Shared Prosperity Fund: Wales

Lord Khan of Burnley Excerpts

Wednesday 4th December 2024 Lords Chamber

[Baroness Wilcox of Newport]

To ask His Majesty’s Government what progress they have made towards giving decision-making over the allocation of the Shared Prosperity Fund to democratic representatives in Wales, as set out in the Labour Party Manifesto 2024.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)]

This Government are committed to restoring relationships with devolved Governments and showing the utmost respect to the devolution settlement. We are working closely with the Welsh Government to discuss our commitment to restore decision-making on structural funding to representatives of Wales. My noble friend will be pleased to hear that my colleague, Minister Alex Norris, will meet his ministerial counterpart in the Welsh Government this week to discuss this very important issue.

[Baroness Wilcox of Newport (Lab)]

I thank the Minister for that Answer, because the era of doing things to Wales, rather than with Wales, is surely at an end. When will proper devolved decision-making reflect both our distinct Welsh needs and UK-wide objectives? While I am on my feet, let me say llongyfarchiadau mawr—many congratulations—to the Wales women’s football team on reaching the Euro 2025 finals and making history.

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[Lord Khan of Burnley (Lab)]

My Lords, I add my congratulations to the Wales women’s football team on reaching the Euro 2025 finals.

My noble friend makes a very important point. Having worked alongside her for many years, I have deep respect for her passion for the prosperity of local government in Wales. This Government know that uncertainty about local allocations is causing concern for our partners in local government. My department is working tirelessly to confirm local allocations and we intend to publish them shortly. I am pleased that we have been able to announce that the fund will continue for a further year. This transitional arrangement will provide a period of stability in advance of wider local growth funding reforms beyond March 2026, when we will work with the Welsh Government to honour our manifesto commitment to return decision-making on these funds to representatives of Wales.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, llongyfarchiadau i chi on bringing football into this Chamber—a rare event these days, of course. The shared prosperity fund was a central part of the Conservatives’ levelling-up agenda, which involved the allocation of funds to elected local authorities, which know their communities best. Given that the shared prosperity fund already works with local authorities throughout Wales, what benefit will be achieved by extending decision- making powers to Senedd Members, who are not always known for their sensible financial decision-making?

[Lord Khan of Burnley (Lab)]

My Lords, I politely disagree with the noble Baroness. The previous Government funded many local growth programmes, including the UK shared prosperity fund. However, they did not make adequate provision in the Budget to do so. This Government have been clear that they will take the difficult but responsible decisions to ensure we fix the foundations of our country’s finances and, more importantly, meet the commitment in our manifesto. From March 2026, we will work with our Welsh Government counterparts to ensure that the allocation of that money is decided by people in Wales.

[Lord Watts (Lab)]

My Lords, the previous Government announced a levelling up fund, but we saw a lot of words but no funding. Will this Government’s attempt to level up be more successful in getting more resources to the regions that need them?

[Lord Khan of Burnley (Lab)]

My noble friend raises an important point. Many aspects of levelling up did not work, not just in Wales but across the United Kingdom. The Government are having a transitional year, during which we will work with our Welsh Government counterparts to ensure what is best for local projects and local communities. As for the future, the answer is yes: we will ensure that the Welsh Government have enough time to plan and decide on structural funding so that they have the best ability to put the money into their local communities.

[Baroness Humphreys (LD)]

Llongyfarchiadau mawr i dîm merched Cymru o’r beinciau yma hefyd—congratulations to the Welsh team from these Benches as well. I draw your Lordships’ attention to my registered interests. I thank the Minister for his announcement. It will bring some clarity about what will happen to the voluntary sector in Wales in the next 12 months. There has been uncertainty, added to which the third sector will be hit by the NICs rise, which will lead to higher costs that will need to be covered in any follow-up funding. Will the Minister ensure that the input and involvement of the third sector is sought through the NCVO and the WCVA, and that multiple-year funding agreements are in place to ensure the continuation of vital projects?

[Lord Khan of Burnley (Lab)]

My Lords, the noble Baroness makes an important point. The short answer is yes: we will ensure that our counterparts in Wales have those discussions. I will pass the message on to my honourable friend in the other place so that the third sector is also a part of his discussions with the Welsh Government on how we can work closely together as central government, devolved government and the third sector.

[Baroness Smith of Llanfaes (PC)]

My Lords, at present, Wales gets 23% of the shared prosperity fund. If the SPF is included in local government funding in England, this risks money being redirected through the Barnett formula. Will the Minister agree that a needs-based formula is better than a population-based formula for funding?

[Lord Khan of Burnley (Lab)]

I understand the noble Baroness’s point. However, we have to recognise that there were no plans from the previous Government for the funding going to the devolved Governments. We have brought in a transitional year to prepare for post March 2026. All these conversations are yet to be had. I cannot make any particular comment on them, but I will come back to the noble Baroness once we finalise our proposals for after March 2026.

[Lord Evans of Rainow (Con)]

My Lords, can the Minister give a definition of shared prosperity? Can he enlighten the House on what role private sector business will have in that shared prosperity in Wales?

[Lord Khan of Burnley (Lab)]

I thank the noble Lord. As I said to the noble Baroness, Lady Smith, we are having discussions with all counterparts. However, it is important to recognise that people in Wales will have a huge say on how that money will be invested in terms of local growth, businesses and working together in partnership.

[Lord Hain (Lab)]

My Lords, I associate myself with my noble friend Lady Wilcox’s question, including her congratulations for our magnificent Welsh women footballers. Does the Minister agree that the previous Conservative Government penalised Wales massively, including by pretending that the shared prosperity fund could somehow substitute for European Union economic funding? Taken together, the £243 million loss of rural EU funding and the £772 million shortfall in EU structural funds add up to more than £1 billion. So much for making Brexit work; for Wales, it has been absolutely disastrous.

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[Lord Khan of Burnley (Lab)]

My Lords, I agree with my noble friend. The previous Government made no plans for the UK shared prosperity fund past March 2025. We will extend the fund for a transitional year. Many local growth programmes, including the UK shared prosperity fund, were funded by the previous Government despite them not making adequate provision in the Budget to do so. This Government have been clear that they will take difficult but responsible decisions to fix the foundations of the country’s finances.

[Lord Harlech (Con)]

My Lords, I declare my interest as a business owner in Wales. You cannot have prosperity without good infrastructure. Since 2023, the Welsh Government have cancelled all roadbuilding projects. I have asked this question before: will the Minister seek to have discussions with his Senedd counterparts about getting some of those roadbuilding projects going again?

[Lord Khan of Burnley (Lab)]

I have great admiration for and friendship with the noble Lord from the previous Government, when I was an Opposition Whip and he was a Whip. These are the conversations that my honourable friend Alex Norris MP is currently having, so I would not like to pre-empt them. I will also be visiting Wales to meet my counterpart in my portfolio, and I will raise that particular point.

[Baroness Hayter of Kentish Town (Lab)]

We look forward to welcoming the Minister to Wales. Can he say, more broadly than the fund, what action the Government are taking to spread growth and prosperity more evenly across Wales?

[Lord Khan of Burnley (Lab)]

My noble friend makes an excellent point. The UK Government are committed to addressing regional inequalities and supporting growth across the whole of the UK. Through the Council of the Nations and Regions, we will address this, working with devolved Governments. As well as the shared prosperity fund, we are taking other initiatives. For example, we will continue to support the four city and growth deals which cover the whole geography of Wales. Through the freeports and investment zones programme, we are delivering significant economic interventions into each corner of Wales, with freeports established in the north-west and south-west of Wales, and great progress has been made on establishing investment zones in north-east and south-east Wales. When I visit Wales, I promise that I will learn a few words of Welsh.