5. Debate on the Finance Committee Report — 'Post-EU funding arrangements'

Part of the debate – in the Senedd at 4:10 pm on 30 November 2022.

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Photo of Rebecca Evans Rebecca Evans Labour 4:10, 30 November 2022

Existing and new EU funding programmes overlap by two years, and the Welsh Government was ready to start a post-EU investment programme almost two years ago, in January 2021, and, by that point, we'd already done a huge amount of intensive work with the OECD and with our Welsh partners to create the strongest possible model for Wales. And it's still completely unacceptable that the UK Government has dismissed that really, really detailed work, and the public consultation, indeed, which supported that, in favour of their own approach, which was, frankly, just cobbled together at the last minute earlier this year. And the consequences of the UK Government's post-EU funding approach are really stark. So, the SPF distribution formula redirects economic development funds away from those areas in Wales where poverty is most concentrated, and we've seen such actions celebrated by our current Prime Minister in terms of moving funding from the areas where it's needed most to those areas that are more affluent.

Local authorities are being put under enormous strain due to unfeasible timescales now for developing plans and projects and putting in place the administrative and the governance arrangements that have to sit alongside their proposals. And also, really importantly, universities, colleges, the third sector and businesses have been completely shut out of directly accessing funding, and it leaves many of those sectors now reporting redundancies and the closure of vital services—absolutely really harmful, real-world effects on Wales as a result of the existing situation. 

The Welsh Government's being denied access to the SPF to support previously EU-funded pan-Wales programmes that are absolutely critical for productivity and growth—for example, Business Wales, apprenticeships, the development bank and our innovation schemes. And because of the low funding levels, the short timescales, the inflexibility, local authorities are being forced, as we've heard, to select those smaller suboptimal projects, which will risk not having real impact.

Our rural communities, of course, are £243 million worse off than if we'd remained in the EU, because the UK Government has deducted the EU receipts due to Wales for work that was part of the 2014 to 2020 rural development programme. And, of course, political delays in formalising the UK's association to Horizon Europe mean that universities and businesses in Wales are losing out on access to vital research and innovation funding.

Bypassing the Welsh Government and this Senedd risks duplication and blurred accountability, and this is already demonstrated by the way in which the UK Government is handling the delivery of the Multiply scheme and its failure to response meaningfully, I think, to the Finance Committee's specific recommendations on this. These actions also need to be seen in the context of our Welsh budget settlement, which, of course, as we've heard earlier today, is worth £1 billion less next year, and the approach also undermines devolution and has little regard, actually, for the wishes of Welsh partners.

So, turning to the committee report's recommendations, we accept all of those that are directed towards the Welsh Government, and we'll continue to work with partners to mitigate as much of this disruption and the consequences as we can. This includes brokering collaboration between sectors and supporting local government with their plans. We also continue to hold our regular meetings of the strategic forum for regional investment in Wales, chaired by Huw Irranca-Davies, to share information and lessons learned amongst Welsh partners. 

In regard to the report's recommendations for the UK Government, we are grateful for the committee raising these important points. The UK Government's response to the report, I think, is regrettably dismissive, and it fails to meaningfully address many of the recommendations and, once again, of course, it refuses to accept the enormous loss of funding that's now being felt by communities across Wales. 

A responsible UK Government would put the needs of the Welsh economy first and listen to us, our partners and a range of independent experts and cross-party groups, who have urged UK Ministers to take a different approach—an approach that involves co-decision making and would deliver much better value for money and economic impact. A substantive discussion on post-EU funding is planned at the next Finance: Interministerial Standing Committee, which, I think, is due to take place early next month and which I will be attending. 

We were able, as we've heard, to work more constructively together, and more successfully, on the issue of free ports. It is vital that the UK Government replicates that more productive approach in the delivery of post-EU funds and other UK funds using the internal market Act. That will mean, then, that we can better address together Wales's long-term structural challenges and maximise the opportunities in support of our mission to create a stronger, fairer and greener Wales.