Shared Prosperity Fund: Wales

Ben Lake 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?

[Mr Philip Hollobone (in the Chair)]

Order. I call Jo Stevens.

--- Later in debate ---

[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.

[Ben Lake]

On the spending review, should we be concerned that it seems that responsibility for this fund has been given to the Ministry of Housing, Communities and Local Government, rather than the Treasury? Might that suggest that it is not as big a pot of money as we would hope?

[Nigel Adams]

I certainly do not write the comprehensive spending review—well, not yet. I ask the hon. Gentleman to bear with, to coin a phrase. I do not think he has anything to be concerned about in terms of MHCLG being involved in this process—it is only right that it be involved.

In the time I have left, let me turn to specific points raised by hon. Members. In his eloquent speech, the hon. Member for Wrexham spoke passionately about his constituency and his area of north Wales. He asked whether the same rules would apply across the UK. We will absolutely respect the devolution settlement and work with the devolved Administrations. As I said, we are committed to consulting before the end of the year—in the next few weeks—and people will have that opportunity to set out their views on the fund.

The hon. Gentleman rightly commented that the system has not always worked as well as he had hoped. He said that investments had not always delivered the expected return in gross value added terms, that some EU funding had not worked particularly well for Wrexham, and that there had been a bit of a missed opportunity. That is absolutely right. That is why we should have this debate, and why we should all contribute to the consultation.

The hon. Gentleman and the hon. Member for Aberavon, whom I thank for his work on the all-party parliamentary group on post-Brexit funding for nations, regions and local areas, said decisions should be made locally. They both made very valid points in that respect. In my view and that of the Government, EU exit provides an excellent opportunity to reconsider how funding for growth is delivered across the UK. The consultation will be a great opportunity to start that conversation.

The hon. Member for Ceredigion (Ben Lake) and others asked when we would publish the details of the fund. As I said, we will do that in the next few weeks, before the end of the year. We are absolutely committed to that. That will give everyone across the UK the opportunity to contribute their views, and to help those views to form Government policy on this issue. Decisions on the actual spending will be made in the spending review next year.

I would have liked to respond to one or two other hon. Members, but I want to give the hon. Member for Wrexham the opportunity to respond to the debate. I thank everyone for contributing. We want an economically strong Wales in a prosperous United Kingdom. Working alongside the Welsh Government through the shared prosperity fund, we can ensure that becomes a reality.