperity from the economic engines and powerhouses to the rural periphery. The result is that the productivity of rural areas is consistently below the UK average, in stark and rather depressing contrast to that of larger towns and cities.

As the MP for Ceredigion, and as there are few signs of there being a change to UK economic strategy in the near future, I must stress that whatever the methodology used by the new shared prosperity fund, Wales must not be left financially worse off. If rumours are to be believed, and the shared prosperity fund is also to finance other responsibilities such as the old pillar two programmes of the common agricultural policy, for example, its budget will need to be proportionally larger so as not to constitute a real-terms cut.

[Albert Owen (Ynys Môn) (Lab)]

The hon. Gentleman is making an important point. We should put it on the record that the funds should not be put through the Barnett formula, but should be protected at the current European level.

[Ben Lake]

I agree wholeheartedly with the hon. Gentleman. If the Barnett formula were applied to the shared prosperity fund, that would be nothing short of a disaster for our communities. We need to make sure that whatever the methodology, it is focused on the need of communities, rather than on simple population share.

I must labour the point: if the fund is to be used for other responsibilities, it cannot be reduced to a convenient tool for hard-pressed Departments to realise budget efficiencies via consolidation. The funding will be a lifeline for our communities, so it must provide Wales with no less, in real terms, than the total allocated by the EU and UK funding streams it replaces.

Furthermore, I believe the UK shared prosperity fund must operate on multi-annual financial allocations of at least seven years. Inconvenient though that may be for the Treasury’s spending review cycles, it would allow recipient organisations and groups the time for proper planning and implementation of larger scale and transformative projects—the types of project needed seriously to ratchet up jobs, wages and living standards in constituencies such as Ceredigion. We cannot settle for mere tinkering around the edges. What is required is a programme that allows for substantial and prolonged investment, so that our areas are no longer less developed and eligible for such assistance.

As the hon. Member for Caerphilly (Wayne David) mentioned, in terms of the shared prosperity fund’s administration, important aspects of economic development are devolved, so the Welsh portion of the new fund should be devolved to the Welsh Government, potentially, as the hon. Member for Ynys Môn (Albert Owen) just mentioned, as an additional, separate block grant from the Treasury, so that we may bypass the Barnett formula.

Time is against me, so I will conclude with a question to the Minister, who I welcome to his place in the Welsh Office. Will he guarantee that the UK shared prosperity fund will be, in real terms, at least equivalent to the funds that it is replacing, and that its budget will be proportionally increased if other EU—or, for that matter, UK—competencies are to be blended into the fund?

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[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Hollobone. I welcome the Minister to his place and congratulate my hon. Friend the Member for Wrexham (Ian C. Lucas) on securing the debate. I am disappointed that the hon. Member for Monmouth (David T. C. Davies)—the Chair of the Welsh Affairs Committee—chose to talk about other things when the topic of the debate is so important for the future of Wales.

My constituency has been a major beneficiary of both European structural funds and the European regional development fund. In the 1980s, my constituency had twice the national average of unemployment—mass unemployment and mass depopulation, which is why it qualified with low GDP for European structural funds. Objective 1 has been a success in my area and it has helped repair communities through its social cohesion funds. It has also helped port communities with infrastructure—the main gateway between Wales and the rest of Europe—and helped the agricultural, food and farming sector.

As my hon. Friend the Member for Cardiff Central (Jo Stevens) said, the further education and higher education sectors have also been major beneficiaries. There have been real, tangible outcomes in my constituency, such as energy centres, food technology centres and job creation, and Wales and the valleys are benefiting from this.

However, we still need to reflect on how we are going forward, because my area is still a low area of gross value added—GVA—and that needs to change. That is why we need a further commitment from the Government for post-2020: that the circumstances will not change and that there will be real growth. Unemployment in my area is now below the national average, when in the 1980s it was double the national average. That is job creation helped by European structural funds—real people benefiting from real jobs in my area. That is why I am a big supporter.

Even today, we have great investment coming in. In 2015, we had a brand-new, state-of-the-art, innovative science park, which was part funded by the Welsh Government and attracted private investment, but it would not have been possible without the grant from the ERDF. In 2017, we got a business park at Llangefni, which now works closely with colleges and universities to ensure that we get top-quality jobs coming to my area. Again, that did not happen in the ’80s, before the structural funds were put in place in the ’90s. A tourist package worth £1.7 million will help the port of Holyhead, which was damaged by storm—again, some of that money comes from the European social fund. It is a good thing. Energy companies are investing in my area, such as Minesto from Sweden, and a not-for-profit organisation has been set up—an indigenous company in Wales—because of ERDF funding.

[Ian C. Lucas]

Does my hon. Friend agree that the determination of companies and institutions throughout north Wales to work together is a massive attraction to outside businesses to come to our area? We have shown that we work very effectively together and can plan the north Wales growth bid.

[Albert Owen]

Absolutely. That is the next point that I want to move on to. I am a strong supporter of devolution—I have fought for it in referendums, and I have seen its enhancement—but devolution is no good just going from Whitehall down the M4 to Cardiff Bay. It needs to go throughout the areas of Wales, including to north-west Wales and north Wales generally. Real devolution is about empowering people in their local communities. My hon. Friend is right: we have a structure in the north Wales growth bid. We have a board set up, with business and local authority representatives, and they have the ability to be a mechanism for distribution of the new growth fund in the future. I hope that the Minister will take that on board. I know that he is visiting my constituency in north Wales shortly, and he will hear about that.

I want to quote the remarks referred to by the hon. Member for Ceredigion (Ben Lake), in which the Secretary of State for Housing, Communities and Local Government stated:

“The UK Shared Prosperity Fund will tackle inequalities within communities by raising productivity, especially in parts of the UK whose economies are furthest behind…It will have simplified administrative arrangements aimed at targeting funding effectively; and…It will operate across the UK. The UK Government says it will respect the devolution settlements in Scotland, Wales and Northern Ireland, and will engage the devolved administrations”.

I want those words to be put into action. I want the new Minister to take that on board and to work with us, as Welsh Members, to ensure that areas such as mine continue to grow and will benefit from the shared prosperity fund. I do not want to see this Government pull the rug from under the feet of the poor communities, education communities and farming communities that have benefited since 2000. Europe based its European structural funds on need, and that is what we need: to establish the needs of areas throughout the UK, including periphery areas such as the one that I represent, to show that we will go forward, that we do share prosperity and that we share it at a pace equal to that in the south-east of England. At the end of the day, we want a more equal society, economically and socially.

[Mr Philip Hollobone (in the Chair)]

We now come to the Front-Bench speeches, and the guidelines are five minutes for Her Majesty’s Opposition, 10 minutes for the Minister and the remaining time Mr Lucas may use to sum up the debate.

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[Albert Owen]

I am not criticising the Minister, because he has only been in the job a short time, but it is the duty of Wales Office Ministers to stand up for Wales. We are having this debate to put pressure on him, so that the Welsh voice is heard loud and clear in this debate. It is not for others to decide; it is for Government to decide, and he is our voice in that Government.

[Nigel Adams]

I completely agree. I see myself as a champion for Wales in Westminster. That is incredibly important and must be my priority. I cannot tell the hon. Gentleman the exact date, but I can say that it will be this year, which indicates that it will be incredibly soon. I hope he takes me at my word when I say that the consultation is about to start.

Given the significance of the shared prosperity fund, it is right that questions about the size, structure and priorities for investment develop as we approach next year’s spending review, which will determine the amount of money that will be discussed.