Item 7 on the agenda this afternoon is the debate on the Finance Committee's report on its inquiry into preparations for replacing EU funding for Wales, and I call on the Chair of the Finance Committee to move the report. Llyr Gruffydd. 

Motion NDM6864 Llyr Gruffydd

To propose that the National Assembly for Wales:

Notes the report of the Finance Committee, 'Preparations for Replacing EU Funding for Wales', which was laid in the Table Office on 25 September 2018.

Motion moved.

Thank you very much, Deputy Presiding Officer. It’s a pleasure again to be able to contribute to this debate today as Chair of the Finance Committee and to look at our inquiry into the preparations for replacing EU funding for Wales. Although I was not a member of the committee during this inquiry, I have read the evidence with great interest and I’d like to thank all those who gave evidence to the committee during the inquiry. I’d also like to thank the Cabinet Secretary for Finance for his response to our report, and particularly the fact that the Government has accepted all of our recommendations, which is always a help to get any praise from any committee in this place, I’m sure.

We also received a written response to our report from the Secretary of State for Wales. However, the committee was disappointed that the Secretary of State did not fully engage with the committee on this important matter. If Brexit is to be a success for Wales, engagement from a UK level will be vital and this includes the opportunities to be able to do scrutiny work, which is something we didn’t have to the extent that the Members would have wished in this case.

Wales currently receives about £680 million in EU funding per year, and in terms of a per capita comparison this is by far the highest of the devolved nations and the English regions. Most of this funding comes through the structural funds and the common agricultural policy. The committee believes that securing post-Brexit funding will be vital for Wales and they found strong support for the Welsh Government’s position that Wales should be not a penny worse off after Brexit.

The UK Government has announced that structural funds will be replaced by a UK shared prosperity fund. And even though a consultation on the fund is due to be launched before the end of the year, very little detail has been given on how this fund will operate. The sources of funding coming to Wales will change in the wake of Brexit, but, of course, little change has been seen in the reality behind the needs-based assessment that determined those funds. According to a wide range of evidence and economic data sets, there is a clear rationale for continued investment in Wales, including GVA per head in the poorest parts of Wales, which is half the UK average. These needs, of course, will not have gone away, whichever approach the funding takes, so in our report we highlight how the fund might be shared between the four nations, and we present a strong case for Wales to receive at least the same funding post Brexit. But equally important, of course, is for the moneys to continue to be managed and administered here in Wales.

Over the past 20 years, the Wales European Funding Office, WEFO, have managed, administered and spent EU funds directly, and in the process they have built up considerable expertise and established partnerships, and they have the necessary structures in place to deliver successful programmes. The UK Government has committed that all decisions made in Wales will remain in Wales, and we expect this commitment to be honoured. We recommended that the Welsh Government should install a central unit equipped with the necessary expertise to deliver a coherent programme of funding post Brexit, and I’m pleased to say that the Government has confirmed this intention, as well as its moves to co-ordinate this work across Government.

The committee believes that the Welsh share of the UK shared prosperity fund should provide multi-year funding, ensure partnership working and also, of course, to continue to mainstream equality in Wales. Also, the Welsh Government should continue to focus on promoting equality, tackling poverty and on human rights when administering the fund. In addition, the committee believes that the move to the new fund should be taken as an opportunity to simplify administrative arrangements and to use approaches such as those proposed by the Cabinet Secretary for trusted partner organisations.

The other main tranche of EU funding comes from the common agricultural policy. The CAP is vital to farming in Wales. In 2016-17, over half the farms in Wales either made a loss or they required a subsidy to avoid making a loss. Now, there are clear opportunities to improve on the CAP for Wales and to ensure that post-CAP funding is better aligned with the specific needs of Wales. But it is essential that these funding decisions respect the devolution settlement and that they give the Welsh Government the maximum possible flexibility to enable it to make decisions that support the specific needs of the Welsh land management sector through made-in-Wales policies. To this end, I am pleased that the response from the Government confirms that agreements with the UK Government mean that Wales, and I quote,

'will not be constrained in its design of new schemes and will be able to implement what is best for Wales.'

At present, the funding that comes to Wales under the CAP is double its UK population share, and this reflects the importance of the agriculture sector to Wales. It’s essential, therefore, that this level of funding is protected post Brexit and guaranteed for a number of years.

We welcome the fact that the UK Government is launching an independent review into post-CAP funding levels across the UK, but we remain wary of possible outcomes of that that may provide a sting in the tail for Wales. But, certainly, we’ll be continuing to keep an eagle eye on that process. We urge the Welsh Government to be a strong voice during this process to ensure that any mechanism the review recommends is consistent with the recommendations of this committee and, of course, that it meets the needs of Wales. 

Wales has also benefited greatly from other EU programmes such as Horizon 2020, especially in the higher and further education sectors, as well as the European Investment Bank. We recommended that the Welsh Government urges the UK Government to maintain a relationship with the EIB to ensure that Wales remains able to benefit from continued investment and infrastructure projects, and I’m reassured that the Welsh Government continues to press the UK Government on this, but the lack of progress and clarity provided by the UK Government remains a concern.

We also support the decision to seek continued access to Horizon Europe, but we believe that should such access not be possible, the equivalent funding should be provided to the UK science and research budget.

In addition to the initial post-Brexit funding level, it’s also important to consider how such funding will evolve over time. In this, we share the concerns of the External Affairs and Additional Legislation Committee that a one-off adjustment to the block grant, while acceptable in the short term, may pose risks in the long term. We agree with the recommendation that 

'the Welsh Government ensures that funding is' futureproofed

'and examines the merits of an objective needs-based formula' that is agreed by all nations of the UK.

The committee heard evidence that simply uplifting the baseline of the block grant by an equivalent amount to EU funding would have a severe impact on Wales over time. It should be a priority for the Welsh Government to ensure a sustainable, long-term solution that allocates funding across the UK based on needs as a replacement for the Barnett formula and its in-built squeeze. I’m pleased that the Government agrees with this.

It’s clear, therefore, that a great many of the important decisions relating to post-Brexit funding for Wales are decisions for the UK Government. But as I said at the outset, the committee is disappointed by the lack of engagement received to date from the UK Government. However, we do recognise the role the Welsh Government will play in negotiations between the Governments.

I hope that the evidence that the Finance Committee has received and the report that we have produced will form a strong, cross-party Welsh case for fair post-Brexit funding, as well as adding weight to the Welsh Government’s position. I’m pleased that the Welsh Government has accepted in full the recommendations of the committee’s report. That said, I find the Cabinet Secretary’s comments in the Chamber, namely, that he does not for a moment believe that we have received sufficient assurances that the UK Government will respect the devolution settlement, to be deeply worrying, and they highlight the need for the Governments to work hard to ensure a fair, reasonable and long-lasting deal for Wales and its people. Thank you.

I'm pleased to contribute to this debate today as a member of the Finance Committee, and to reiterate the views of our new Chair, who actually covered the issues in our report very fully and comprehensively, so I don't need to add much to that. It was clearly an area of enormous importance that we were looking at during our reporting stage.

The issue of how we replace EU funding post the UK's exit from the European Union is something that will affect us all, affect all sectors of the economy. It's an unprecedented situation, and I think we recognised that in the sessions that we had with the Welsh Government. This has not been done before, so you can't expect the Welsh Government to be able to plan everything meticulously ahead, although from the discussions that we did have with officials in the Welsh Government, I think that a lot of good work has been done in a difficult situation.

There is no right way to proceed, so key is recommendation 1, which says that we need the best possible funding deal to ensure that Wales is not a penny worse off post Brexit. We particularly phrased it as 'not a penny worse off', because, let's face it, if we could get some additional money in addition to what we've had—I know that it might be seen as pie in the sky, but if we could get some additional money then that avenue should not be closed down. But the very standard-case scenario that we would want to see would be us getting a pound-for-pound replacement from the new funding arrangements that we get at the moment from Brussels. 

The Conservative manifesto for the 2017 general election committed my party to establishing a UK-wide shared prosperity fund, which the Chair has mentioned, that would avoid some of the costs and the bureaucracy associated with the current funds. And whilst I think we all recognise how much Wales has benefited from structural funds and how much our agricultural industry has benefited from payments from the CAP, I think that all of us would say that it hasn't been a perfect situation and that there have been some administration costs. There are different ways of doing things that this is an opportunity for us to do; we don't have to follow everything as it's been done by Brussels hitherto.  

I appreciate that we haven't seen to many details of this fund, and I'm sure the Cabinet Secretary will make comments on this in his remarks later, but I think it is important that we hit the ground running when that shared prosperity fund is up and running. So, aside from some of the issues about not knowing exactly what the details will be, it's important that the Welsh Government puts in place mechanisms so that as soon as the details of that fund do become clear, we can hit the ground running and get on with using that money as it should be used. David.  

Thank you for taking the intervention. Do you therefore agree that, actually, what we need is knowledge, because how can the Government actually put mechanisms in place to hit the ground running when they don't even know what it is they're going to be hitting the ground running with? The problem is we don't know. We don't know anything. 

I fully recognise the problems that the Welsh Government have in this regard. I think to say we don't know anything is going a bit further—[Interruption.] Hang on. I've taken one intervention. We don't know everything, but to say we don't know anything at all I think is wrong. We can estimate exactly—not exactly, but we can estimate how the system will potentially look, so certain work has to be done. I'm sure that the Cabinet Secretary is aware of that and that officials are getting on with it; they certainly seem to be dealing with some of the concerning issues when we took evidence. 

Turning to chapter 3 and reform of the Barnett formula, well, of course, we've been talking about this for a very long time, but it's developed a new resonance now Brexit is on the horizon. Recommendation 2 recommends,  

'that the Welsh Government should work with the UK Government and other devolved administrations to develop a sustainable long-term replacement for the Barnett formula that allocates funding across the UK based on needs.'

At the heart of this is the widely held view that the Barnett formula will be unsuitable for allocating future funding allocations.

So, yes, we've come a long way. We do have the fiscal framework and the Barnett floor, and we've had modifications to the Barnett formula that will help in the short to medium term, but the committee recognised that in the longer term, particularly post Brexit, a full review of the Barnett formula is necessary. The Institute for Fiscal Studies highlighted that the formula does not take account of differences in funding needs or population growth and, if used to determine funding, it could be seriously disadvantageous to Wales.

There were different options put forward that were quite mind-boggling to the committee. An alternative would be the index per capita formula that's used in Scotland or, alternatively, the UK and Welsh Governments may wish to allocate funding differently again using hypothecation and indexing changes over time.  

I appreciate I'm out of time, deputy Chair, but it's been a pleasure to be part of this debate, and also to be part of the committee inquiry into this. It's a very important area, and I look forward to listening to what other Members have to say.  

Thank you. Julie Morgan.

Thank you very much, Deputy Presiding Officer, for calling me to speak in this very topical debate, as we move into an even more nail-biting time over our future relationship with the European Union. I'm not a member of the committee, but I did give evidence to the committee as chair of the Wales programme monitoring committee, along with Sioned Evans, the chief executive of WEFO, and Grahame Guilford, EU funding ambassador. The report certainly makes a strong case for the continuation of funding, at least at the level of the present European structural funds. And, in fact, as the Chair has already said in his introduction, Wales receives considerably more structural funds per person than any other part of the UK, so Brexit could hit Wales particularly hard.

Many organisations cited in the report gave evidence about the value of the funds, and many drew attention to the cross-cutting themes that have to be adhered to when European funding is agreed—the cross-cutting themes of equal opportunities and gender mainstreaming, sustainable development and tackling poverty and social exclusion. That is one of the great things, I think, about the European funds that we have had—that these themes have been built into all the projects. Chwarae Teg in particular drew attention to the projects that had been set up to look at women in the workforce and to tackle inequalities. I think it's important to remember that, in WEFO, there is a whole section of staff that is devoted to promoting the cross-cutting themes and ensuring that they're embedded at the beginning in all of the projects that are agreed to have EU funding. I think it is absolutely essential that, in any future funding that comes through the shared prosperity fund, these themes are also built in. We must make sure that tackling inequality is one of the main issues of these themes. I think it is also important to remember, as the Chair of the committee also said, about the huge amount of expertise that has been built up in Wales over nearly 20 years of EU funding—and that is recognised in the report—because the Welsh Government has been responsible for managing EU structural funds since April 2000 and, of course, has an in-depth knowledge of local views, local situations and local partnerships. It is vitally important that this is not lost, and it cannot be replicated by a Whitehall-down approach.

One of the most striking things in the report that struck me reading it was how it highlighted what an unequal country the UK is. I was particularly struck by the bit in the report that said that:

The UK currently has the largest regional economic disparity in GDP per person of any of the 28 EU Member States', with Inner London West having a GDP per head of 611 per cent of the EU average, while West Wales and the Valleys has a GDP of 68 per cent. I think it is very worrying that there are such extremes of wealth in the UK and that we have such an unequal society across the UK, because an unequal society will never be a cohesive society, and obviously the financial crash and austerity, which has followed, has made the gap between rich and poor get even wider.

But it was very good to hear in the committee report the strong support for the view that Wales should not be a penny worse off than it would have been within the EU, because this was, after all, one of the 'leave' campaign's promises to voters before the referendum.

Now, I know there have been pre-consultation meetings between different organisations in Wales in the Wales Office ahead of the formal consultation on the shared prosperity fund, which I'm told is planned to start before Christmas. It was interesting to hear in First Minister's questions, when I asked the First Minister about a meeting that was supposed to take, that did take, place last Friday—this was a meeting with third sector organisations and I know there was some concern amongst the third sector about who was being involved and who wasn't being involved in discussing the shared prosperity fund, but the First Minister said that his officials here were informed, but only the day before. So, I think, in response to Nick Ramsay's comments, that we only know a little bit and pretty late in the day. So, I think it is a matter of great concern. I think there is concern amongst organisations, and particularly organisations working on promoting equality and helping women to achieve and prosper are very concerned that there may be any change of emphasis if the UK Government controls the levers of the shared prosperity fund. So, I am very pleased that the Welsh Government is quite clear that anything that comes from the shared prosperity fund to Wales must be controlled and made in Wales.

Can I join the Chair in thanking all those who gave evidence to the committee and to the clerking team of the committee as well in producing the work? It's crucial that we do that. Can I also agree with Nick Ramsay—it's probably the only thing I will agree with him on this afternoon—in that in fact the Chair give a very detailed review of that report. I want to express my huge disappointment that only one person—oh, Andrew R.T. has now just appeared; two people—who actually supported Brexit are in this Chamber to listen to this important debate, because it discusses the future funding for Wales. And UKIP have disappeared. They all wanted this, but when it comes to the actual realities on the ground they don't want to know about it. I think it's disgraceful.

Dirprwy Lywydd, last year, the External Affairs and Additional Legislation Committee published its report on the future of regional policy in Wales post Brexit, and that report highlighted the issue of funding for that future and the challenges that were posed as we no longer became beneficiaries of European funding. During the 2014-20 round of European structural funds, Wales has been earmarked to receive £2.1 billion in funding. I'll repeat that: £2.1 billion. Given that every year Wales receives £375 million of funds from the European structural investment funds during that period for the purposes of regional economic development, it was clear to us as a committee then that we needed to look at these issues in more detail, and I'm very pleased that the Finance Committee took on the role of looking at this in far more detail. The loss of access to these funds could result in a funding black hole for a number of investments in areas such as skills and apprenticeships—Jobs Growth Wales, we know, was funded by European funds—research collaboration and excellence—we've talked about Horizon 2020 and its successor, Horizon Europe—infrastructure and innovation. Indeed, we stand to lose more money than any other nation in the United Kingdom if European structural funds are not replaced. Julie Morgan's highlighted the fact that we get—I think it's 458 per cent of the UK average in Wales. The next one closest to us is actually Northern Ireland, at 197 per cent. So, we are way in the lead in the benefits we have from European structural funds. It's hugely disappointing that we have not yet got clarity on what will replace it.

Now, the principles underpinning the current system of support from EU to member states are based on fairness and need. Regions that have a per capita GDP of less than 75 per cent of the EU average qualify for that maximum level. There are actually only two in the UK that actually met that status: that's Cornwall and the Isles of Scilly, and west Wales and the Valleys. And we know that, if we had remained in the EU for the next period of the MFF, we would have actually had either equivalent funding or the minimum of a transition funding. Now, we've not been given any notification as to whether that will happen. All we've been told is there will be a shared prosperity fund. I'm sorry, Nick, that's all we've been told. Estimates and guesses—we can guess things, but it's nowhere given us in detail as to how that fund will work, what will be in it, who can bid for it. Is it a bidding scheme? Is it an allocation? What will the criteria be? It seems to be that the UK Government has taken the view, 'Well, that's not our priority'.

Will you take an intervention? I don't disagree with you, Dave. I think it's not an ideal situation. I'd like to see much more detail of the shared prosperity fund myself. The only point I was making was that there are certain assumptions that can be made, and I know full well that the Cabinet Secretary's officials have been looking at different options; of course they have. So, there is something that we can do, but I don't fundamentally disagree with you. We would not choose to be in this position.

I agree. And, yes, there are some assumptions that can be made, but, of course, as Julie Morgan pointed out, with the news today as to what's happening in Cabinet right now, all those assumptions could be thrown in the air and discarded, because we just haven't got a clue. And that's the biggest problem: there is no commitment to any aspect of this. The high-level abstract definitions say absolutely nothing. And Julie's also highlighted the concern that we've also had in the past—and we've raised this with the Cabinet Secretary on other aspects of Brexit—is the engagement with the Welsh Government. Julie highlighted the fact that there was a meeting last week, preparatory to the consultation, but it was organised through the Welsh Office, not the Welsh Government, and George Hollingbery came to our committee to talk about trade and he was having exploratory discussions with stakeholders, so he said, organised through the Welsh Office, not the Welsh Government, on aspects of business in Wales. It is clear that the engagement with devolved institutions is atrocious, and it's something that really needs to be taken up at a much higher level— if you can, Nick, if you've got any influence at No. 10, please tell them that they need to engage with the Welsh institutions. [Interruption.] It's very important. They could tell us as well, yes.

Now, the report does highlight, once again, that lack of engagement, and I think we need to address that because we have representation for communities, deprived areas. Those communities benefit from European funding. They're going to lose out, and yet the UK Government doesn't seem to have an interest in helping us help them. We do know that Wales will lose funding; we do know that some of our most deprived communities will no longer get the opportunity to have financial investment and support; we do know, to date, that there are no identified replacement programmes. It's time for the UK Government to move ahead with the promises to the Welsh people of no loss of funding now or in the future.

I think it's a very good report, and I think the recommendations are very good. I just want to focus on a few comments with regard to my concerns over the shared prosperity fund.

But, within the context of the shared prosperity fund, it is—. It's nice, actually, to see Nick Ramsay struggling and squirming, trying to explain what information whatsoever has been given from the Government. You did the best you could; I think that's probably a fair comment. But what I do get annoyed about is, certainly from the Secretary of State for Wales, in talking about it, and saying, 'Well, of course, the past system hasn't worked very well'—I have to tell you, in Rhondda Cynon Taf, in the Pontypridd and the Taff Ely area, it has been phenomenally successful in a constituency that's suffered from deindustrialisation. We had the £7 million of money for the lido, which connected with the £10 million for the pedestrianisation. We had the £100 million for the Church Village bypass, which has made a massive transformation. We've now got the £119 million for the rail enhancement part of the metro, £27 million of which is within the Taff's Well area, and, of course, the announcement more recently—I think an excellent announcement from the Cabinet Secretary for Finance—in respect of the £100 million in respect of further research and innovation. Those things, together with the way in which Welsh Government has moved Transport for Wales into the Pontypridd area, and the engagement and the partnership—it's actually transforming and regenerating. It has been vitally important, vitally useful, and a really serious consequence from not having it.

But my reason for going on about the shared prosperity fund—. Sometimes you make these glib comments, you know, that the Welsh Conservatives and the Conservative Government has been sharing prosperity ever since it was elected in 2010. The only problem is that it's been sharing prosperity with the people who are already prosperous, not with the people who actually need it. But the Secretary of State for Wales, when he's been asked about this and been challenged about this in Westminster, this is what he said on 24 October 2018:

'The UK's exit from the European Union provides us with an opportunity to reconsider how funding for growth across the UK is designed and delivered. In our manifesto'—

I presume that's the 2017 manifesto, coming up to two years ago—

'we committed to engaging with the Welsh Government on the UK Shared Prosperity Fund, and that work is under way.'

Well, from what I can see, that's been a manifesto commitment that's been broken from day one. There is no engagement, there has been no sharing of information, and there is no realistic work that is under way. And no doubt the Cabinet Secretary will say that's wrong. But more importantly than that, of course, is that the Secretary of State for Wales, who apparently seems to be confused about what his role is, or, in fact, that if he actually has a role that delivers any benefit to Wales whatsoever, he says, in an event that he had that, as far as I'm aware, was done without the engagement with Welsh Government:

'The creation of the UKSPF creates several risks and concerns. Will it be devolved? If yes, how will the governance and management work? Who will decide the investment priorities? Perhaps a UK Common Framework would work better for Scotland’s third sector? Will it be less money than we have now? Will the sector have a voice?'

Now, those were the questions that were being raised in the event at which he was the main speaker, and I think it raises the concerns that we all have, and we have to speak completely openly about, that what we are seeing is a re-centralisation of UK policy, a clawing back on devolution by using the finance—the so-called finance—that will go into the shared prosperity fund to actually control the political direction within Wales. We can have all the powers we want in this particular Assembly, but if we don't have the finance to enable us to implement them, then that power becomes sterile, and that is my real concern.

In a situation where the UK Government is telling us nothing, is clearly breaking its promises for engagement, will not give any commitment whatsoever in terms of how much money we will need, even if it's to guarantee that we will not get less, what it is actually talking about is how it will control that finance, how it will use that finance, to redirect policy, and even a question as to whether it will be devolved at all. That is the challenge I see, and, in a Conservative Government that is so abysmally divided, that it is in danger of, on the brink of, a general election any day now, it is a real concern that we have no idea, no capacity whatsoever, to plan for the future in terms of the so-called shared prosperity fund. There is only one commitment that will satisfy this, and that is that we will not have less money than we had before. And then there was a second commitment—it wasn't just the one; there was a second commitment—and that is that it will not be in any way used to undermine devolution, that those resources will come here to this place, the local, democratically elected Assembly of Wales, to decide how best it can be used. The decisions taken in my constituency have been very wise, prudent and are bearing fruit, and there's no reason to expect that not to happen in the future, unless there is a recentralisation policy, a secret agenda that the Tories have in the UK, to actually undermine devolution and recentralise power.

I'd like to thank the Finance Committee for their report.

Over the past two decades, Wales has been the beneficiary of billions of pounds of EU funding, and we are currently receiving nearly £700 million a year. With the UK due to leave the EU in March next year, it is vital that we secure funding from the UK Government that is equal to or greater than the level of funding we receive from the EU.

The UK pays around £13 billion per annum to the EU, and money is then returned to the UK to pay for the common agricultural policy and structural funds. When Wales received Objective 1 funding in 1999, it was a once-in-a-lifetime opportunity to improve the economy of large parts of Wales. But still, west Wales and the Valleys remain one of the poorest parts of the UK. Therefore, tackling this inequality, post Brexit, is of paramount importance. 

In 2014, Wales once again qualified for the highest level of structural funds as a lesser developed region, and this concerns me. While EU funding has delivered many improvements to Wales, it hasn’t transformed our economy. Wales remains the poorest part of the UK, and one of the poorest regions in Europe. Post Brexit, we have the opportunity to develop funding programmes that meet the needs of Wales. Structural funds can be developed and designed to meet the needs of Wales. Agri-funding schemes can be developed that benefit Wales’s environment and our farmers.

In order to achieve this, we must ensure that Wales continues to get the same level of funding. I therefore welcome the committee’s first recommendation to ensure that Wales is not a penny worse off post Brexit. In fact, I support all the committee’s recommendations.

The UK Government’s shared prosperity fund must work for Wales, and funds destined for Wales decided upon by this institution. Whatever system the UK Government comes up with for replacing EU funding programmes, it must not be used as a way of circumventing devolution. Devolution is here to stay, and we must send out a clear message that this institution is responsible for funding decisions affecting Wales.

I am pleased that the Welsh Government have accepted all the committee’s recommendations, and by us supporting the motion before us today, we will be sending a clear signal to the UK Government: guarantee the funding and allow us to decide on how best to spend it. 

Thank you. Jane Hutt.

Thank you very much, Dirprwy Llywydd, for calling me to speak. I speak in full support of the Finance Committee inquiry report; I took part in it as a member. I want to focus specifically in support of recommendations 2 to 7: the importance of the shared prosperity fund; the impact on equalities of the loss of European funding; and the future fiscal framework for Wales in relation to Brexit.

In the Equality and Human Rights Commission Brexit and equalities debates last week, I spoke of the importance of the socioeconomic duty in Wales. Although this isn't featured in the Finance Committee's report, I do believe that this is a vital duty for the Welsh Government to enact. It will play a part in giving us powers to counteract the adverse impacts of Brexit on equality and human rights. It's also important in the funding context in terms of powers and priorities that this Welsh Government needs. We drew attention to the threats to EU funding in last week's debates, the uncertain prospects for the UK's shared prosperity fund. We made it clear that the UK shared prosperity fund proposed by the UK Government should be administered by the Welsh Government to ensure that it's sensitive to local needs and inequalities in Wales. We made it clear, as all speakers, indeed, have done today, that the fund should be targeted at tackling inequality and socioeconomic disadvantage.

Our committees have identified the EU funds that relate directly to equality and human rights, with around 60 per cent of European social fund-funded projects targeting people with one or more protected characteristics. I welcome the actions the Welsh Government has taken to influence this agenda. It's unclear how the UK Government has responded to the positive policy papers that have come from the Welsh Government, starting with the 'Regional Investment in Wales after Brexit' paper, which was published last December. A commitment in that paper to using funding received from Europe to support regional development and reduce inequality, and a commitment to a multi-annual approach towards investing replacement funding to maintain a long-term focus on the structural challenges in our economy and the labour market—how has the UK Government responded to this?

The Cabinet Secretary might like to update us on his last oral statement on the regional investment steering group that's been set up with businesses, local government, universities and the third sector, and £350,000 from the European transition fund to establish a partnership with the Organisation for Economic Co-operation and Development to help inform our approach. Welsh Government has been proactive in preparing for future funding arrangements post Brexit, and we've repeatedly told the UK Government that its proposed consultation about the shared prosperity fund must now take place, engaging with the Welsh Government and the National Assembly for Wales, with our committees asking for it, with interest arising across the Chamber, as well as from the Finance Committee.

Llywydd, at the Women in Wales For Europe meeting, last week, which I chaired, the Equality and Human Rights Commission alerted us to their forthcoming report. It will be called 'If not the EU, then who? The potential impact of the loss of EU funding on equality and human rights in Britain'. That report's going to be published imminently. It will provide an evidence base for the commission, the Welsh Government and ourselves in this Assembly, to respond to the UK Government shared prosperity fund consultation, and I understand that that EHRC research explores how the new UK shared prosperity fund can be an opportunity to keep equality and human rights as a cross-cutting theme in the way that Julie Morgan has described as being so influential in the use of our structural funds. So, I hope that the EHRC report will be influential with the UK Government as well.

Can I finish by welcoming the Cabinet Secretary's response to recommendation 2, acknowledging the Welsh Government paper, 'Reforming UK funding and fiscal arrangements after Brexit', fully backing the call for the Barnett formula to be replaced with a new, rules-based system that would ensure the allocation of resources within the UK is based on relative need. Alongside the socioeconomic duty, it is vital that we strengthen our powers and resource base for public finance in Wales. The fiscal framework and inter-governmental machinery reform is crucial to that, if Wales is to have a strong voice in not only Brexit, but the discussions of the future of the management of our public finances in Wales. So, I do hope that the Finance Committee's report will be useful to the Cabinet Secretary in his ongoing negotiations on behalf of Wales.

I congratulate the Finance Committee on its very important report and recommendations, Dirprwy Lywydd. We all know that the challenges involved with Brexit are immense, and the uncertainty is great, and that poses all sorts of very, very difficult challenges for organisations, and, indeed, everybody in Wales. Trying to find a way through is very, very difficult, given the complexity and the reach of our membership into all aspects of life.

We've heard mention of some European Union programmes today, Dirprwy Lywydd, and I'd like to mention the LIFE programme, which many of our organisations concerned with our environment and nature and biodiversity in Wales value greatly, and have requested that it be highlighted in terms of continuation of funding. It has been critical to nature and, by extension, well-being in Wales, since 1992, when it first started. Over that period, we've had 18 nature and biodiversity LIFE projects in Wales, with a total value of over €65 million—€36 million of which is directly from European Union funds. I would say, Dirprwy Lywydd, and I know many would agree, that money has achieved a lot and has been put to very good use. I think that's very much the view of Welsh Government, given that the Welsh Government's own nature recovery plan for Wales lists several LIFE-funded projects that are critical to the achievement of nature conservation objectives in our country, and it specifically mentions LIFE as crucial to achieving our nature recovery objectives. So, given that centrality of that programme, those projects and that funding to nature, biodiversity and well-being in Wales, I wonder if the Cabinet Secretary might consider calling on UK Government to replace the EU LIFE nature fund with an equivalent dedicated funding programme for nature as we move forward.

Thank you. Can I now call the Cabinet Secretary for Finance, Mark Drakeford?

Thank you very much, Deputy Presiding Officer. As other Members have done, I would like to start by saying a few words of thanks to the Finance Committee and to Llyr Gruffydd for their work on this report, and to all the stakeholders across Wales who've provided evidence as part of the committee’s inquiry and to everyone who has spoken in so supportive a way during this debate today.

I’m going to use my time to respond to some of the recommendations in the report and to build on some of the points that have been made this afternoon. 

Thanks very much to all those who've taken part in what has been a consensual debate, as was the report itself. I was very pleased on behalf of the Government to be able to support all the report's recommendations. We particularly and obviously support the overarching recommendation of the report to continue to negotiate with the UK Government to ensure that Wales is not a penny worse off as a result of Brexit. As others have said, this was a promise made to people in Wales during the referendum campaign, and the UK Government must live up to that promise.

Now, Dirprwy Lywydd, I've always recognised in the Chamber the value of the Chancellor of the Exchequer's commitment to current programmes. The guarantee that he has provided has been undoubtedly useful in sustaining the interest and commitment to that programme, but as the weeks and months go by, it is hugely regrettable, as David Rees said, that we are still no clearer on the UK Government's intentions beyond 2021. The delay in the spending review into next year means that it is now going to be even more difficult to plan effectively for our future outside the European Union and to support prosperity across Wales.

The value of the programmes to Wales has been regularly referred to during the debate. Caroline Jones referred to the money that we get for European structural and investment funds, worth some £370 million annually to Wales. John Griffiths made a really important contribution, I think, in reminding us that, as well as the money we get through its structural funds and the money we get to support agriculture in Wales, there are a series of other really important European Union programmes—Erasmus+, Horizon 2020, the interterritorial co-operation programme, Creative Europe, and, as John said this afternoon, the LIFE programme. All of those strands in European funding have done enormous good here in Wales and allowed Wales to play a part on the European stage. When we say that Wales must not be a penny worse off, we mean continued access to those programmes and to what they bring to Wales, as the report does in, for example, highlighting the importance of the European Investment Bank to us here.

It's essential, then, that the UK Government not only confirms replacement funding for the Welsh Government to protect the livelihoods of our businesses, people and communities, but also that we retain the responsibility that has been here in this Assembly since it was founded in 1999 to decide how that funding is best deployed along with our partners here in Wales.

We set out our policy position in 'Regional Investment in Wales after Brexit'. It was developed through close and open dialogue with stakeholders and it contains those 'made in Wales' solutions to which Members this afternoon have referred. I'm very grateful to the committee for its support of this basic policy position.

We've heard a lot this afternoon about the UK shared prosperity fund. Maybe that wasn't one of the more consensual moments in our debate. Let me say from my perspective, there's very little 'shared' about it, in the sense that we know almost nothing about the plans that the UK Government has for the fund. We raise it absolutely regularly. I raised it at the last meeting of finance Ministers with the Treasury, strongly supported by the Scottish Government. The First Minister raised it again with the Deputy Prime Minister and the Scottish First Minister at the British-Irish Council at the weekend. Frankly, Dirprwy Lywydd, we have more traction with UK Ministers who do not represent Wales in the UK Government than we do through the Secretary of State himself, constantly, as Mick Antoniw said, talking Wales down in a vain attempt to aggrandise his own role in the UK Government.

We reject outright any notion of a UK shared prosperity fund that would take money or decision making away from Wales. The repeated promises that Brexit would result in an increase in powers for this institution have to be honoured in the very practical implementation of any funding arrangements the other side of the European Union. That was endorsed this week, Dirprwy Lywydd, in a report by the all-party parliamentary committee on this matter, which said, yet again, the money that goes to Wales and to Scotland as a result of our membership of the European Union must flow to Wales and Scotland in the future, and the decision making about how best to use those investments must be left as close to where those decisions matter.

Will the Cabinet Secretary take an intervention?

Of course, Andrew.

I'm grateful to him for taking the intervention. I do take the point, and I, as a Member of this institution, want as much autonomy as possible within this institution, but under the EU rules, on the rural development plan, for example, the Cabinet Secretary and her officials would be going back and forth to Brussels for final sign-off. Do you not accept that there is an element, on a UK basis, for agreement around some of the general principles that are best defined in the agricultural field as UK frameworks?

Well, let me answer Andrew R.T. Davies in two ways. First of all, Andrew, one of the major selling points that were put forward by those who supported the idea of leaving the European Union is that we would be free of those restraints in the future and that those decisions would come here to Wales, and that's what I am arguing for in relation to the shared prosperity fund. Those responsibilities have been here since 1999, and the other side of the European Union, those responsibilities should be augmented, not taken away.

You used a very important word in your intervention, which was 'by agreement', and if there were to be a proper discussion with the UK Government on how those funds might best be used—and maybe there are some UK-wide themes that we would wish to agree on with others—I'd have no objection to that. There's been nothing of that, I can absolutely assure you of that. There has been not a single occasion on which we have sat down around a table, with Scotland and the UK Government, to draw out exactly that.

On the new agriculture policy front, we are working closely with the UK Government and other devolved administrations, and it demonstrates that where that takes place, it is possible to draw out those things where we have common ground, and we know now that the majority of the framework that will govern agriculture in the future will be managed through non-legislative inter-governmental co-ordination. So, when it's done by agreement, progress can be made. We see very little sign of that in the shared prosperity fund area.

Very briefly, Dirprwy Lywydd, just to mention some final important themes in the report and in contributions. Absolutely, we recognise what Julie Morgan said about the need to continue to secure expertise in the administration of those funds, to simplify those processes, to make sure that we use European Union funds to focus relentlessly on equality and human rights, especially citizenship rights in the Brexit context—a point picked up by Jane Hutt when she talked about the socioeconomic duty. The report talks about the reform of Barnett and we agree, but it's been very difficult to bring others to the table. It seems particularly hard to me to see how Barnett could be used in any emergency budget that might be necessary in a hard-line Brexit.

In conclusion, Dirprwy Lywydd, the Welsh Government accepts all the report's recommendations. Its evidence provides a core part of our negotiating strategy to achieve the best funding deal for Wales. We will continue to adopt an open and evidence-based approach to those negotiations and I welcome the contribution that this report and this debate make to that whole process. 

I now call on Llyr Gruffydd to reply to the debate.

Can I thank all Members who contributed to what I thought was an excellent debate? If I had a penny for every time I heard somebody say that we shouldn't be a penny worse off, then I could probably bankroll some of this myself. But, it does underline the fact that this is probably one of the central aspects: that we would like to see the Brexit dividend that was promised to us. Although the likelihood of that is quite remote, certainly in the short to medium term, the reality is that we, at the very least, expect to hold on to what we have previously received.

The other key feature coming through, of course, was the lack of detail coming from the UK Government. I wasn't a member of the Finance Committee when the Secretary of State was initially invited to come and give evidence, but you might want to consider whether the Secretary of State politely declined because he didn't really know himself what the proposals were going to be. Indeed, we look forward, if there is to be a consultation, as expected, or some sort of information dissemination before Christmas, to be made aware of that at the very least.

Of course, it raises again the point made by Mick Antoniw about the lack of engagement, and Jane Hutt and others mentioned the lack of engagement that's such a concerning feature of all facets of Brexit between the UK Government and the Welsh Government. Only this morning, members of the Climate Change, Environment and Rural Affairs Committee were scrutinising the UK Agriculture Bill and concerns were expressed there around how the UK Government seem to be sucking some powers back to the centre in relation to funding as well, and setting upper limits, et cetera. 

We saw—I see the Cabinet Secretary for rural affairs in her seat there—in the independent review that's now been started, looking at the way that farm funding is being allocated across the UK, how the Welsh Government didn't have that proactive role in looking at developing terms of reference for that particular piece of work. So, it is concerning, I think, that we're potentially seeing once again on an issue as important as successor funding programmes, we're possibly seeing the same tendency here. 

Of course, David Rees and John Griffiths and others have referred to this risk of a funding black hole that we might see where important programmes, schemes and projects will be adversely impacted, affecting communities, businesses, industry, academia, et cetera, who are very much dependent on a lot of this money for much of their work. 

The Cabinet Secretary reminded us that he's still no clearer as to the UK Government's intention beyond 2021. Well, what he can be sure of is our committee's support for the two key things that he mentioned, in that he demands of the UK Government a confirmation of replacement funding in the first place, but also that we here in Wales retain the responsibility to decide how that funding is deployed. And really, in that respect, I think this is very much a litmus test on whether devolution actually does what it says on the tin, because if that isn't delivered then clearly there will be fundamental questions to be asked. 

Can I, in conclusion, also thank the clerk and the team at the Commission for the excellent support that the committee has received along the way of carrying out this work, and thank Assembly Members who are members of the committee as well for their deliberations? Hopefully this is an important contribution to what is a key discussion and a key factor for the future of this National Assembly, not only in our relationship with the UK Government, but certainly in terms of our ability to deliver the benefits that historically we've been able to deliver through European funding, and let's hope that, if there is a successor scheme that comes, then those schemes, whatever they look like, respect the principles outlined in our report and allow us to continue with much of that work. Diolch yn fawr.

Thank you. The proposal is to note the committee's report. Does any Member object? Therefore the motion is agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.