Wales: Regional Development Funding

– in Westminster Hall at 6:28 pm on 7th May 2019.

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Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 6:28 pm, 7th May 2019

I beg to move,

That this House
has considered the future of regional development funding in Wales.

It is a pleasure to serve under your chairmanship, Sir Graham. I take this opportunity to welcome the Minister to his place. I have lost count of how many have preceded him. I have not counted how many days he needs to get through to exceed his predecessor, but I am sure that one of my colleagues will work that out as we speak. We wish him well and we wish him good luck—he is going to need it.

Regional development funding has been absolutely critical in boosting less prosperous areas across the United Kingdom, including in Wales. It is crucial in an era in which the divides in terms of wealth and prosperity in British society are so evident for all to see. We are witnessing a growing trend whereby our cities attract investment, create wealth and offer high-quality jobs, whereas our smaller towns are left behind or, worse still, buffeted by the winds of globalisation without any real support from the UK Government.

That has been the story of the last 40 years. UK Governments have stood by and watched the forces of globalisation and new technology destroy our industrial base and decimate our high streets, and they have been intensely relaxed about the impact of those changes on the pride, identity and prosperity of constituencies such as mine and others across Wales and the United Kingdom. First, Margaret Thatcher sold out the miners across south Wales, the English midlands and northern England, offering no state support to those who needed it to retrain in other fields. Then, although new Labour injected much-needed investment into our public services, it did not manage to deliver fundamental structural reform through a bold, radical industrial strategy. Then came Osborne-omics, which inflicted utterly self-defeating austerity on the areas that could handle it least.

As a result of this triple whammy, manufacturing has collapsed, from 30% of UK GDP to just 10%, since the 1970s. In comparison, Germany’s manufacturing base has remained stable, at 23% or above. The vast differences between the UK and German experiences of the last 40 years demonstrate conclusively that globalisation is not an unstoppable force of nature; it is a man-made phenomenon. The repeated failure to harness globalisation and make it work for our communities was caused not by force majeure but by repeated failures of political leadership.

The collapse of our manufacturing base has of course led inexorably to our skills and productivity crises. No recent Prime Minister has come up with any kind of half-decent strategy to support the so-called forgotten 50% who do not go to university or get good jobs and training. For those graduates living in the big cities, the last 40 years have delivered wealth, opportunity, diversity and the excitement of technological change, but non-graduates who live in our towns and villages have simply been ignored and left behind. Younger, diverse cities full of graduates continue to thrive; older, smaller towns with close-knit communities of non-graduates continue to suffer. Wales is a case in point. Despite the efforts of the Welsh Government—I will come to the vital support the Welsh Government have delivered for constituencies such as mine—many parts of our great country have experienced hardship due to inept government at the UK level.

The gap in GDP between Wales and London makes the UK the most unbalanced EU member state in terms of regional economic disparities—a truly shocking statistic that shows the size of the challenge we face if we are to reduce inequality and spread opportunity. In Aberavon, we have had absolutely no regional development support from Westminster. The Swansea bay tidal lagoon would have put south Wales at the forefront of a 21st-century industry, marrying our desperate need to produce more green energy with the creation of genuinely high-quality jobs across the region.

Wales was the cradle of the first industrial revolution, and we could have been the cradle of a new, green revolution, but the Tory Government ran scared, spending £1 billion to buy the votes of each Democratic Unionist party Member but not a single penny for a long-term strategic infrastructure project that could have boosted wealth and opportunity for my constituents and so many across south Wales. I cannot help wondering whether that £1 billion would pass a value for money audit, given the voting behaviour of the DUP over recent months, but I digress.

The tidal lagoon decision followed hot on the heels of another broken promise: to electrify our railway lines. That promise made it only as far as Cardiff, with the line down to Port Talbot and Swansea still firmly embedded in the 20th century. With everything the Transport Secretary has achieved in his quite remarkable tenure, it feels that too little attention has been paid to this kick in the teeth for Welsh commuters and travellers and for the Welsh economy. Maybe handing a £50 million ferry contract to a company with no ferries was in fact a cunning plan to distract us from the fact that the Government he represents were holding Wales in contempt.

Thankfully, where the UK Government have failed, other tiers of governance have stepped in to give the Welsh economy a much-needed boost. The Welsh Government and local councils have combined to deliver so many crucial projects, but many have relied on the funding that we receive from the European Union—the EU structural fund.

Photo of Carolyn Harris Carolyn Harris Shadow Minister (Equalities Office) (Women and Equalities)

Although the Swansea bay campus is in my hon. Friend’s constituency, the £60 million EU investment in it has benefited my constituency incredibly. Does he agree that, given that we have missed out on the tidal lagoon and electrification, we now deserve assurances from the Government that structural funding will come to our region and to our communities?

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I agree with every word. As I will come on to, the key point is that we must not receive a penny less; there must not be any sleight of hand in the shift from EU structural funding to the shared prosperity fund.

EU structural funds are distributed to regions throughout the European Union based on their relative GDP. Areas where GDP per capita falls below 75% of EU GDP are placed in the first tier, and therefore receive the maximum funding. The poorer the region, the higher its priority and the more funding it receives. West Wales and the valleys is ranked as a region of the highest priority, and therefore received £2 billion for the 2014-20 cohort. No other area of the UK received more than £750 million, showing the scale of the challenge for the economy in that area of Wales. We are talking about a serious amount of funding here.

Like much of Wales, my Aberavon constituency has benefited hugely from European money, and from the strong vision and partnership working formed between the Welsh Government and our local Neath Port Talbot Council. Take, for instance, the new integrated transport hub—a Neath Port Talbot Council project in partnership with the Welsh Government, using EU money—or the sunken gardens and toddlers’ play area on Aberavon beach, which is a Neath Port Talbot Council project using EU funding granted by the Welsh Government.

There are more, from the bay campus, as my hon. Friend mentioned, to the Croeserw community enterprise centre, to the Cognation mountain bike trails in the Afan valley, to the Port Talbot magistrates court regeneration project. Those projects would not have been possible without European funding and strong political leadership of a type we see consistently from the Welsh Government and our local councils, but too rarely from Westminster. That is why Brexit raises a number of concerns regarding the future of regional development funding.

Photo of Chris Bryant Chris Bryant Chair, Finance Committee (Commons)

My hon. Friend is absolutely right that the Government have previously guaranteed that every penny from Europe that Wales lost would be matched by Westminster funding. That still has not happened. Has he noticed that, in the meantime, the Government have guaranteed that the British overseas territories will now receive from Westminster every single penny that they received from the European Union? Is it not a bit of an irony that the British Government are prepared to guarantee money to our overseas territories but not to our territories at home?

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

Indeed. That is a quite shocking example of the failure to prioritise what is happening right on our doorstep. It is absolutely vital that we see the funding in Wales that we need if we are to deliver. We all know how much support is required to deal with the huge changes in our economy over recent decades. We currently have a system that, while not perfect, works relatively well: EU funding is targeted at less prosperous areas and delivered by devolved Administrations who know the needs of their areas better than anyone else.

Now, we can debate Brexit until the cows come home—I am sure that we would love to—but I am sure that we can all agree that it is crucial that Wales does not lose a single penny of the funding that we would have received had the British public voted to remain instead of to leave the EU on 23 June 2016. The UK Government have agreed to replace those European funds, yet nearly everything about the shared prosperity fund is still to be worked out. We still do not know how much funding will be available. We need £1.7 billion per year UK-wide to keep up with what the EU is set to contribute from 2020 to 2026.

Photo of Wayne David Wayne David Shadow Minister (Defence) (Armed Forces and Defence Procurement)

There is an active debate ongoing about how the shared prosperity fund ought to be allocated. Some strongly argue that there should be a huge competitive element. Does my hon. Friend agree that it is far better to have a needs-based formula, so that resources are allocated where they are desired, not according to which area can put forward the best bids?

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I agree entirely. There are two key points. First, the big advantage of the current system is that it is depoliticised. The European Union works on the basis of data and facts and of a scientific analysis of what is required. There is a huge risk that the shared prosperity fund will be turned into pork barrel politics, where the fund gets used as a slush fund for, dare I say it, a Conservative Government in Westminster. Secondly, competitive bidding does not work. The shared prosperity fund needs to be embedded in an industrial strategy and a regional development strategy that works from a strategic point of view rather than being based on bidding.

The second key question is how this money will be divided across the country. The third question is what activities will be eligible for support. The fourth question is who will take the decisions on how the money is spent. We are still none the wiser on all those key questions.

It really is not just about the money. There is a real fear that this will be not just a financial grab, but a power grab: the Westminster Government will use this opportunity to reduce funding for areas that need it most and claw back powers that sit naturally with the devolved Administrations.

Photo of Jessica Morden Jessica Morden Opposition Whip (Commons), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

This week is the 20th anniversary of the first elections to the Welsh Government. It is therefore important that, when we have this debate, we respect the role of the Welsh Government and devolution.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

One of the key recommendations we in the all-party parliamentary group for post-Brexit funding for nations, regions and local areas have made in our report on the future of the shared prosperity fund—apologies for the plug, Sir Graham—is that the devolution settlement must be respected. Of course, the Westminster Government, the Assembly in Cardiff Bay and local authorities need to work as a team on this, but, fundamentally, the people on the ground know best how to spend this money and deliver maximum impact. Therefore, it is essential that the devolution settlement is respected in spirit and letter.

As I was saying, there is a fundamental worry that the shared prosperity fund will become a politicised slush fund, with a Conservative Government using it to buy votes in marginal seats. Those deep-seated concerns led to the creation of the all-party group, which I am proud to chair. The wide-ranging review we carried out heard from 80 organisations across the UK, including the Welsh Government, a wide range of local authorities in Wales and the Welsh TUC. Those representations were unanimous: the UK shared prosperity fund must comprise not a single penny less in real terms than the EU and UK funding streams it replaces. Westminster must not use Brexit as an opportunity to short-change the poorest parts of the UK and of our great country of Wales. Equally, the UK Government must not deny devolved Administrations the appropriate control over funds. Local decisions must not be made by an official or Minister sitting at the other end of the M4.

While it is deeply disappointing that the Minister with overall responsibility for the shared prosperity fund, the Under-Secretary of State for Housing, Communities and Local Government, Jake Berry, has refused to meet with our APPG, I am pleased to report that its officers met with the Secretary of State for Wales last month to make these points to him, and then last week with the Chief Secretary to the Treasury. Both meetings were conducted in a positive and constructive spirit, but it is shocking that there is still no sign of the public consultation on the SPF being launched any time soon. In fact, in one meeting there was a suggestion that the consultation may even be delayed until the comprehensive spending review in the autumn. Given that the CSR will include information on the funding of the SPF, I am not sure how relevant bodies, such as the Welsh Government and our local authorities, will be able to contribute in a meaningful way to a debate over funding when the horse will have already bolted. However, I can assure the Minister that our APPG will be watching carefully to ensure that there is no sleight of hand from the Government on this point.

Our APPG report contains 19 specific and deliverable recommendations. I hope the Minister has had an opportunity to read it, and we look forward to his response. However, in the limited time available, we would be particularly grateful if he responds to the following requests. Will he guarantee that Wales does not receive a penny less and that the devolution settlement will be fully respected, and will he provide clarity on when the SPF consultation will be published?

Let us be clear, the Welsh are a proud, resilient people. They are not looking for special treatment or anybody’s charity. However, we are looking for a level playing field—an opportunity to compete without having one hand tied behind our backs. This is the essence of the Welsh spirit: an unrelenting commitment to community, fairness and the wellbeing of our future generations. With that spirit, every single Welsh MP on the Labour Benches will keep fighting to ensure that Wales gets the regional investment that it needs to thrive in this city-centric era of globalisation and fast-paced technological change.

Several hon. Members:

rose—

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

Order. To get in everybody seeking to speak, I will place a four-minute limit on Back Benchers’ contributions.

Photo of Ian Lucas Ian Lucas Labour, Wrexham 6:46 pm, 7th May 2019

Thank you, Sir Graham. I congratulate my hon. Friend Stephen Kinnock on securing the debate. He has made such a superb contribution through the all-party parliamentary group for post-Brexit funding for nations, regions and local areas. I also welcome the Minister to his post. I want to speak briefly about regional development across north Wales.

At the time of the 2015 general election and its aftermath, there was a strong political focus by the then Prime Minister and Chancellor of the Exchequer on the development of the northern powerhouse. As the MP for Wrexham, on the border with England, I was concerned that investment should not be focused on one particular city in the north of England, but should be spread to regions, towns and communities to the west. My concern was shared by MPs representing English constituencies to the west of Manchester. We established the all-party parliamentary group on Mersey Dee north Wales, so that we had a political structure to enable us to raise the issue politically.

In north Wales our economy works from west to east, rather than north to south. We were very encouraged by the response from business, local authorities, universities and the community as a whole in supporting the initiative that we had set in place, which we used as a template to campaign for more focus and more investment in north Wales. Together with the work of organisations such as the cross-border Mersey Dee Alliance, that template led to the momentum that brought about the north Wales growth deal project, which we all worked extremely hard to achieve. It was very important that that project involved all political parties in north Wales, as well as business and the academic community, through universities and further education colleges.

My concern—I am sorry to say this—is that since the announcement of the establishment of the north Wales growth deal late last year, the cross-party and broad nature of the work being carried out in north Wales has lessened. Certainly, the consultations that have been done by certain political parties and local authorities in north Wales have not been in step with the collaboration that led to the achievement of the growth deal. Rather than the partisan approach that a particular political party has taken, a consensus among political parties to work for the benefit of north Wales is required.

To deliver the north Wales growth deal, I want a new structure that is more in step with business in north Wales and that involves Members of Parliament and Assembly Members, regardless of their political party. We need to set up an accountable structure to deliver the future investment in north Wales that must be delivered. Certain areas in north Wales did not benefit from European funding—my constituency did not receive the same level of investment as other parts of Wales—so it is imperative that we rebuild the sharing and investment that we set up after 2015 as soon as possible.

Photo of Jo Stevens Jo Stevens Labour, Cardiff Central 6:51 pm, 7th May 2019

It is a pleasure to serve under your chairmanship, Sir Graham. I thank my hon. Friend Stephen Kinnock for the opportunity to speak in the debate, although, frankly, I would rather we were not leaving the European Union and not giving up the £370 million a year that Wales receives from European structural and investment funds. I hope that, three years on, the public are soon asked to decide whether they now wish to accept whatever exit deal is available or retain the much better deal we have as a member of the European Union. Today’s debate encapsulates the Government’s failings with regard to Brexit. We were due to leave the European Union more than a month ago and they have failed even to open the consultation they promised on how regional development funding will work in Wales after exit.

The lack of information about the shared prosperity fund is stark. I have asked 18 parliamentary questions about the fund and I am yet to receive a clear response on a host of vital issues such as when the consultation will start, who will be eligible to apply and whether funding for Wales will be guaranteed. Perhaps the Minister will give us some information today—who knows?

Meanwhile, what happens to my constituents who would otherwise have continued to benefit from EU funding? What about the school leaver who could have obtained one of the thousands of apprenticeships that have been funded by the £71 million provided to the Welsh Government’s skills enhancement programme by the European social fund? What about the student who might end up helping to conduct cutting-edge research on the causes of dementia at Cardiff University’s revolutionary brain research imaging centre in my constituency? That centre exists only because of £4.5 million of funding that the European regional development fund provided to Cardiff University, but its work benefits dementia sufferers across the world. What about my constituent who just wants to drive across Cardiff bay to see family in Penarth, through the tunnel funded under the old objective 1 funding scheme?

Such opportunities and improvements to my constituents’ everyday life are there only because the EU has partnered with the Welsh Government and local communities and has consistently invested a net gain of more than £680 million per year in Wales. Is it any wonder that we on this side of the House are suspicious about what, if anything, is coming down the line? We have had prevarication and obfuscation about the fund. It has that mythical air about it, as do many of the promises made after 2016 about life after Brexit. We were told by the former Foreign Secretary, Boris Johnson, the Environment Secretary and the Defence Secretary that Wales would not lose a penny from voting to leave the EU, but since the referendum result all we have heard about is efficiencies and targeting.

That raises deep concern on these Benches, because we have been here before. We were told that cuts to policing budgets were just efficiencies, before crime started spiralling; we were told that councils having their resources cut was just targeting, before the homelessness crisis hit our streets; and we were told that help was being directed towards the neediest constituents, before terminally ill people started arriving at our surgeries having been declared fit for work. Given that track record, the people of Wales have every reason to think that there will be less money, fewer projects and fewer opportunities for our communities.

Like my hon. Friend the Member for Aberavon, I want the Minister to provide some guarantees to back up what his colleagues have said about match funding. The Government have failed to take decisive action to resolve the Brexit crisis. We have no clarity about future funding and we do not even have a date for the start of the consultation. It surely cannot be that difficult, because there is not much else going on, so perhaps the Minister could enlighten my constituents—they have been waiting long enough.

Photo of Gerald Jones Gerald Jones Shadow Minister (Defence) 6:55 pm, 7th May 2019

It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate my hon. Friend Stephen Kinnock on the case that he made.

As we have heard, Wales has been a net beneficiary of European regional development funding. In recent years we have seen towns and villages across the south Wales valleys transformed and regenerated, much of which has been due to European structural development funds. Wales has received millions of pounds more than it has contributed in recognition of the deprivation that exists.

Over the past 15 years, the upper Rhymney valley in my constituency has benefited from about £16 million in EU structural funds for regeneration projects, while in the Merthyr Tydfil part of my constituency the figure is £35.8 million. Merthyr Tydfil’s town centre has benefited from significant regeneration, from a brand new college development to the creation of the hugely popular public space that is Penderyn square, which is a real focal point for a renaissance of Welsh culture and heritage, including the annual Merthyr Rising festival, which takes place over the spring bank holiday weekend later this month.

We have also seen regional projects, such as the dualling of the A465 heads of the valleys road, which links the Merthyr Tydfil and Rhymney parts of my constituency and is a hugely important road link from west Wales across the heads of the valleys to the M5 and the midlands. That has all been made possible with the support of regional development funding from the EU.

In my previous life as a councillor for the New Tredegar ward in the upper Rhymney valley, I was heavily involved in the New Tredegar regeneration partnership. At that time, in 2001, the then Labour Government secured objective 1 funding for the south Wales valleys and west Wales, which resulted in billions of pounds of funding for crucial regeneration across the region.

The New Tredegar regeneration strategy helped to secure about £28 million for the community from a range of sources, including local regeneration funding from the Welsh Labour Government, which have helped to support and regenerate the Welsh valleys communities. The catalyst for the investment, however, was about £6 million of European funding. New Tredegar has new small business units, a new road, a community school, a museum, a community resource centre and a community café, all of which have helped to breathe new life into a community that was deeply scarred following the collapse of the coal industry under Thatcher. Regional development funding was essential to begin the process of regenerating valley communities.

Mrs Thatcher came to power exactly 40 years ago this weekend, which heralded one of the most difficult economic periods in modern history for many of the communities in Wales and created significant deprivation. The Thatcher Government ripped the heart out of our communities, threw countless people’s jobs on the scrapheap and decimated villages and towns across south Wales without any plan to replace the jobs that were lost. The economic decline of that period can still be felt today, despite the investment in the valleys by the last Labour Government.

It was not just the jobs in the coal industry that were lost; there were many support industries. At the bottom of my street when I was growing up was Evans Coaches, a small family-run coach company that had taken miners to work since the 1930s. The company did other jobs, but that was its main business. Some 15 drivers worked there, as well as support staff, all of whom were local. The company went out of business after Thatcher closed the pits. It is one of many heart-breaking examples.

I have outlined the history of the communities I represent and highlighted why the economic deprivation exists. We benefited from the regional development fund simply because we needed it. It is essential that we have clarity on a future regional development fund, known as the shared prosperity fund. A few weeks ago, during Wales questions, I asked the Secretary of State about it, but I received little response. I hope that the Minister can provide some answers about how it will work. We were promised that we would not lose a penny when we left the EU. We need answers, because the uncertainty cannot go on.

Photo of Nick Smith Nick Smith Opposition Whip (Commons) 6:59 pm, 7th May 2019

I thank my hon. Friend Stephen Kinnock for securing this important debate. The future of regional funding is crucial for Wales, and in the past it has been serious money. Wales has received more than £3.5 billion in European Union funding since 2000, and that money has made a difference. It has been a big boost for projects in Blaenau Gwent. There was the £77 million to support the dualling of the heads of the valleys road; there was the £7.5 million to help improve the railway line between Ebbw Vale and Cardiff; and there was a further £7.3 million to help build the new-ish Blaenau Gwent learning zone. Those important investments have helped many people to travel to work or to get the skills and qualifications they need. However, there is still much to do to help create opportunities for all our people. To do that, we need significant further investment. This funding needs to be in the pipeline and ready to go as soon as possible.

As my hon. Friend the Member for Aberavon said, given the recent extension of article 50 we need some clarity about the Treasury guarantee. In Blaenau Gwent we need three specific things: improvements on our railway line to Cardiff, with four trains an hour; road upgrades to the south and to the west; and the Welsh Government’s Tech Valleys project to be supported through a dedicated training centre that will equip people for the jobs of the future. The eastern valleys and Blaenau Gwent deserve their fair share from the new fund. After losing coal and steel, our valleys are taking time to catch up with the rest of Wales and the rest of the UK. Both the UK Government and the Welsh Government need to prioritise our communities’ industries, which previously powered not just the UK’s economy but the world’s economy.

Finally, the EU’s structural funds were not meant to be a replacement for a UK-wide regional policy but, wrongly, that is what they became. I therefore urge the Government to make two commitments: to ensure that areas such as Blaenau Gwent get a fair deal out of the shared prosperity fund; and to ensure that in future those areas also get the capital spending they need from other investing Departments, such as those responsible for transport, business and culture.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Brexit), Shadow PC Spokesperson (Cabinet Office), Shadow PC Spokesperson (International Trade) 7:01 pm, 7th May 2019

I congratulate Stephen Kinnock on securing the debate, and I welcome the Under-Secretary of State for Wales, Kevin Foster, to his place—I hope that he will add some much-required substance to the Wales Office team.

Three years ago, Vote Leave campaigners promised that Wales would lose not a penny if we voted to leave the EU. If we leave the EU, Plaid Cymru is determined to ensure that they fulfil their promise. I will briefly outline the principles of Plaid Cymru’s model for regional development funding. It would be a substantial new step in reducing regional inequalities across the UK; I think that Wales could take a lead in this regard.

Although the EU has the makings of a proper regional development policy, in the UK, by default, the regional policy is to favour London and the south-east of England. Wales currently receives £245 million more a year from the EU than it pays in. That we qualify for so much money reflects our poverty, which is on a par with areas in former USSR satellite states. It also reflects the extreme centralisation, the policy vacuum and the chronic underfunding by the UK Government. The worst inequality in any EU member state is indeed that between London and Wales, and leaving the EU will make the situation worse, unless the Government act.

Two years ago, Westminster committed to creating a UK shared prosperity fund that was

“specifically designed to reduce inequalities between communities across our four nations.”

We are on the cusp of exiting the EU, so where is it? Wales will not forgive a Westminster Government that cannot, or perhaps will not, plan for the funding on which so many of our communities are forced to depend. However, decisions on future funding must be timely. We cannot have a Government-caused funding gap disrupting the proper transition in the delivery of projects on the ground.

Replacing European structural funds with a well-funded UK SPF could be genuinely transformational for Wales and for the rest of the UK, but we need timely planning and proper funding to enable Welsh solutions for Welsh problems. Funding must be managed in Wales and be pre-allocated. A cut-throat bidding process would pit Wales against other regions and nations in a race to the bottom. Also, funding must be multi-annual. I think that all hon. Members here today will know of project managers who have so often been disempowered by self-defeating short-term funding cycles.

Finally, Welsh programmes should continue to meet the goals of European structural funds, with streams for employability and economic development, with any funding being co-ordinated with Welsh Government policy and spending, as well as meeting sustainability legislation, such as the very welcome Well-being of Future Generations (Wales) Act 2015.

Photo of Wayne David Wayne David Shadow Minister (Defence) (Armed Forces and Defence Procurement)

Does the hon. Gentleman agree that, as far as Wales is concerned, it is important that any allocations are made outside of the Barnett formula?

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Brexit), Shadow PC Spokesperson (Cabinet Office), Shadow PC Spokesperson (International Trade)

Indeed, that is a crucial point, and one that I have taken up with Government Ministers. In my case—in north Wales and in much of rural Wales— that point is particularly crucial for farming. If we pit marginal farming on the uplands of Wales against the grain barons of East Anglia, we all know what will happen. The hon. Gentleman makes a crucial point.

Funding for Wales should meet the goals of the European structural funds. I also mentioned the Well-being of Future Generations (Wales) Act 2015, which is crucial in this regard. Decades of under-investment by the Welsh and UK Governments have led to chronic and disgraceful child poverty, as outlined in the Assembly this afternoon by my colleague, Rhun ap Iorwerth, and to families having to choose between heating and eating. Leaving the EU will harm our communities further, unless the Government act properly.

The UK shared prosperity fund must deliver for Wales. Otherwise, ever more of our citizens will conclude—rightly, I believe—that we would be better out and in: out of the UK and back in the EU.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government) 7:06 pm, 7th May 2019

I will be as brief as I can, Sir Graham. I thank Stephen Kinnock, who chairs the all-party parliamentary group on post-Brexit funding for nations, regions and local areas, for the work he has done in this area. It is important work and it has really exposed the lack of planning by the UK Government on a matter of such importance to Wales and Scotland.

It is quite disturbing that communities and charities have been waiting for years to find out what funding will be available after Brexit, and we urgently need from the Minister the details of this so-called UK shared prosperity fund. It is also important to note those issues that must be considered when setting up the fund, including its priorities and objectives, as hon. Members have already said, as well as the sums of money involved, the allocation method and model, the length of planning and who will administer it, because at the moment these matters are devolved matters, serving devolved priorities, which each devolved institution can decide upon and set the priorities for spending.

It is deeply worrying that, as the hon. Member for Aberavon set out, there appears to be a power-grab, plain and simple, because there is no clarity about what will happen. When questions have been asked about this, in local government questions and in other places, it has looked to some as though this process is a means of bringing powers back to the UK Government to decide what Scotland and Wales shall get, rather than Scotland and Wales deciding for themselves what they actually need. It is important that we do not lose that devolved power.

It is also critical for our communities and charities to know what the future funding will be. The EU funding will run out in 2020, and there are charities, businesses and all types of organisations the length and breadth of these islands that need to know, for planning purposes, whether or not they will have funding in just over a year’s time. Yet we still have not seen a consultation, even though the Ministry of Housing, Communities and Local Government has promised to publish full details. In November the Wales Office told MPs that a full consultation would be published before the end of 2018, and six months on we are still waiting. I seek some clarity from the Minister today on exactly what that consultation will look like and when it will begin.

The only real information that we have had was a written statement from last July, which consisted of a future planning framework for England, which does not reassure any of us today that Welsh needs will be taken into account. I know that my colleague in the Scottish Government, Aileen Campbell, has written to ask about that issue, but she has not had much by way of a response that will set out what exactly will happen in those inquiries.

What we know is that analysis from the Conference of Peripheral Maritime Regions estimates that the UK would have been entitled to approximately €13 billion of regional development funds from 2021 to 2027 if the UK stayed in the EU. If the UK’s Stronger Towns fund is anything to go by, the funding for the SPF will be only 10% of what the UK would have received from EU cohesion funds, so we need to know from the Minister today when this funding is coming, and will he guarantee that there will be not one penny less for Wales or for Scotland in the new fund?

Photo of Chris Ruane Chris Ruane Shadow Minister (Wales) 7:09 pm, 7th May 2019

It is a pleasure to serve under your chairmanship, Sir Graham. I, too, extend my gratitude to my hon. Friend Stephen Kinnock for having secured the debate. Perhaps more importantly, I am grateful to him for having sponsored the “not a penny less” report through the all-party parliamentary group for post-Brexit funding for nations, regions and local areas. That report has informed the debate throughout.

This is the second debate on the shared prosperity fund over the past six months; the previous one was secured by my hon. Friend Ian C. Lucas. There were nine Labour speakers at that debate in November, and 11 are here today. The fact that so few Conservatives have attended speaks volumes about how important they view the shared prosperity fund for Wales as being. [Interruption.] Well done to Glyn Davies.

“Not a penny less” has been mentioned by virtually every Member who has spoken today. Wales is home to 5% of the United Kingdom’s population but receives 23% of European funding sent to the UK; “not a penny less” has been mentioned by every Member, and that is the level of funding that we want in future.

It is not only Wales that is concerned about the shared prosperity fund. There have been 177 written parliamentary questions about the fund over the past couple of years, many of which centre on the lack of consultation and detail that has been coming out—or, rather, not coming out—of the Wales Office, the Treasury and other Departments. We were promised a consultation in 2017, but it did not happen. We were promised a consultation in 2018, but by the end of that year it had not happened. As we speak, that consultation is nowhere in sight. We do not just need to secure the level of funding that we have received in the past.

Photo of Nick Smith Nick Smith Opposition Whip (Commons)

My hon. Friend is making an important point about the consultation. Does he agree that it is important that the consultation occurs as soon as possible, so that it can be fed into the comprehensive spending review and so that Wales can get its fair share?

Photo of Chris Ruane Chris Ruane Shadow Minister (Wales)

I agree entirely. I am not sure what the Government are hiding, or why they cannot be open and transparent with the people of Wales.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

My hon. Friend is making a very good point about asking Ministers. I have asked Ministers from the Treasury, the Department for Business, Energy and Industrial Strategy, and the Wales Office. All of my questions have fallen on deaf ears, and when I have queried why the consultation is delayed, no Minister seems to know. My concern is that there is a question of trust: the Government have cancelled various projects that they promised they would deliver, and now that we are moving into the position of what will happen post Brexit, they cannot give us answers. That is why we on the Opposition Benches are so sceptical about what the Government will deliver in the long term. Does my hon. Friend agree?

Photo of Chris Ruane Chris Ruane Shadow Minister (Wales)

As ever, my hon. Friend speaks immense sense.

We are concerned not just with the level of funding, but with the issues of democracy and respect for devolution in this, the 20th year of devolution. We do not want the Welsh Government to be leapfrogged, and for the Conservative Government in London to be undermining devolution by dealing directly with local government in Wales. If we do not have direct, democratic input from the Welsh Government, what happened in the United Kingdom will happen in Wales. When the Conservatives got into power, they vired education funding away from the poorest areas and towards the Tory shires. Nine out of 10 of the most deprived areas in the United Kingdom have had three times the rate of austerity cuts than the average.

The poor will be punished unless the Welsh Government have overriding responsibility for the allocation of funding within Wales. It is not just Labour politicians saying this; the Federation of Small Businesses has called for the devolved nations to retain the power to set their own allocations and frameworks for how funding should be prioritised, taking into account local economic needs. There is unity across the board, with the private sector, government and public sector all wanting the democratic control that we have had for the past 20 years.

My hon. Friend the Member for Aberavon gave his three demands: not a penny less; that devolution should be respected; and that a date for the shared prosperity fund consultation should be given immediately, as has been mentioned by virtually every single Member who has spoken today. I hope the Minister will at least be able to answer my hon. Friend’s three questions.

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office 7:15 pm, 7th May 2019

It is a pleasure to serve under your chairmanship, Mr Brady. I will finish a minute early to allow Stephen Kinnock to respond to the debate. I congratulate him on having secured this debate, and I congratulate the hon. Members who have contributed today, showing their pride in, and passion for, the communities they represent here at Westminster. In particular, I thank those hon. Members who have welcomed me to my new post over recent weeks, and with whom I have already enjoyed discussions. My door is always open to those who want to engage constructively with the Government on issues that affect Wales and their constituents.

Although I have been in the Wales Office for only just over a month, I have managed to travel across the nation, so the issues raised today are already familiar. Particular highlights of the past month have been, first, the visit to Tata Steel in Port Talbot, in the constituency of the hon. Member for Aberavon. There, I heard first hand about the exciting prospects for carbon capture and not just storage but use. I was also in Monmouthshire recently to talk with the local authority about proposals for a Chepstow bypass to cut congestion through the town, improve economic growth and link our Union more closely, given that the bypass will literally cross the English-Welsh border. Only last week in north Wales, I met the innovative telecommunications business Moneypenny—familiar, I am sure, to Ian C. Lucas—which shows how Welsh firms compete on the global market.

I pay tribute to the hon. Member for Aberavon in his role as chair of the all-party parliamentary group for post-Brexit funding for nations, regions and local areas. From what he has said today, it is clear that he is passionate about that issue, as are his colleagues who have also spoken. That is why, as he mentioned, my right hon. Friend the Secretary of State for Wales met him and colleagues from the APPG on 11 March to discuss post-Brexit regional funding. I hope that the hon. Gentleman and his colleagues found the meeting helpful and that it reassured him that this Government are taking future regional funding in Wales seriously.

Photo of Nick Smith Nick Smith Opposition Whip (Commons)

I congratulate the Minister on his role, and say “Well done” for travelling around Wales and hearing people’s concerns about the future. When will the consultation on the shared prosperity fund begin?

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

I thank the hon. Gentleman; I will come on to the shared prosperity fund in a moment. Of course, if he invited me to visit his beautiful constituency of Blaenau Gwent, I would be more than happy to add it to my list of travels.

At this point, it is important to look to the future and at what the Government have committed in regional funding. In our 2017 manifesto, which I am sure was a popular read for everyone in this room, we set out our proposals for a UK shared prosperity fund to reduce inequalities between communities across our four nations. The UK’s shared prosperity fund seeks to provide the opportunity to move away from the old bureaucratic EU model, and to design a future regional funding model that truly benefits people across our United Kingdom in a way that reflects the specific needs and strengths of its different parts.

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

Not for the moment.

We will achieve our objective by strengthening the foundations of productivity, as set out in our modern industrial strategy, to support people to benefit from economic prosperity. As a Government, we have already begun engagement on the fund with the Welsh Government and key stakeholders in Wales. That engagement will continue, both at official and ministerial levels. Of course, a benefit of debates such as this is that we can hear the views of right hon. and hon. Members. It is important to recognise that direct engagement with stakeholders has already taken place, including with the third sector, universities and local authorities in Wales. Official-led events were held in Cardiff in November last year, and more recently in St Asaph on 30 January.

As has been referenced several times, the Government have committed to holding a public consultation on the design of the fund. The consultation will build on the conversations and engagement on the fund that have already taken place. That includes engagement with the Welsh Government, because we will respect the devolution settlements as part of the fund, as requested by Opposition Members.

I recognise that right hon. and hon. Members are concerned about the delay in the consultation. I make this point in response: the delay should not be misunderstood as the Government not being fully committed to the fund—we are. The dynamics of EU exit, not least in this place, often mean there is a fast-changing situation, so it would not be appropriate to speculate on specific dates for when the consultation will be launched.

It is worth reflecting on how constructive work has taken place between the UK and Welsh Governments on city and growth deals in Wales. By the end of the Parliament, every part of Wales will be covered by a growth or city deal. Cardiff and then Swansea, as well as, most recently, north Wales and then mid-Wales, are or will be benefiting from that collaborative approach to turbocharge economic growth regionally in Wales.

I listened with interest to the points made by the hon. Member for Wrexham. He may be aware that I was in Wrexham last week talking with local authority leaders and other members of the North Wales Economic Ambition Board. I respect the fact that it needs to be a collaborative effort, but what is key is that the proposals come from the region upwards, not Westminster downwards. Although we have to ensure that we are satisfied that the money will be transformative, it is about what the region thinks.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

I encourage the Minister to engage with Members of Parliament, who have been very active in establishing the forum of the all-party parliamentary group, with which he has not yet engaged. It would be helpful if he would meet the all-party group to hear what Members of Parliament, who have the largest mandate, have to say to him on this important subject.

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

I thank the hon. Gentleman for his constructive intervention. I am more than happy to accept the invitation, although I have not been short of north Wales Members of Parliament wanting to come and see me. I have already met Hywel Williams and Liz Saville Roberts, and spoken with my hon. Friend Guto Bebb. As I said at the start of my speech, my door is always open to those who want to talk constructively, and I hope to meet on their patch as well, if possible. Certainly, I am more than happy to engage with Members of Parliament on these issues.

Photo of Nick Smith Nick Smith Opposition Whip (Commons)

The Minister seems reluctant to give us a date for when exactly the consultation will begin, but does he agree that it should begin, and finish, before the comprehensive spending review is delivered?

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

I thank the hon. Gentleman for his further intervention. As I said, I do not want to get into specific dates, but I am clear that the spending review will set out how we approach the fund in the future. I am not surprised to see such passion. We will ask people across Wales about the size, structure and priorities for the fund, and that will develop as we approach this year’s crucial spending review. Given the continuing debates about our EU exit, it is clearly hard to give a specific date, although, as the hon. Gentleman knows, constructive discussions are ongoing between our Front Benches as we speak.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Brexit), Shadow PC Spokesperson (Cabinet Office), Shadow PC Spokesperson (International Trade)

I understand that the Minister cannot go into any detail about the fund itself, but can he give us some indication of the principles behind it? Will it be based on need, or on some sort of competitive tendering or competitive proposals, either between Wales and other regions and nations, or even within Wales itself?

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

I thank the hon. Gentleman for his intervention. Our clear emphasis will be on ensuring that it works for local communities and delivers prosperity and growth across the nation. The consultation will set out our plans, and I am sure that he and other Members will be powerful advocates in ensuring that the fund works for their communities in the way they envisage.

I am conscious that many Members have raised the future of EU funding. In 2016, the Government guaranteed funding for UK organisations in receipt of EU funds where projects are agreed before the day the UK leaves the European Union. In July, the Government announced an extension to that guarantee, which will underwrite the UK’s allocation for structural and investment fund projects under this EU budget period to 2020 in the event of the UK leaving without a withdrawal agreement. That ensures that UK organisations, such as charities, businesses and universities, will continue to receive funding over a project’s lifetime if they successfully bid into EU-funded programmes before December 2020.

Our overall message is therefore business as usual. We want all places to continue to sign contracts while we still belong to these funds.

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

Not for the moment.

The December 2017 withdrawal agreement means that Wales will receive its full 2014 to 2020 allocation, because we recognise the importance of short-term certainty on funding. As we transition to longer term arrangements, we will of course ensure that all parts of the UK are treated fairly and that their circumstances are taken into account. We have promised, as I have already touched on, to engage the devolved Administrations as we develop the UK shared prosperity fund.

Photo of Kevin Foster Kevin Foster Assistant Whip, The Parliamentary Under-Secretary of State for Wales, The Parliamentary Secretary, Cabinet Office

Given the time, I need to make progress.

I fully recognise the importance of EU funds to Wales. The guarantees set out by the UK Government show the importance that we place on those funds, as does the position that we have since reached with the EU on participating in the 2014 to 2020 EU programmes until closure. Under the terms of the withdrawal agreement, UK entities ripe to participate in EU programmes such as Horizon 2020 and Erasmus+ during the current multi-annual financial framework period will be unaffected by the UK’s withdrawal from the EU for the lifetime of the projects financed by the current multi-annual financial framework. UK-based organisations and people will be able to bid for funding and participate in and lead consortia in 2019 and 2020.

In terms of our future participation, the joint political declaration published in November sets out a basis for co-operation in European Union programmes, subject to the conditions set out in the corresponding Union instruments, such as in science and innovation, culture and education, development and defence capabilities, civil protection and space. Of course, the UK would make financial contributions were we to participate in any EU programmes.

On the specific point made about Barnettisation and potential agricultural funding, direct payments will continue to be made on the same basis in 2019 and 2020. The Government have already confirmed that overall funding for UK farm support will be protected in cash terms until the end of the Parliament in 2022, providing more certainty than any other EU member state. Crucially, the Government are clear that they will not simply apply the Barnett formula to changes in DEFRA funding beyond this Parliament. That means that farmers in Wales, Scotland and Northern Ireland will not just be allocated funding according to the population size of each nation, which in each case is significantly smaller than that of England.

In the beginning, EU funding was seen as something of a panacea for all Wales’s ills and as an opportunity that needed to be grasped with both hands. However, we should question whether, given the way that money was spent, it has reached those communities. We can all think of examples of projects that did not succeed, such as Techniums, the Ebbw Vale funicular railway and the All Wales Ethnic Minority Association.

I hear the passion with which many Members representing their communities have articulated what they see as the benefits of EU funding. However, we need to contrast that with the fact that some of the areas involved returned some of the highest leave votes. That was not based on whether a consultation was going to take place, but on what people perceived in their areas. It is a challenge for us as politicians to ensure that people see the benefit of what is done in their area.

As I set out at the beginning of my speech, the UK’s exit from the EU provides us with a considerable opportunity to reconsider how we invest our money in a way that helps to reduce inequality across our four nations. The current system is bureaucratic, inefficient and difficult to access. With the UK shared prosperity fund, we would have the opportunity to design a fund that works in the interests of Wales and the UK as a whole. I am clear that we will do that while respecting the devolution settlements and continuing to engage with the devolved Administrations, as we have successfully and productively done and continue to do on growth deals, and as I have done personally since my appointment, in the shared interests of those we serve.

Ultimately, the Government want to see an economically strong Wales, within a prosperous and strengthening United Kingdom. Working alongside the Welsh Government, through a future shared prosperity fund and other initiatives such as the growth deal, we can ensure that that becomes a reality.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 7:28 pm, 7th May 2019

The Minister’s speech showed that the Government are truly paralysed by Brexit. We could have a debate about that, but the fact is that that paralysis is having real-world consequences. What is the future of that key infrastructure project? What is the future of that vital skills project in our community? What is the future of that vital railway upgrade? We simply do not know. We do not have answers to those questions, and the clock is ticking. We are talking about 2020 as if it is a decade away. It is not; it is just around the corner. These are multi-annual programmes that have a time lag in them, and the clarity should have been forthcoming months ago.

I and many other Members asked for a guarantee that Wales will not receive a penny less, a guarantee that the devolution settlement will be fully respected, and clarity on when the shared prosperity fund consultation will launch. It is a matter of great regret that answers to those three questions were not forthcoming. We will therefore continue to press the Government for some clarity on those vital points.

Motion lapsed, and sitting adjourned with Question put (Standing Order No. 10(14)).

Sitting adjourned.