10. 9. Debate on the External Affairs and Additional Legislation Committee's Report on their ‘Inquiry into the future of regional policy — what next for Wales?’

Part of the debate – in the Senedd at 3:36 pm on 27 September 2017.

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Photo of David Rees David Rees Labour 3:36, 27 September 2017

Our first set of recommendations looked at the immediate challenges for the current funding round. Members will be aware that in autumn 2016, the Chancellor of the Exchequer guaranteed funding for projects until 2020, and we as a committee were unequivocal in our support for this. The picture is less certain, however, when it comes to threats posed by currency fluctuations post Brexit. Whilst it was heartening to hear that the Welsh Government, working with the Welsh European Funding Office, has been able to mitigate some of the risk posed by currency fluctuations, we believe it is incumbent upon the Welsh Government to ensure that the risks posed by this are constantly monitored and assessed, as we already know that currency goes up and down quite easily, and is, at the moment, down.

During our inquiry we looked at the case for a new regional policy after Brexit. The available data paints a sobering picture and shows us that the United Kingdom is the most unequal country in the European Union. We believe that the case for a future regional policy for Wales, with funding made available to us on the basis of objective need, is unequivocal. One of the many areas that we all agreed upon is that Wales should not be any worse off as a consequence of leaving the European Union than we would have been if we had remained in the EU. However, the big question is: how do we achieve that? Not only should those who were on the ‘leave’ side of the referendum campaign make good on their promise of new funding for Wales after we leave, but politicians from all sides and from all nations of the UK must come together to agree a new needs-based formula for the allocation of funding for the purpose of regional policy. We believe that this is the best guarantor of equity, equality and fairness between the UK’s constituent parts.

The Cabinet Secretary, in his response to us, alludes to the work that is being undertaken behind the scenes to press the UK Government on a replacement for funding after we leave the EU. Perhaps he could shed light on how those discussions are actually progressing when he rises to speak in this debate afterwards.

Recommendations 7, 8, 9 and 10 all looked at how we evaluate the effectiveness of past experience in order to inform the future. As a committee, we felt that it is critically important—that we make the most of the opportunities to design future policy in ways that maximise the benefits for the people of Wales. We recognised that, in the three tranches we’ve had so far, we have seen different levels of success. This does include also looking at a broader range of indicators than solely economic indicators. It also means that we can look across the globe for best practice. And it was heartening to see that, in his formal response to our report, the Cabinet Secretary is amenable to this concept and open to adopting experimental approaches.

The Cabinet Secretary also makes reference throughout his submission to the Welsh Government’s forthcoming paper on the future of regional policy. I would therefore ask whether the Cabinet Secretary can give us an idea of the timescales for the publication of this work, because his response indicated ‘in the autumn’, and I would be grateful for further clarification on that particular point.

We heard concerns during the inquiry about the complexity of the landscape for the delivery of regional policy, and recommendations 11 and 12 relate to this. Brexit gives us an opportunity to look again at the delivery models for regional economic development. The current landscape, described as a ‘spaghetti junction of layers’ by one witness, in our view must be simplified after Brexit. And whilst, in recommendation 13, we agree that the Welsh Government retains strategic oversight for this future policy, it is essential that future policy is responsive to local needs as much as possible. This should include ensuring that rural areas, not covered by the recent introduction of the city deals, are given a role in shaping policy in the future.

In terms of future approaches, we heard about the importance of productivity and innovation. The past performance of the Welsh economy in this area has been stubbornly weak. We therefore recommend that the Welsh Government addresses this in a number of ways, including through looking at the overall strategy for innovation, and through maximising opportunities through procurement policy.

Our seventeenth and final recommendation was a broad one, setting out some of our priority areas for the future. These include support for skills and human capital—and that term, ‘human capital’, was repeated several times throughout the witness evidence—investment in infrastructure and, importantly, engagement with the private sector wherever possible. That is something that I know was moving forward within the EU, but we need to make sure that that goes further. To that end, the Welsh Government should redouble its efforts to break down the barriers to collaboration between the public and private sectors.

Dirprwy Lywydd, before concluding, I want to say a little bit more about the sense of disappointment that we felt with the evidence we received from some witnesses during the inquiry. We heard very little ambition or constructive challenge from some quarters, and perhaps even less appetite to seize the opportunities that looking again at regional policy could bring. We felt very much that we heard that more of the same was the way forward. Things cannot and should not continue in the same vein. More of the same is not acceptable in the way we move ahead. And in a week where we are marking the twentieth anniversary of the devolution referendum, which was last week, we should take stock, look ahead to the next 20 years, with our sights set firmly on opportunities for forming a new regional development policy focused on the innovation, collaboration and, above all, excellence that all those opportunities can bring to the Welsh economy.

I look forward to discussing and hearing the Members’ contributions this afternoon, but our focus must be on taking Wales forward at the point we leave the EU.