5. Statement by the Cabinet Secretary for Finance: Update on Regional Investment after Brexit

– in the Senedd at 3:21 pm on 16 October 2018.

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Photo of Elin Jones Elin Jones Plaid Cymru 3:21, 16 October 2018

(Translated)

Which brings us to item 5, a statement by the Cabinet Secretary for Finance: an update on regional investment after Brexit. I call on the Cabinet Secretary to make the statement, Mark Drakeford.

Photo of Mark Drakeford Mark Drakeford Labour

(Translated)

Thank you very much, Llywydd. Since the 2016 referendum, the Welsh Government has been engaged in a public debate about replacing European Union regional investment once the UK exists the EU. I’m grateful to the Chairs of the External Affairs and Additional Legislation Committee and the Finance Committee for their work in informing this debate.

Last month, the Finance Committee published its inquiry report into preparations for replacing EU funding for Wales, and we will respond formally to that shortly. I welcome the committee’s support for a made-in-Wales approach. It reinforces our clearly expressed message that the UK Government has no mandate to extend the proposed and ill-defined shared prosperity fund to Wales.

Photo of Mark Drakeford Mark Drakeford Labour 3:22, 16 October 2018

Llywydd, in July of this year, the Welsh Government published an independent report analysing the responses to our policy paper 'Regional Investment in Wales after Brexit'. That paper set out principles and a direction of travel to guide the replacement of European structural and investment funds in Wales, and received widespread support. I believe there is an emerging consensus here in Wales on how we want to see replacement funding work, and an appetite to get on with it. Amongst the key characteristics of that future is that it requires a made-in-Wales policy framework focused on outcomes, one that addresses regional inequalities and is guided by the Well-being of Future Generations (Wales) Act 2015 and the regionalisation set out in our economic action plan.

We need a system that focuses on functional Welsh regions, providing them and local areas with the authority to make more decisions; a system that is less bureaucratic, but still rooted in the partnership model that has served us well; a system that is based on an open rulebook, but with less rigidity in geography and in purpose; a system that provides a full return on public investment but that is proportionate in arrangements for access, monitoring and audit.

I've held detailed discussions with my colleague the Cabinet Secretary for Economy and Transport to develop our thinking, so that we can be confident, for example, that opportunities in rural Wales are not missed, and can ensure that this vital investment in Wales is central to the approach contained in the economic action plan, where public investment is predicated on delivering public goods.

So, Llywydd, we continue to press the UK Government for the £370 million annually we'd receive for our European structural and investment funds to be replaced in full so Wales will not be a penny worse off, as promised so often during the referendum campaign. We also expect decisions on how and where replacement funding in Wales is deployed to remain here in Wales—as has been the case for the last 18 years and which is clearly set out in the devolution settlement. There is simply no support in Wales for a centralised or UK-administered replacement fund. It is wrong in principle, it is undeliverable in practice and it is time that UK Ministers understood just that.

Photo of Mark Drakeford Mark Drakeford Labour 3:25, 16 October 2018

Llywydd, it's not my main purpose to focus primarily on what has been achieved in those areas that have benefited from EU funds, but nor is it in Wales’s interests to undermine or under-represent what has been put in place with the aid of that investment: a sharp fall in economic inactivity and rise in employment rates; a dramatic improvement in the skills of our people, with a major decline in the proportion of the working-age population with no qualifications; and a narrowing of the gap between different parts of Wales, and a narrowing of the gap between the Welsh economy and the rest of the United Kingdom.

The £370 million we receive annually from the European Union matters to Wales because the livelihoods of our people, communities and businesses are at stake. During this programme period alone, EU projects have already helped to create 8,400 jobs, helped 11,000 people into work, and supported people to achieve over 68,000 qualifications. People’s lives are being altered for the better, families are growing up in homes with work, and people are being supported to take up education and training.

And this is happening, in part, through the 970 new enterprises created and the 5,400 businesses supported by EU-funded projects. Those will generate tax revenue and jobs well into the future, helping us to deliver a more prosperous Wales. 

Now, Llywydd, as we look to that future, Welsh partners have highlighted two key concerns around future arrangements: that replacement funding could be directed away from regional development, and that the loss of a multi-annual approach will prevent effective long-term planning. To address those concerns, I would like to reaffirm commitments I have made in evidence to the Finance Committee and in this Chamber. 

Firstly, any replacement funding will be invested to support regional development and to reduce inequality. It will not be subsumed into other core Welsh Government budgets. The economic action plan sets the focus for this approach, and I continue to work together with the economy Secretary on this.

Secondly, I can give an assurance that we will continue to adopt a multi-annual approach towards investing replacement funding to maintain a long-term focus on the structural challenges in our economy and labour market.

In all of this, we will draw on the significant expertise of our partners across Wales in designing and delivering a new made-in-Wales approach. Our approach to date has been collaborative and outward looking, and today I can announce two developments to strengthen this further.

Firstly, we will establish a regional investment steering group, which will draw on the wealth of knowledge and experience in our businesses, local authorities, our academic institutions, the third sector and the wider public services across Wales. The group will work closely with existing regional partnerships, including drawing on the leadership of the chief regional officers established under the economic action plan. This will ensure that our new approach aligns with wider economic development planning.

Secondly, Llywydd, I can announce this afternoon £350,000-worth of funding from the European transition fund to establish a new partnership with the Organisation for Economic Co-operation and Development to inform both our future regional investment approach and the implementation of the economic action plan. We may be leaving the European Union, but that makes the obligation to remain an open and connected nation all the more vital. Working with the OECD will reinforce our ability to sustain vital relationships with other European countries and regions and will ensure that international best practice is built into our future arrangements. The economy Secretary and I will announce further details of this new investment shortly. 

In the meantime, Llywydd, we cannot wait for meaningful discussions on successor funding arrangements to commence with the UK Government. These may not take place, we now learn, until the 2019 spending review. We must act now to develop, in genuine partnership, a new approach that ensures investment aligns with the wider economic development interventions of this Government. The Welsh Government is strategically best positioned to administer these funds, and to achieve this outcome.

Photo of Mark Drakeford Mark Drakeford Labour 3:30, 16 October 2018

(Translated)

Llywydd, the coming year will define our future relationship with the European Union. It will also see us develop arrangements to deliver economic growth, and challenge regional inequalities. I am grateful for the opportunity to have updated Members this afternoon, and I look forward to sharing further information on progress in future.

Photo of Darren Millar Darren Millar Conservative 3:31, 16 October 2018

Can I thank the Minister for his statement this afternoon? Although, I have to say, I find it bizarre that he's making this statement when the UK Government has already committed to consulting on the shape of the new UK shared prosperity fund in the future, and has also given a commitment to making sure that it respects the devolution settlement in terms of the way that that fund is going to be administered. I find it very strange that we have the Cabinet Secretary for Finance coming here today, telling us that he's going to spend yet more precious taxpayers' money setting up a parallel universe, as far as the distribution of regional funds is concerned, through the establishment of the regional investment steering group—yet another quango, frankly, with more jobs for the boys and girls that the crony Government that we've got wants to be able to distribute.

Let me put on record right now that I have absolutely no faith whatsoever in the ability of the Welsh Labour-led Government to distribute any funds across Wales in a fair and just manner to those parts of the country that need them. Just look at the local government settlement—just look at the local government settlement that we had last week: it's very clear that you like to distribute cash to certain places in Wales, to the detriment of others, including north Wales, mid Wales, and west Wales. In fact, what you like to do as a Government is to distribute the cash to your friends in the Labour Party, in other parts, in terms of local authorities that are run. So, I would be grateful if you could give us more clarity on what the precise costs of this body—this regional investment steering group—are going to be, and why you are jumping the gun in terms of making these statements now, when you are yet to receive any kind of consultation document from the UK Government.

We all know that the Welsh Government wants to try to crow about the success of European structural funds to date. But the reality is that they've been far from a success. In fact, we've gone backwards in terms of our relative gross value added in the UK, as a proportion of UK GVA. That's an embarrassment. The only reason that the jobless totals have been coming down in these areas is because we've got a Tory Government over the border, in London, that has been bringing the jobless total down, creating thousands of jobs each and every week since we got into power back in 2010. So, I'm very disappointed that you're jumping the gun, that you're making this statement today, that you're going to be spending yet more hard-earned cash that belongs to taxpayers in a wasteful way, setting up this parallel system, when it's absolutely likely to be completely unnecessary.

Will you accept that there has been a failure over the past two decades in terms of the way that you've invested—as a Government, taken the lead in investing these European structural funds? We know that there's been this failure to lift Wales out of poverty. We're still the poorest part of the UK as far as the figures demonstrate, in terms of the European regions within the United Kingdom. That is diabolical. It's an embarrassment. It's a shame that Wales is in this situation, but that's where we're at as a result of your Government's decisions in terms of the management of EU structural funds so far.

Can I also ask how you will ensure that the different regions within Wales have as local decision making as possible in the future? You've already heard from the UK Government that they're going to respect the devolution settlement in terms of these arrangements. But how are you going to ensure that any cash that becomes yours to distribute, under any future UK prosperity fund, is actually going to reach all parts of Wales and will deal with the poverty that there is across the country? We do know, of course, that we have a new opportunity with the UK shared prosperity fund to reach out into poorer communities that are not in west Wales and the Valleys. At the moment, we have this geographical straitjacket, which we are in as a result of EU decision making, which forces us to spend the money in certain places to the detriment of those places in east Wales.

So, I wonder whether you can tell us: is the removal of that straitjacket something that you feel that Wales can benefit from? How do you intend to make sure that those poorer communities in other parts of Wales are going to get the cash that they need in order to raise prosperity levels? And do you accept that simply having more of the same, which I think is sort of what you're proposing, is not going to work and is going to fail again in the future? 

Photo of Mark Drakeford Mark Drakeford Labour 3:36, 16 October 2018

Well, Llywydd, I'll do my best to answer some of those questions. I'm afraid it wasn't the Member's finest hour—that contribution. He's completely wrong in relation to the shared prosperity fund. We couldn't possibly wait for it: we have no timetable for it, we have no details about it. I do not for a moment believe that we have received sufficient assurances that it will respect the devolution settlement. My fear remains that his Government's idea of a shared prosperity fund is to take money that comes to Wales today and to share it out to other parts of the United Kingdom. I await to see what happens, and I look forward to discussing this with the Chief Secretary to the Treasury tomorrow.  

He is quite wrong, of course, in relation to the impact of European funds here in Wales: they have allowed us to do so many things that have been to the benefit of Welsh communities. And his Government's stewardship of the UK economy, far from being the reason why jobs and economic inactivity are moving in the right direction in Wales, if you look at their record elsewhere, had we remained in the European Union, three new English regions would now have qualified for European assistance as a result of his Government's stewardship of the United Kingdom economy as a whole. 

As far as the regional investment group is concerned, it will draw on those individuals in businesses, in local authorities, in those parts of the Welsh economy, which regularly Members of his party urge us to make sure that we hear their voices and act on their advice. This is far from being a parallel universe: this will be an opportunity for people beyond the Assembly, who have relevant experience and expertise, to make sure that the things that we do in the Welsh Government are informed by their direct, everyday experience of making the Welsh economy a success, and I look forward to receiving their advice. 

I'll ignore, for the moment, Llywydd, the shameful remarks that the Member made about the local government settlement. He knows perfectly well— 

Photo of Mark Drakeford Mark Drakeford Labour

He knows perfectly well that the formula for the distribution of funds—. I hear the Member shouting at me, Llywydd, 'cronyism' and I'm keen to read that into the Record, because it is a shameful accusation that he makes and he needs to substantiate the sorts of accusations that he makes. It is absolutely not sufficient for him to sit there and smear words across the floor of the Assembly when he knows perfectly well—and we know that he knows perfectly well—that the funding formula through which funds to local authorities are distributed is not made up by the Welsh Government; it is the formula agreed— 

Photo of Elin Jones Elin Jones Plaid Cymru 3:39, 16 October 2018

Repeating an accusation, Darren Millar, doesn't make it true. I think you've made your point and the Minister is responding. 

Photo of Mark Drakeford Mark Drakeford Labour

Llywydd, it is certainly utterly bereft of truth on this occasion, because that funding formula is not a formula of the Welsh Government: it is a formula signed off every year by an expert group and then by Welsh local authorities themselves, including leaders of north Wales authorities, who were round the table in the meeting where that formula was agreed. 

Let me try and rescue a small number of points from what the Member had to say. Indeed, had he been listening he would have found that they were answered already, because one of the things that we will be able to do with funding the other side of the European Union is to make better, more flexible use of it. The geographical constraints that inevitably come with European funding will not be there to that extent in the future, and it is one of the advantages we will be able to put to work.

I agree with what he said about local decision making featuring as much as possible in the future deployment of European funds. I believe there will still be some national priorities that we will wish to set, but there will be regional working very importantly at the heart of the way we use these funds, and there will be more room for decisions to be made at a very local level, often drawing on the experience of the LEADER programme, for example, which the European Union has helped us to develop here in Wales. Far from being more of the same, Llywydd, the whole exercise is designed to learn the positive lessons from the programme so far and then to take advantage of new possibilities that we will have for regional investment, provided the money comes to Wales and the decisions are made here in Wales. 

Photo of Steffan Lewis Steffan Lewis Plaid Cymru 3:41, 16 October 2018

I thank the Cabinet Secretary for his statement today. Can I say I find it quite amusing—that's probably not the right word—when Conservatives squawk and croak about funding formulas, when Wales has been shafted by the Barnett formula for many, many years with very little protest from the benches opposite?

Clearly, there's an agreement between Plaid Cymru and Welsh Government on the fundamental principle in terms of regional policy, that leaving the European Union should not mean that Wales is left short, either financially or in terms of responsibilities. As the Cabinet Secretary has said, Wales receives an annual amount of £370 million in European structural and investment funds and we should not lose a single penny of that money. That was the promise made by the separatists during the referendum and they should keep their promises. 

It is however worth remembering that Wales qualifies for so much regional aid from the EU because of its historic economic neglect at the hands of Westminster Governments of all shades, who have never fully addressed our economic needs. They have some cheek in Westminster now if they're showing an interest in stealing powers back over regional policy, when they have repeatedly shown no interest in regional policy, not just in Wales but in deprived parts of England as well and Scotland, over decades, particularly since they intentionally deindustrialised our communities. 

Llywydd, the stakes could not be higher when it comes to regional aid and the Welsh economy. It was sober reading recently to pick up the report by the Financial Inclusion Centre. In it, they list Wales as being one of the most vulnerable regions and nations in the UK to leaving the European Union when it comes to regional policy and wider economic policy. They said, and I quote:

'In the worst case scenario, some of the most vulnerable regions'— including Wales

—'could face a "triple whammy"...a very significant loss of potential economic output...the loss of EU funding. Third, unless fiscal transfers from stronger parts of the UK economy can be maintained at the same level to mitigate these impacts, the combined economic shock could be severe.' 

Those are the words of the Financial Inclusion Centre report.

In terms of today's statement, I welcome the announcement that steps will be taken to create the infrastructure for a new Welsh regional policy post separation. I cannot however help but be concerned that all of this preparation will be done only to have the rug pulled from under its feet when the Westminster Government announced that regional policy will be centralised in London. I will be interested to know what the Cabinet Secretary makes of the comments expressed by the Prime Minister during the Tory Party conference to the media. As far as I could understand from what she was saying, she was insinuating that far from simply providing the money promised to Wales, new regional policy through the so-called shared prosperity fund would include a UK rulebook, decided in Westminster, enforced by Westminster, and spending will be decided upon in Whitehall as well. I found that very alarming. Far from being—. If we want to talk about parallel universes, talking about guaranteeing every single penny and power we have now goes completely contrary to what the Prime Minister said in statements to the media, as far as I could read in any case. 

In his statement, the Cabinet Secretary says that he does not expect meaningful discussions on successor funding arrangements to take place until the 2019 spending review. Can he clarify, does he believe that there won't be any discussions about the policy itself, or does he mean how that policy would be financed? I.e. is he expecting there to be meaningful discussion on the policy, i.e. that it is devolved and shall remain devolved, and then we will have a better idea for the precise nature of the funding at around the time of the 2019 spending review? Because we need to know fairly swiftly exactly the policy intentions of the UK Government. It's not acceptable to kick this can down the end of the road, pushing devolved Governments, as they are, into making preparations based on the best-case scenario, when I unfortunately fear that the worst-case scenario might come to pass. So, are formal discussions under way? Are more scheduled? Is there a clear timetable for deciding the shape of future regional policy as soon as possible?

Also, in terms of the wider political debate that will happen now in the UK as this becomes an issue of increasing importance, can I ask the Cabinet Secretary: what is the policy of the UK Labour Party? Are they going to be batting in the same team as the Welsh Labour Government here when it comes to regional policy on the Labour front benches in Westminster? Will they vote down any attempts in the House of Commons to take regional policy powers away from Wales? What discussions has he had with party counterparts at the UK level in that respect?

Crucially to all of this, if there are discussions under way, or if discussions will take place soon, can the Cabinet Secretary make a cast-iron promise to Members here today that, in any discussions on negotiations with the UK Government, he will not give our money away in the way he gave away some of our powers the last time he struck a deal with Westminster?

Photo of Mark Drakeford Mark Drakeford Labour 3:46, 16 October 2018

Llywydd, can I begin by thanking Steffan Lewis for the way he welcomed the fundamental principles that I've outlined this afternoon? I agree entirely with what he said about the way in which Wales is doubly vulnerable to the impact of particularly a hardline Brexit on our economy, and then to the potential loss of funding.

I heard the Prime Minister's comments on the shared prosperity fund. To be truthful, I thought she sounded as though she was as much in the dark about what that fund might be about as the rest of us. Her answers seemed to me more designed to cover up the fact that she wasn't quite sure what was going on than to offer us any real clarity on it.

Steffan Lewis is right to say that I was making a distinction between policy matters, which we may hear something about during the rest of this calendar year, and funding arrangements, on which I think we will have to wait until the comprehensive spending review to have any clarity.

The Member asked if there are any formal discussions going on. I can tell him that I have raised our concerns previously with the Chief Secretary to the Treasury and with the Chancellor of the Duchy of Lancaster, and that this was raised again last week at the Joint Ministerial Committee on Europe by my Scottish colleague Ben Macpherson, where I was able to, again, express the Welsh Government's disquiet at proposals for a shared prosperity fund. And it is on the agenda again tomorrow morning, when I will be in discussions with the Chief Secretary to the Treasury, both on Wales-only matters and in the finance Ministers' quadrilateral. I go from that meeting to a meeting with members of Keir Starmer's team, and to discuss matters of Brexit at the House of Commons. The Member can be sure that I will be raising the shared prosperity fund there as well.

Llywydd, no powers have gone away from Wales—let us be completely clear about that. All the powers that reside in Wales as a result of the 1999 devolution settlement remain here today. The Member could not name a single power that, as he said, was given away, because none were. They all remain here in this National Assembly, and none can move from here without our prior agreement. However, I give him the assurance that he is looking for that, of course, this Welsh Labour Government will not agree to any proposals that result in fewer funds coming to Wales as a result of our membership of the United Kingdom than we have benefited from as a result of our membership of the European Union.

(Translated)

The Deputy Presiding Officer (Ann Jones) took the Chair.

Photo of Mr Neil Hamilton Mr Neil Hamilton UKIP 3:49, 16 October 2018

Can I extend my support for the finance Secretary in much of what he says in his statement? I don't think it's at all unreasonable for him to say that it would be unacceptable for Wales to be a penny worse off as a result of the Brexit settlement, whatever that might be, although I disagree with him saying 'as promised during the referendum campaign'. The only people who could promise that during the referendum campaign were the Prime Minister and the Chancellor of the Exchequer, both of whom, of course, were remainers. But I do not think it unreasonable that, as a result of Brexit, Wales should be not a penny worse off; in fact, we should better off, because for every £1 that we get back of British taxpayers' money from Brussels, we have to send out £2 in the first place. So, it's not EU money, it's British taxpayers' money, albeit funnelled back to us through the aegis of EU institutions. 

Photo of Mr Neil Hamilton Mr Neil Hamilton UKIP 3:50, 16 October 2018

I would like to raise the question of the effect of the way much of this money has been spent over the years. As Darren Millar pointed out, in fact in Wales we've gone backwards in the last 20 years in terms of relative prosperity. In 1998, the average gross value added in Wales was 74.8 per cent of the UK average, and in 2016 it was 72.7 per cent, so we've actually, relatively speaking, gone backwards. And, of course, we do have two of the poorest parts of Europe within our country. The Gwent Valleys is second from bottom with an average income of £14,700-odd, 56 per cent of the UK average; Anglesey is even worse, with an average income of only £13,600-odd, 52 per cent of the UK average. We've had significant sums of money spent on regional policy over the years, but they don't seem to have done a great deal to disturb the relativities.

Therefore, I'm not sure that it's the correct approach to ring-fence this money  that we will have the right to administer after Brexit, and I'm not an admirer, generally, of hypothecation of revenues, because priorities change from year to year and new needs appear, and the relativities between different needs also change. So, I think if the Welsh Government was to commit for a significant period to maintaining the importance of the regional aid budget within Wales, then it might be closing its eyes to other opportunities as to how it might spend the money in a more productive way to achieve the social objectives and economic objectives that the Government has.

The statement goes on to say towards the end that  

'It will also see us develop arrangements to deliver economic growth and reduce regional inequalities.'

We can all support that objective, but there are other ways in which, perhaps, that can be achieved, and I would like the Government to be more imaginative than it has been able to be in the past.

I'm fully in sympathy with the Cabinet Secretary in wanting to get on with the job, and not waiting for the UK Government in its wisdom to hand down tablets of stone whenever it feels convenient to do so. Theresa May has given a whole new meaning to the word 'torpidity', I think, since she has been Prime Minister, and the conduct of the Brexit negotiations, if we can exalt them with that description, is proof positive of that, as she persists in her unthinking, Sisyphean relentlessness in pushing boulders to the tops of hills, only to have them rolled down back on top of her and ultimately, I believe, to flatten her. But I think it is right that the Welsh Government should take the lead and put more pressure by taking positive action to force, if they can, the UK Government to get on with taking rational decisions as to how the future for Wales might be best administered. It's a mystery to me that the UK Government cannot simply say, 'Yes, you will get your £370 million a year', because the money is there—we will be getting it back from Brussels, and the United Kingdom Government, I think, has no moral right to say that there is some doubt about this. It's creating uncertainty not just for Wales, but also an unnecessary uncertainty, I think, in the minds even of Conservative Members elsewhere in the United Kingdom. The Government cannot simply remove levels of uncertainty that could be removed without any damage whatever to the Government's overall objective, whatever that might be, in the course of the Brexit negotiations.     

One of the ways in which we could perhaps spend some of the money that is currently allocated to regional policy better is on energy prices, reducing the impact on specific industries of energy prices. We know that, for example, the steel industry, in effect, has got 85 per cent of the burden of the extra charges imposed as a result of climate change policies on its back, and without that rebate, then the steel industry in the whole of the United Kingdom would be flat on its back. So, there are unintended consequences of some policies that could be addressed as a result of considering other ways of spending this money. I can't go into it in any more detail now, but I wonder if the Cabinet Secretary, bearing in mind that we all have the same ultimate objectives here—that we share the desire for Wales to be much more prosperous than it has been in the past and, even within Wales, for inequalities to be addressed—. But that I think requires us to be as flexible as possible in funding arrangements post Brexit, when we have the levers of power in our own hands. 

Photo of Mark Drakeford Mark Drakeford Labour 3:55, 16 October 2018

I thank the Member for those remarks. By and large, I think he was endorsing some key aspects of the policy I set out this afternoon. I understand the point he made about the word 'promise', but when the leader of the Conservative Party in Wales says to people in Wales that there is an absolute guarantee that Wales would not lose out by a penny, I wonder what more has to be said to make that a promise. It sounded like a promise to many people in Wales and many people in Wales voted on the basis of what they regarded as a promise. 

I thank the Member for what he said about a sensible proposition that the Welsh Government should take the lead in making decisions about the way such funding should come to Wales in the future, and I share what he said—it is a mystery to me as well why a Government that has enough quarrels on its hands, surely, and enough difficult issues to sort out, cannot make a straightforward decision that would be simple to make and simple to execute, and simply say, as people in Wales were promised, that the money that came to Wales under the European Union would come to us the other side of it. 

I listened carefully to what the Member said about hypothecation, because as a finance Minister I tend to start from a point of view of being uneasy at hypothecation as well. We took a very conscious decision in the Welsh Government to say in advance that money that came to Wales today for regional economic development purposes would be retained for that purpose the other side of the European Union. We did so because there is a real confidence issue out there in the sector, amongst people who are running projects, bringing forward plans, that the things that they have been able to rely on in the past may not be there for them in the future. The commitment I made in today's statement, to say that that money would be retained for regional economic development purposes, and we would guarantee it over a multi-annual period, is designed to sustain confidence in the sector that the long-term plans that they have put in place will be honoured through this Government.

Where I think the Member made an important point is that we will have some additional flexibilities in the way that money can be used in the future. Whether it stretches all the way to using the same money to sustain or to create lower energy prices, I probably doubt, but I do think that there will be opportunities to use that money in a way that avoids some of the rigidities of the previous set of arrangements. In that sense, we might get the benefits both of hypothecation in terms of its confidence building but also to be able to use that money more flexibly, as Neil Hamilton said in his closing remarks.   

Photo of Julie Morgan Julie Morgan Labour 3:58, 16 October 2018

I welcome this very important statement and I welcome the fact that the Cabinet Secretary is setting out the principles that he sees will be used in future regional investment in Wales. I just think it's very important to set up these principles now because we've been waiting far too long to hear the details of this shared prosperity fund. And, again, I think that would be something quite simple for the Government in Westminster to do, to make real efforts to consult and find out exactly what's going on and end this uncertainty. I think it's very important that, as the Cabinet Secretary says, confidence is given to those people who are running projects and are making long-term plans, that they know that there is certainty from what the Government here plans to do. I'm very glad, too, that the Cabinet Secretary has pointed out the huge benefits we have had from European structural funds. Of course, we have had benefits from other European funds, such as Erasmus+ exchanges, Horizon 2020 and of course the European Investment Bank, which has brought huge benefits to Wales. So, I'm sure that the Cabinet Secretary would comment on the benefits of those other European benefits.

Before going into other details from the statement, would he agree that it's absolutely crucial that we maximise the use of the current EU funds before we actually do leave the EU? Because those funds are still being distributed up to the point that we actually leave the EU, and they will be continuing beyond the date, well beyond the date, that we leave the EU—probably up until 2023.

I know that the Cabinet Secretary agrees that we do have the history and the expertise here in Wales. We have the expertise of having been involved in structural funds for so many years, and of course our knowledge and the way we've operated the structural funds have changed over those years, moving from a multiplicity of smaller projects to fewer, larger projects. And I think it is really important that this experience that we've got is maximised to ensure that we get the maximum benefit post leaving the EU. So, I do welcome the steering group, and I think it's crucial that we use all the expertise that is here in Wales. I also welcome the £350,000 from the European transition fund. I think that the Cabinet Secretary is thinking creatively ahead, trying to see what we can do to minimise the damage that will be done by leaving Europe.

Finally, I would particularly welcome his commitment to multi-annual funding. I think we've all had experience of the problems of short-term funding, which so many people have suffered from—so many different projects. And that has been one of the great benefits of the European funding, that it has been multi-annual. So, I particularly welcome that commitment from the Cabinet Secretary.

Photo of Mark Drakeford Mark Drakeford Labour 4:01, 16 October 2018

Well, Dirprwy Lywydd, I thank Julie Morgan very much for those remarks. They reflect the experience that she has chairing the programme monitoring committee under the current round of European funding, where the benefits of partnership working and the ability to call on the advice of experts in the field are very much part of the way that we have done things here in Wales. And, in that sense, Julie Morgan is absolutely right that we need to maximise the lessons that we can learn from our experience so far to make sure that we go on doing things in ways that have proved successful, while taking opportunities to do things better still. I want to thank her and all those who sit on the PMC for what they are doing to make maximum use of current funding.

Here let me say, as I try to every time, that we have always welcomed the decision that the Chancellor of the Exchequer has made to guarantee those funds and the more recent announcement he has made about extending that guarantee to the very end of the current round. In the sense of what I said earlier about confidence in the sector, that has been a helpful announcement, and I'm happy to recognise that this afternoon. We will be using European funding up until 2023 under the current round, and we'll be accounting for it up until 2025, so making good use of that is really important.

And Julie Morgan is absolutely right: we cannot wait for the UK Government to move on all of this. We have pressed them time after time to make sure that we have an ongoing relationship with the European Investment Bank the other side of our membership of the European Union; we have contributed some expert advice from officials here who have real understanding of the way in which that could be brought about, and we're still waiting to hear anything about the way in which that relationship can be formed for the future.

Part of the reason why I am pleased to be able to announce today funding to draw on the advice of the OECD is that that will give us here in Wales a new set of avenues into those European union networks that Julie Morgan mentioned, so that we are able to sustain the benefits that we have had from regional working, from learning from other parts of Europe, and for making sure that the way we do things here in Wales is informed by the very best practice from elsewhere.

Photo of Jane Hutt Jane Hutt Labour 4:04, 16 October 2018

Cabinet Secretary, thank you for your statement on regional investment after Brexit, and thank you for acknowledging the work of the Finance Committee in its report, 'Preparations for replacing EU funding for Wales'—key recommendations, which, of course, will be of no surprise, leading with the priority of negotiations with the UK Government to secure the best possible funding deal to ensure Wales is not a penny worse off post Brexit, as laid out in 'Securing Wales' Future', which has stood the test of time over the past two years.

I also want to raise questions on funding prospects post Brexit in relation to the UK shared prosperity fund, particularly focusing on the frustration that we've had, both in the Finance Committee and, indeed, in the External Affairs and Additional Legislation Committee, about the lack of engagement in shaping, as you say, an opportunity to help shape—the Welsh Government, the National Assembly—this fund. The Finance Committee did receive a letter from the Secretary of State for Wales last week that comments on our inquiry's report. In his letter, the Secretary of State refers to the UK shared prosperity fund, and he says 'we intend to consult' on this 'publicly...before the end of 2018'.

Well, when the Secretary of State was invited earlier this year to attend the committee on this inquiry, he declined that invitation, saying he didn't think it necessary for him to attend in person, but telling us that this was a priority for Government and that 'they will engage with you at the earliest opportunity'. Well, that was back in May; we're now in October with this letter drawing our intention, indeed, to a written statement on 24 July by none other than our former colleague Assembly Member Lord Nick Bourne, who made a statement on 24 July. And he did, in his statement, refer to the UK shared prosperity fund in the devolved nations, saying that the UK Government will:

'respect the devolution settlements...and will engage the devolved administrations to ensure the fund works for places across the UK.'

Unusual terminology in terms of the relations that we would—in terms of respect and negotiations between Welsh Government and UK Government. So, I would be grateful if the Finance Secretary could comment on this, comment on what has happened since that written statement was made,  and how and if the Welsh Government has been involved.

Now, I have brought together women's organisations to form the Women in Wales for Europe network, and one of the major concerns raised by a diverse range of organisations has been the future impact of funding decisions post Brexit, especially in relation to the UK shared prosperity fund. There are a lot of organisations in the third, public and private sectors who want to engage in this discussion about this new fund.

Would you accept the views and recommendations of the cross-party Finance Committee that EU structural funds have had a clear focus on promoting equality, addressing poverty, supporting human rights, with a significant amount of EU-supported projects focused on supporting women?

Photo of Ann Jones Ann Jones Labour 4:08, 16 October 2018

Are you winding up, please, for a question?

Photo of Jane Hutt Jane Hutt Labour

So, we do have opportunities and challenges, and I hope that you will be able to make the case for us all to be engaged, because, as you said, there is an emerging consensus, and this Assembly can back you in these negotiations.

Photo of Mark Drakeford Mark Drakeford Labour

I thank Jane Hutt for what she said, particularly that last remark; it is very helpful, always, when you are discussing things with UK Ministers, to be able to refer not simply to the views of the Welsh Government, but, for example, to the Finance Committee's report, which I've read. I thought it was characteristically well informed and constructive in its conclusions. And being able to refer to that report and the cross-party consensus that it has established in relation to these matters is always helpful when you are discussing these matters with UK Ministers.

It is a shame that the Secretary of State for Wales, once again, declines invitations to come and defend his Government's policies in front of this Assembly. I hear, Dirprwy Lywydd, that the UK Government has held a consultation event in Scotland on the shared prosperity fund, and that it has held a consultation event in Northern Ireland on the shared prosperity fund. I hear that it did not inform either the Northern Ireland—well, the devolved arrangements there—until the day before that consultation took place, and that the Scottish Government was not informed of the consultation exercise until the day before that happened either. What sort of UK Government is this, Dirprwy Lywydd, that moves around the United Kingdom like some sort of thief in the night, refusing to tell devolved administrations of its presence in their localities? Maybe we will see them here in Wales, and, if we do, I look forward to hearing of their arrival from the same Secretary of State.

Finally, just to agree with what Jane Hutt said about equality, equality matters have been a key strand in European funding here in Wales and in the work of the programme monitoring committee. Many organisations of the sort that Jane Hutt referred to have benefited from it. What guarantees could we possibly have that that focus would be sustained in any shared prosperity fund decided upon elsewhere, the rules set elsewhere, the funding decisions made elsewhere, and, here in Wales, simply left to deal with the consequences?

Photo of Mick Antoniw Mick Antoniw Labour

Cabinet Secretary, I always get disappointed when I hear the Tories dissing the way in which some of the European funding has actually been used to regenerate parts of Wales. If they want to come to Pontypridd, they can see what I think is a model example of the way a town that suffered so grimly out of the mining industry and the industrialisation—the regeneration that is actually taking place, where European funding has been such a fundamentally important catalyst. You can see it— whether it be the Taff precinct, the pedestrianisation, the lido, the Church Village bypass, the station. Pontypridd and parts of Taff Ely—and of course the metro extending all the way to Taff's Well—are a hub of regeneration at the moment. There is a buzz in the town, and, without that European funding, that would not have happened. So, it's very disappointing to hear those examples being totally rejected by the Conservatives.

The shared prosperity fund has already been commented on in detail. There were promises, just like there were promises that we wouldn't lose any money—promises of engagement. Steffan Lewis referred very clearly to some of the promises, statements being made about centralisation, and it is very clear that there isn't proper engagement; no-one knows what the shared prosperity fund actually is. And, when you read Western Mail today and you see an article in there—and you hear Darren Millar, who was shouting so loudly earlier—saying, 'Darren Millar looked forward to a new development funding system once the UK has left the EU', 'Brexit provides Wales with an opportunity for a fresh approach to regional investment and economic development through a new UK shared prosperity fund', which he isn't able to describe or to identify either, there's only one conclusion, Deputy Presiding Officer, that you can come to. And maybe the name 'Tory' is very appropriate in these examples, because it has its roots in the Irish language and means 'robber'. Because the only conclusion I can come to is that there is a Tory conspiracy to rob Wales of £370 million a year—rob Wales of £370 million a year. Because not once have you heard the Tories stand up and say, 'Yes, we will demand that Wales gets every penny that it had before.' Not once have they dared to stand up and do that, and that is because they are basically a London Tory party fifth column in Wales. That's the role they play.

And do you agree with me, Cabinet Secretary, that the Tory party in Wales now only represents one thing and that is economic betrayal—betrayal over the promises over electrification, betrayal over the Swansea tidal lagoon, and now a total betrayal over EU funding?

Photo of Mark Drakeford Mark Drakeford Labour 4:13, 16 October 2018

Well, Dirprwy Lywydd, I thank the Member for that and thank him for reminding us that the reason why Wales has qualified for European funds over these years is because we have had to deal with the consequences of the Conservative Party's handling of the Welsh economy during the 1980s—their shameful record of de-industrialisation, their shameful record of an assault on the manufacturing industry. Of course they don't know the benefits that European funding has brought because they never go there—they never go to those parts of Wales where their policies laid such waste and where economies and communities are still having to recover from the way in which they discharged their responsibilities, and, indeed, the policies that they continue to pursue here today, the policies of austerity on the one hand and their refusal to live up to the guarantee that was offered to people in Wales that we would not lose a penny from European funding.

The shared prosperity fund, Dirprwy Lywydd, it's a unicorn fund, isn't it? Everybody has heard of it, nobody has ever seen it, and we certainly don't want to see it here in Wales.

Photo of Ann Jones Ann Jones Labour 4:14, 16 October 2018

Thank you very much, Cabinet Secretary.