Wales: European Structural Funds

Lord Thomas of Gresford Excerpts

Wednesday 5th February 2020 Lords Chamber

[Lord Thomas of Gresford (LD)]

My Lords, it was a particular pleasure to read in the Sunday Times last weekend a tribute to the noble Lord, Lord Jones, which was much deserved. It is a real pleasure to follow him in this debate, and I congratulate the noble Lord, Lord Wigley, on obtaining it. I thank noble Lords for the good wishes that have been expressed towards me. I am sorry that I am still in a sedentary position but it will not be for long.

The “shared prosperity fund” has a comforting sound. It is a good choice of title; it assumes prosperity. However, as the devastating analysis of the noble Lord, Lord Anderson, has made clear, it is not a familiar concept in west Wales and the valleys or in other parts of Wales. Perhaps it is better than, for example, “the pork barrel fund” or the “red wall repainting project”, which we might have expected. If there are objections to my capricious titles, I point out that the only thing that we really know about the shared prosperity fund, which in 11 months’ time is to take over the vital support that Wales receives from European structures, is its title. Its design and proposed functions remain cloaked in mystery.

On 30 January 2019 Mr Jake Berry told the Commons that

“The Government recognises the importance of … providing clarity on UKSPF. Therefore we intend to publish the public consultation shortly.”


“Clarity” is the word that my noble friend Lady Humphreys used a moment ago. The concept of the shared prosperity fund is squarely down to Mrs Theresa May; for once we cannot blame Dominic Cummings. She put it in her very personal 2017 manifesto:

“We will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund … We will consult widely on the design of the fund, including with the devolved administrations, local authorities, businesses and public bodies. The UK Shared Prosperity Fund will be cheap to administer, low in bureaucracy and targeted where it is needed most.”


Mrs May came to Gresford Memorial Hall, of all places, to launch the 2017 Welsh Conservative campaign, in the wake of her sharp change of direction on the dementia tax. There it was that she coined the famous phrase “Nothing has changed. Nothing has changed.” My wife—my noble friend Lady Walmsley—and I found ourselves under close scrutiny in an all-blue audience when we chanted “Oh yes it has” in reply. We had heard of the Prime Minister’s visit with only half an hour to go and muscled in past the young men in blue suits. Indeed, the local press termed the PM’s visit the “stealth visit”, since it had had no advance notice of her descent upon Gresford—although it was later reported that the police had warned our local Spar that very morning not to sell eggs or flour.

Curiously, all references to the shared prosperity fund have disappeared from Mr Johnson’s 2019 manifesto. Not surprisingly, the promise of wide consultation on the design of the fund has not been fulfilled. We have not seen the consultation document. In his speech, the noble Lord, Lord Bourne, commented that we need consultation soonest and I agree. The issues have been well aired in this debate. First, how much of British taxpayers’ money is involved?

The APPG on Post-Brexit Funding for Nations, Regions and Local Areas published a note of its calculations last June. It pointed out that EU funding will cease as from 1 January 2021, deal or no deal. Over 2021-27—a period of seven years equivalent to an EU funding period, and taking into account expected inflation over that period of 12.5%—it calculated that to replace European structural funds would require a shared prosperity fund of £1.79 billion. That figure includes £215 million for extra funding which would have come from the EU because of additional sub-regions in England being involved.

Once the Government have decided the size of the fund, the second question is: how will it be shared out? The Barnett formula, described very correctly by the noble Lord, Lord Bourne, as a blunt instrument, has rightly been criticised by the Institute for Fiscal Studies in its report prepared for Preparations for Replacing EU Funding for Wales, a report by the Finance Committee of the Welsh Assembly. It said that

“the formula has design flaws which mean its use in the allocation of funding to replace current EU schemes should be avoided. In particular it takes no account of differences in population growth, or differences in the initial levels of funding.”

For that reason, the noble Lord, Lord Wigley, called for a separate system from the Barnett formula. I promise to read page 113 of the autobiography of the noble Lord, Lord Murphy, to fully grasp the additionality principle about which he spoke.

The issue which rightly concerns the Welsh Government is that decisions in devolved matters as to how the shared prosperity fund is spread should be determined in Wales, a point made by my noble friend Lady Humphreys. It would not be acceptable that Whitehall should control the purse strings. As Mark Drakeford, the First Minister, put it:

“We explicitly and vigorously reject any notion of a UK centralisation of regional economic development policy. A UK Government ‘shared prosperity fund’ approach would be a direct attack on devolution and would risk depriving some of our most disadvantaged communities of the funds they need to develop economically. This would be contrary to the UK commitment that leaving the EU would not leave Wales worse off.”


I agree: European structural fund money has been allocated to Wales on the basis of a recognised needs-based allocation formula. Whitehall did not get involved, save perhaps to pass the money on. Applications for the funding of projects have been made accordingly to the Welsh Government, who have had the flexibility and organisation to define the type of project to be supported: in other words, to determine where the money can best be spent.

In the future, the UK Government should do no more than draw up very broad guidelines, with the consent of the Welsh Parliament, but they should avoid rules which would restrict the Welsh Government from carrying out their devolved responsibilities. On 15 January the Secretary of State, Mr Simon Hart, said that the SPF was

“a joint UK Government-Welsh Government initiative”—[Official Report, Commons, 15/1/20; col. 1007.]

and that they would be, as he put it, resetting the meter of their relationship. Will the Minister, who I too welcome to the Front Bench for this debate, kindly tell us what he means? I join my noble friend Lady Humphreys in also asking: when can we expect to see the consultation document promised over a year ago? We have less than 11 months left to sort it out and, as the noble Lord, Lord Anderson, said, it is a question of trust.