Shared Prosperity Fund: Devolved Administrations

Backbench Business – in Westminster Hall at 4:30 pm on 1st March 2022.

Alert me about debates like this

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party, Belfast South 4:30 pm, 1st March 2022

I beg to move,

That this House
has considered the shared prosperity fund and the devolved Administrations.

It is a pleasure to serve under your chairship, Sir Edward.

I am grateful for the opportunity to raise an issue and hopefully to get some clarity on a matter of concern and potential opportunity for a number of third sector partners and others in Northern Ireland. It has been almost five years since the shared prosperity fund was first floated as the replacement for the loss of EU structural funds after Brexit. The SPF was included in the Conservative manifesto, which claimed that the focus would be on reducing inequalities between communities and that the Government would consult widely on the design of the fund. The manifesto explicitly outlined the involvement of the devolved Administrations, although stakeholder engagement events a few years ago were characterised to me by polite generalities and weak assurances, and unfortunately the Government do not appear to have met those commitments, either about the breadth and the scope of the scheme or about the engagement with partners.

From what information we have, we know that funding will come directly from Westminster, without the involvement of local authorities or devolved Parliaments. In Northern Ireland, some of the bodies that have been administering European funds for the last several decades and that have experience and trusted links are apparently being retired at this point, amid a centralisation of power. The phrase “Take back control” resonated with many people, but with some of the funds that have traditionally underpinned social progress and economic progress in Northern Ireland, it appears to mean taking back control and handing it directly to London.

Photo of Jonathan Edwards Jonathan Edwards Independent, Carmarthen East and Dinefwr

I am grateful to the hon. Lady for giving way and I congratulate her on securing the debate on a very important issue—perhaps the most important issue for the economic development of the respective countries of the UK. The hon. Lady is right that this is an unashamed power grab by the UK Government. It fatally undermines the ability of the Welsh Government, the Northern Ireland Government and the Scottish Government to deal with their role in economic development. A key part of the role, of course, is strategic regional planning. The constitutional issue is very important, but so is delivery. The way that the UK Government go about the process will fundamentally undermine strategic regional economic planning in our respective countries.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party, Belfast South

I agree. As I say, there are opportunities and willing partners, but unfortunately it appears that the funding is being delivered over the heads of those who have an interest in and a proven track record on a number of the issues.

The latest information we have is that the fund is set to operate from April 2022, which is next month, replacing funds such as the European social fund and regional development funds that have provided vital opportunity for infrastructure and specifically to support some of the most marginalised and vulnerable individuals in our region and across the devolved areas. At the moment, however, the information people are seeking on the design, the priorities, the level of funding available and the governance arrangements simply is not there.

That confusion has left substantial holes in a number of Stormont Departments and left many key third sector partners in the lurch. Northern Ireland’s Department for the Economy has warned that the £100 million gap that it faces in this funding period will mean halving its apprenticeship programmes and a rollback of the skills agenda, which has been a key focus of our party and of many others.

It also means missing a potential opportunity. As Members from all parties will know, we face an almost unprecedented demand for labour. There are opportunities in that regard, but some of the funds were specifically designed to work with individuals and get them over the barriers that they personally faced to take up and retain work.

There are organisations such as Orchardville, a social enterprise and charity in my own constituency, which for four decades has worked with people with autism and learning disabilities, helping them to learn and to earn, and to have the dignity and support of a work environment. At this moment, however, Orchardville faces a substantial black hole.

It is worth saying that the concerns are held not just by those organisations that sought to receive these funds, or by political parties such as my own. Invest NI has been very clear that it believes that the funding would be best delivered in conjunction with the Northern Ireland programme for government and through existing delivery partners. The think-tank Pivotal and a number of other respected commentators and business voices have been raising that point over the past month or two, and the Select Committee on Northern Ireland Affairs has conducted a wide-ranging inquiry into investment priorities in Northern Ireland. Although people see opportunities, concern has been expressed by many of those people about the loss of experience and fidelity that changes to delivery will bring.

Northern Ireland, like other devolved regions, was a net beneficiary in Europe—that is not a secret. I do not think it is anything to be ashamed about either, because the funding allocations were made on the basis of need, and in many cases they were a counterweight to the obvious challenges that Northern Ireland faced in those years, but also to decades of under-investment in areas such as skills and infrastructure. We have had the lowest UK rate of capital investment over many decades and, of course, a stark failure to attract quality foreign direct investment. The founder of our party, John Hume, said many times that the best peace process is a job: the best way to enable people to build and have hope in their futures and, I suppose, to get around the things that have divided them is for them to have meaningful employment—a reason to stay, a reason to get up in the morning and a reason to build.

It is worth also saying that we unashamedly saw an opportunity for Northern Ireland in that political example of common endeavour, with people pooling their needs and abilities in a spirit of co-operation and interdependence, without those people having to change their identity in any way. The French are still French in Europe, and the Germans are still German in Europe. British people in Northern Ireland and Irish people in Northern Ireland could still have an opportunity to co-operate, and the European funds facilitated that over many years. Individuals and the capacity they built, as well as regions and specific industries, are almost unrecognisable after the funding they received.

“Have faith and try new things” is the message we have heard so far from the UK Government, but unfortunately, the experiences people have had so far with the community renewal fund—billed by the Secretary of State for Levelling Up as the forerunner to the SPF— have exacerbated fears. Bids for that fund were invited by the UK Government from a range of local applicants including, but not limited to, universities, voluntary and community sector organisations and umbrella business groups. They were received from a variety of partners, such as Women’s Aid, Mencap, and the Royal National Institute of Blind People. Applications were rejected from groups including Catalyst, which is a well-respected entrepreneurial hub, and Northern Ireland Screen, which is trying to capitalise on the burgeoning film and television sector in Northern Ireland and is creating the kind of exciting jobs that young people in Northern Ireland have never had the opportunity to have—the kind of jobs that allow people to stay and to build a career and a life.

Who was the biggest recipient? It was not any of those groups: it was TieTa, an Oxford-based call centre with no ground game and no operational experience in Northern Ireland, a group that started its life as the customer service arm of a payday lending company. Its funding allocation through the predecessor fund was over twice that of the next biggest recipient, which was Ulster University. Looking at Companies House, three directors of that company are listed: are they from Maghera or the Mournes, or are they from Millisle? No, they are from Monaco; that is the experience that people are having. The fears that many of us have articulated for many years about the loss of EU funds have not been allayed in any way by the rolling out of that fund.

We are in a new paradigm. We are where we are, and our approach has always been to try to make lemonade out of the lemons we have been handed. We want the opportunity to build in Northern Ireland, we want to create real careers and real opportunities for young people, and we want to capitalise on Northern Ireland’s unique dual market access—the first real unique selling point that we have had in many decades of sluggishness and low productivity—but to do that we need local power in local hands. That was a key part of the 1998 agreement. Brexit has not just been a threat in terms of border and identities; that concept of local powers, local decision making and building up trust between local decision makers in mutual endeavour has been crucial to the last 20 years.

The fund should have been an opportunity to realise some of those ambitions. It should have been a way to connect regions—to “level up”, in the common vernacular —and remove barriers to employment. So far, the experience is not good. People need information, and they need some experience that is not handing cash to people registered in Monaco and Oxfordshire.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 4:40 pm, 1st March 2022

It is not often that I am called first to speak. Indeed, I am always shocked that it should happen—and very pleased, too; thank you so much, Sir Edward.

I congratulate Claire Hanna on her excellent representations for the project that we all wish to see more of—the shared prosperity fund. As she said, we want to see more funds filtering down to our constituencies. She referred to three or four things, including the TieTa group and its three owners from Monaco. I just said to my hon. Friend Carla Lockhart, “Who wants to live in Monaco when you can live in Millisle?” That is because Millisle is in my constituency, of course—at least, part of it is.

Photo of Stephen Farry Stephen Farry Alliance, North Down

Just for the record, Millisle is in my constituency.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

No, for the record, the Drumfad Road—the Drumfad estate right up to the car park—is in mine. I know it is, because I knock those doors.

I am very pleased to support the hon. Member for Belfast South in bringing the debate forward. There is absolutely no doubt that the shared prosperity fund is needed to build on work that has been done in every region of the United Kingdom through EU funding. Not to be too pedantic, but it is always great to get a percentage of the money that we funnelled into the EU back into our communities. I am very pleased that we have been able to do that.

I share a semblance of the dismay outlined by the hon. Lady, my Northern Ireland colleague—we are from different parties but very much on the same page on this issue—yet I am perhaps a wee bit more optimistic. I suppose I tend to be more optimistic about life—the glass is always half-full rather than half-empty—because there are good things happening. To be fair to the hon. Lady, she outlined the issues but also where we can go with this, and I want to do the same.

When the new Minister of State, Conor Burns—it is lovely to see him in his place—was appointed, I quickly asked him to come down to the most beautiful constituency in the whole United Kingdom of Great Britain and Northern Ireland, Strangford. I say to Stephen Farry that that is not in dispute. I was very pleased to bring the Minister down to Strangford. I know that he has a deep interest in Northern Ireland—it has always been in his blood and in his life—so it was good to get him down to Strangford to introduce him to some of the issues on which the shared prosperity fund could make the difference.

I wanted speak to those issues and to give the Minister a taste of the concerns. I spoke to him beforehand and said, “Here are my thoughts; are those things that you would like to do?” and he very quickly said that he would. Issues such as the local high street and how it should feature, and our education system, are key for every one of us. We had a chance to go to Castle Gardens School, and we went to the high street and met the chamber of trade in Newtownards town. There is also our tourism industry; we went to Mount Stewart, and we had a lovely lunch in Harrisons in the constituency. That is one of the tourism projects that has taken off.

In two major areas in which the EU has had control over subsidies in the past, we spoke to the fishermen and, importantly, to the community representatives. The Minister asked for that specifically, and I was very pleased to make that happen. Those are the sorts of things—the changes in the community—that we want. I think I referred to them as the journeys that people have taken away from the past to a new future. Those are the sorts of things that I wish to speak about.

The Minister acknowledged the awful handling of the situation so far for the fishermen. I know that the fishermen in Portavogie were particularly enthralled with the Minister. Sir Edward, if you ever want somebody to imitate our Prime Minister, he is the man who can do it—nobody can do it better. For one minute, if I closed my eyes, I thought it was the Prime Minister. The Minister issued a promise to get it right with his colleagues; he did that for us, and we appreciate that. I got him to meet with the local community representatives from one of the estates in my area, a very progressive community group that is probably one of the best in the Ards area. I did so with a clear view of showing him how far so many have come in our town, and the giant leap forward there has been in the work that they carry out. It is work that it is essential to continue. That is why the shared prosperity fund is so important; it makes a difference and builds a future that we can all wrap our arms around and be part of.

I felt that the Minister took seriously the five areas that I had highlighted. The group he wanted to meet again was the community group, and in particular, its young people. I could see that the Minister was interested. He, like myself and the community group, could see where the future needs to be built. The shared prosperity fund is one way of doing that. We heard how the community wanted to move away from the actions and the reactions of the past. They want to train the new generations in a new way of doing and looking at things. They want to train the new generation to look at things in a way that, some time ago, the community did not, and, if I am perfectly honest, in a way that I did not 40 years ago either. The Minister saw the value of facilitating the local community network through European funding and his response was clear: the work must continue. I subscribe to that. That is what the hon. Member for Belfast South wants. I believe it will continue, but we need a wee bit of help.

We look to the Under-Secretary of State for Levelling Up, Housing and Communities, Neil O’Brien. I know I have been referring to the Minister of State at the Northern Ireland Office—he will forgive me for that, but I wanted to tell the story because it is part of where we are. I look to the Minister for a positive response. That cannot happen without dedicated funding. I have highlighted the areas in my constituency that need help from the fund, including the small businesses that we met on that day; people working in fishing and agriculture, which are still major employers; tourism, which Ards and North Down Council believes is key to building the economy; and our community and educators. Funding for innovation is also essential for large business expansion.

All of that is necessary for a flourishing Northern Ireland—a Northern Ireland for everyone. That is what I want to see, it is what the hon. Member for Belfast South wants to see, and it is what the Minister wants to see. I am sure that everyone else here wants to see the same thing. There is work to be done, and more to do. We have moved forward with a contribution from both sides of the community working together. There is an appetite to do it; there is an appetite from elected representatives, from the Minister and from others here today.

I encourage the Minister to announce the parameters of the fund, to allow every area—not just my constituency, but Belfast South and every constituency in Northern Ireland—the support. We need to help Northern Ireland, and indeed the United Kingdom of Great Britain and Northern Ireland as whole, to live up to our potential. I believe that Northern Ireland has that potential, we just need help through the shared prosperity fund to do that. There is no pressure on the Minister, whatsoever, but will he tell us what he will do for us? We want to take that journey together—all parties and all representatives, along with our Minister and our Government.

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs) 4:48 pm, 1st March 2022

It is a pleasure to serve under your chairmanship, Sir Edward. I will begin by thanking Claire Hanna for securing this debate and for the welcome opportunity to discuss the shared prosperity fund’s governance and scale, as well as the promises that were made to the devolved nations. Levelling up is an economic necessity, and for decades Plaid Cymru has drawn attention to the chasms that separate our nations in economic development, social opportunity and political attention. That is why, although I applauded the long-term vision contained in the levelling-up White Paper, I am concerned that it lacks the requisite funding and structural reform necessary to realise that vision. Quite simply, we need to get the shared prosperity fund right—a task that has been made even more difficult by a less than auspicious start. The Government dragged their heels in publicising the detail and in implementing the fund itself, and we now know that it also represents a broken manifesto promise, at least as it relates to Wales. On page 15 of the Welsh Conservative manifesto, the party committed

“to ensure that no part of the UK loses out from the withdrawal of EU funding”.

The Welsh Government have recently calculated that the Welsh budget will instead be £1 billion worse off by the year 2024 than if we had continued to receive EU funding through the structural funds. If we look to the EU and its €750 billion covid recovery fund, or to Germany’s historic €2 trillion, or £71 billion annual, investment in east Germany, we have an idea of the scale of the funding that levelling up truly requires.

I urge the Government, in the light of some of those examples, to raise their ambitions when it comes to levelling up—to levelling up levelling up, even—and to perhaps look at committing 1% of GDP over the coming decade, equivalent to some £22 billion annually, to the shared prosperity fund and the task of levelling up the nations and regions of the United Kingdom.

Sadly, in terms of governance, the UK Government are already repeating past mistakes by adopting the same centralised Whitehall model that created many of the regional inequalities in the first place. The shared prosperity fund must be administered by each nation, rather than being disbursed in a fashion that turns nations and regions against each other. Not only is that inefficient but it undermines devolved responsibilities for economic development, a point made by my hon. Friend Jonathan Edwards.

The shared prosperity fund must be better resourced and must work with rather than over the devolved nations. Anything else would be further proof that Westminster does not work for Wales. It would also call into question whether it works for the persistence of this Union.

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales) 4:52 pm, 1st March 2022

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate Claire Hanna on securing this debate. I declare my membership of the all-party parliamentary group on the shared prosperity fund.

Since we heard about the shared prosperity fund way back in 2017, the whole thing has been shrouded in confusion. The Government have been less than forthcoming with clarity and detail. While we now have some more information about the fund, there is still too much uncertainty.

Then there is the top-down, Whitehall-led approach that the Government have insisted on using. Welsh local authorities such as my own in Merthyr Tydfil and Caerphilly County Borough Council, which covers the Upper Rhymney valley part of my constituency, have 20 years’ experience of working together through the Welsh Local Government Association and alongside the Welsh Government to deliver strategic regeneration projects. It is deeply concerning that, instead of a strategic joined-up approach to investment to tackle the urgent issues affecting our communities, we now seem to see a centralised Whitehall-led approach administered by Departments with no real understanding of the needs of Welsh communities. They have limited experience of working with communities in Wales and little understanding of the priorities of those communities. There is also the complete bypassing of devolution.

Photo of Stephen Kinnock Stephen Kinnock Shadow Minister (Home Office) (Immigration)

My hon. Friend is making an excellent speech. I also declare an interest: I chair the APPG on the shared prosperity fund. The pre-launch guidance to the fund simply says that the devolved Administrations

“will be invited to play a role in the development and delivery of local investment plans.”

Does my hon. Friend agree that that is an incredibly vague statement, which could mean absolutely nothing, and that the fund is also part of a broader project being pursued by the UK Government of dismantling the entire project of devolution?

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales)

I very much agree. We are seeing an opportunity to bypass devolution, which is a very real threat to what has been built up over the last 20 years. This is not the partnership approach we all could have supported; I fear that it is a real step backwards.

I am deeply concerned, as I know others are, that Wales and areas across the UK are going to lose out as a result of the withdrawal of EU funds, despite the promise that we would not lose a penny. The Chancellor’s Budget for next year shows some £400 million across the UK as opposed to the £1.5 billion that was earlier mentioned. For the purposes of comparison, Wales alone used to receive £375 million. Next year, for the whole of the UK the figure will be barely that.

The lack of clarity from the Government on the amount of funding, how it will be used and the involvement of devolved Administrations has been hugely disappointing from the start, and it saddens me that it shows no sign of improvement. Hopefully, the Minister will give us further clarity and address the points that have been raised for so long.

I want to give a short, quick example to the Minister. Some years ago, prior to entering this place, I was a local councillor heavily involved in regeneration in my local community. A hugely significant regeneration project had £6 million of EU funding allocated to it, but that was just a catalyst. That funding also unlocked funding through the Welsh Government, the private sector, the lottery and other charitable partners, and not least the local community, meaning a significant investment of around £26 million all told. Those projects are still going strong almost 20 years later and are going from strength to strength. I use that example as an illustration because of the nature of the partnership between agencies, not least local government and the Welsh Government. We should learn from such examples.

Finally, what measures is the Minister taking to ensure that we can move forward in a spirit of collaboration involving all partners? As I said previously, any investment is welcome, but it should be in partnership with regional and local government and the Welsh Government, who have had significant experience in these areas. Speaking as somebody who was very much pro-Union, we achieve much more when we work together in partnership for the good of all.

Photo of Stephen Farry Stephen Farry Alliance, North Down 4:56 pm, 1st March 2022

It is a pleasure to serve under your chairmanship, Sir Edward. I thank Claire Hanna for securing this important debate today.

My comments largely reflect Northern Ireland, but there will be a large degree of commonality between the situations in Scotland and Wales. I speak as a former Minister for Employment and Learning in Northern Ireland with overall responsibility for the administration of the European social fund. I also have direct knowledge of the application of the European regional development fund as well, so I can testify to the huge value that both of those played in Northern Ireland.

To follow up what the hon. Member for Belfast South indicated, we were told that Brexit was all about taking back control. Well, may I say that when we were members of the European Union, Northern Ireland Departments had more control over that money than we will have in the context of the shared prosperity fund. That is a rather ironic situation, to say the least.

I have numerous concerns to highlight. The first involves governance. To reiterate the point, this cuts across the devolved settlements in all three nations and regions of the UK. In the case of Northern Ireland, it cuts across the Good Friday agreement itself, and that is a fairly serious thing to do. It also creates a real mess in terms of governance itself. In essence, we end up with the UK Government and the Northern Ireland Executive both as players essentially on the same pitch trying to do things in the same areas, whether it is around skills, apprenticeships, labour market inclusion, economic development or economic regeneration. Rather than that being greater than the sum of the parts, I fear this will become lesser than the sum of the parts because there will be built-in inefficiency in terms of what happens.

With all the best intentions in the world around co-ordination and communication, it has been far from perfect up until now. Even if that is remedied, nothing will replace the same teams in the Northern Ireland Departments having overall control over the resources and applying them in the most efficient way. That then begs the question as to what happens in terms of things like the programme for government and measurements of impact. I am not sure whether those have been highlighted by the Department at all.

We are hopeful in Northern Ireland of having an outcomes-based programme for government if and when devolution returns after the Assembly election. In that context, it is important that whatever happens, the Department for Levelling Up, Housing and Communities works hand in hand to the same objectives. If not, again we are going to miss the opportunity to make the best use of the resources.

The same point applies to measurement. How on earth will the Department measure the impact of its interventions on, for example, skill levels, if it is only one part of a wider equation in which Northern Ireland Departments, notably the Department for the Economy and the further education colleges and universities, are all trying to do the same thing? How on earth do we disaggregate all of that? There is then the issue of the scale of the spending. Like Wales, Northern Ireland was told that we would be no worse off under the shared prosperity fund than we were under the structural funds, and yet the Northern Ireland Department of Finance and the wider Executive have made it clear that Northern Ireland risks losing up to £70 million per year of spending power. I would be grateful if the Minister could reconcile those two seemingly contradictory positions.

We then come to the nature of the spending itself. There has been a long-established pattern in terms of the areas where European funding has been put to use. In terms of investment in skills, a large part of apprenticeship funding in Northern Ireland has come through the European social fund, and almost the entirety of areas such as disability employment have been funded through European funding. The ERDF supported a wide range of economic development measures and regeneration issues. Indeed, Invest Northern Ireland, our main inward investment organisation, has depended on that type of funding, and its budget faces a very uncertain future.

Even if those issues are clarified, there are issues around the switchover between the next—and final—round of ESF and the start of the shared prosperity fund. There are a lot of groups working on the margins that are deeply concerned in that regard. There are fears of gaps in the provision of programmes, and of some programmes ceasing altogether. There are concerns about those who are employed. Unlike the civil service, the community and voluntary sector has to put people on notice of redundancy whenever funding comes to an end. There are a lot of people out there who are very worried about their own futures.

Finally, I want to ask why the actions and role of the Department for Levelling Up, Housing and Communities in Northern Ireland will not be covered under section 75 of the Northern Ireland Act 1998. By contrast, both the Northern Ireland Office and Her Majesty’s Revenue and Customs are covered under section 75. The spending that will potentially come through the Department is much greater than that which comes through either of those bodies, so the situation is slightly incongruous. I would be grateful if the Minister could explain the discrepancy.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government) 5:02 pm, 1st March 2022

Thank you, Sir Edward. It is a pleasure to speak in this debate on the shared prosperity fund and the devolved Governments, and I pay tribute to Claire Hanna for bringing it forward and for setting out her case so comprehensively.

The Tory manifesto pledged a fair and equal share of funding that would fully replace EU support, which in Scotland would have been around £183 million per year. However, the Treasury Committee has already indicated, in a report published at the end of January, that the UK shared prosperity fund up to 2024-25 will be worth 40% less than EU support. In addition, all the power over the delivery of the funding is concentrated in Whitehall. There is no doubt that devolved Governments have been ignored. The Scottish Government as yet have no details of how much funding will be allocated to Scotland, nor has there been any consultation with Scottish Ministers, who have had no role in investment proposals or decisions in areas that are devolved to the Scottish Parliament.

The UK shared prosperity fund will replace the EU structural funds from next month, and still there has been no meaningful engagement with Scottish Ministers, or indeed those of other devolved nations. In January, the House of Lords Constitution Committee concluded that the UK Government continued to ignore devolution and the devolved Governments’ calls for greater transparency on decisions being taken with regard to levelling-up funding. With the publication of the shared prosperity fund pre-launch guidance this month, the role of devolved Governments and Parliaments is still completely unclear. The UK Government have chosen to work directly with local authorities, as presented in the guidance, and there is no evidence that they respect devolution or consider the Scottish Government, for example, an equal partner. Because the UK Government have also failed to offer any indication of Scotland’s shared prosperity fund allocation, or indeed how levelling up will align with the priorities of the Scottish Government, there is no overarching strategic thinking or planning in accordance with the Scottish Government’s priorities.

It is simply not respectful for the UK Government to seek the Scottish Government’s help in implementing projects after they have been selected by the UK Government. The Scottish Government, and all the devolved Governments, should be consulted at all stages, as was the case with EU funding. What possible objection could there be to that, unless the purpose is to undermine devolution? Although I appreciate that the Minister will tell us of the great munificence of the UK Government, it is also important to remember that in his last Budget, the Chancellor announced several direct funding programmes in Scotland through the levelling-up funding, totalling £172 million in spending. However, the rolling out of the levelling-up fund to communities around the UK short-changed the Scottish Government of expected Barnett consequentials, leaving a £400 million hole in the budget.

Delays to the delivery of post-Brexit funding—a year into Brexit—have already robbed poorer areas of £1.5 billion in funding, with the shared prosperity fund not set to deliver until April. When it is delivered, it will fall far short of previous EU funding. The reality is that Scotland will receive 3.5% of all levelling-up funding, despite having 8.2% of the UK’s population. Perhaps the Minister could explain that. The reality is that the Secretary of State for Levelling Up and the Prime Minister led a Brexit campaign promising £1.5 billion a year for Scottish devolved services when the UK left the EU. Instead, all we have heard is an announcement of £172 million. To put that into context, Scotland has received 11p for every £1 promised. In effect, Scotland has been short-changed by 89% of what was promised. I know the Minister will dispute this, but there is a growing consensus that the devolved Governments have been short-changed. The Treasury Committee says so, the House of Lords Constitution Committee says so, the Scottish Government say so, and the Unionist Welsh Government say so. They all agree that this is the case.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Environment, Food and Rural Affairs)

I want to raise the issue of Interreg with my hon. Friend, because the shared prosperity fund is touted as a replacement for EU structural funds, but the levelling-up White Paper makes no mention of Interreg. Interreg was very important to organisations such as the European Marine Energy Centre in Orkney, which works in collaboration with other partners and gets a lot of funding on the back of that in order to tackle really important common challenges in meeting our targets for net zero. Is my hon. Friend aware of that, and does she agree that it is essential that the funding is replaced?

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government)

My hon. Friend makes an excellent point. The fact is that a number of organisations, including the European Marine Energy Centre, are very concerned about funding going forward, given the cuts to funding that I and many other speakers in the debate have talked about today.

Scotland has been short-changed and her Parliament undermined. I know the Minister thinks Scotland should be grateful, but the post-Brexit funding bonanza has not materialised and as a result important projects across Scotland and the devolved nations have been jeopardised. Scotland is the poorer for Brexit in so many ways. I hope the Minister will at least recognise the loss of funding that Scotland and the other devolved nations have suffered as a result and all the other concerns that he has heard about today. I really hope that when he gets to his feet, he will make a genuine attempt to address those concerns.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government) 5:08 pm, 1st March 2022

It is a pleasure to serve once again under your chairmanship, Sir Edward, and to contribute to the debate. My sincere thanks go to Claire Hanna for securing today’s very important debate.

We have heard some excellent contributions from hon. Members of different parties who represent communities across our devolved nations. The hon. Member for Belfast South spoke about local charities needing security and sustainability in order to continue with their excellent work in her community in Northern Ireland. She referred to the programme as “learn and earn”, and I certainly wish such programmes well in the future.

Jim Shannon made a very powerful contribution and spoke eloquently about the need to have not a penny less, in order to shape a bright future for all the communities in Northern Ireland. My hon. Friend Gerald Jones referred to the Westminster-centric approach of levelling up and the shared prosperity fund, and to the need to work in partnership with the Government in Wales and with local government so they can shape their own destiny. Stephen Farry correctly derided the notion of taking control. If we look at levelling up and the shared prosperity fund, the reality on the ground is anything but that of taking control.

Even though the Government have touted the shared prosperity fund as a central pillar of their levelling-up agenda, serious questions remain. The Minister will no doubt ask us to wait until the formal launch, when all questions will be answered. However, important questions need to be answered now, as eloquently argued by the hon. Member for Belfast South. Fundamentally, we cannot escape the fact that this funding is worth only 60% of the EU funds it is replacing. How do the Government reconcile cutting 40%, which is a considerable share of the fund, and claiming to level up at the same time?

The Government are trying to hide behind rhetoric that tells the public that they are investing in them and in communities that the Government have left behind for close to 12 years, when they are doing the exact opposite, on top of a clear breaking of important manifesto pledges, as stated across the Chamber today. The Government said they would match funding to devolved nations, but clearly that is not the case. The evidence is there to see. Concerns have also been raised that the chosen delivery geographies—essentially, lower tier and unitary authorities—will result in inefficient procurement and fragmented and duplicated services. Indeed, some Members have argued powerfully that, in some cases, devolved Governments have been ignored completely.

We have heard concerns from Members representing all the devolved nations here today. As the Institute of Government has stated, the shared prosperity fund

“risks damaging trust between the UK and devolved administrations and undermining the UK government’s key objective of binding the four nations of the UK closer together.”

As we have heard today, the “Westminster knows best” diktat is an affront to the very principle of devolution, while giving the Chancellor the reins to oversee funding cuts.

As my hon. Friend Stephen Kinnock eloquently and powerfully argued, this overly centralised scheme, devised by Ministers in Westminster, has not seen proper engagement with devolved nations and other stakeholders during the development of the plans for the UK shared prosperity fund. I am sure the Minister will, again, ask us all to wait for the full prospectus to be published. Given the scant involvement of the devolved nations that has been permitted so far, and the scant detail provided so far, he can hardly be surprised that he has been asked to attend this important debate today.

Finally, as mentioned by the hon. Member for Belfast South, can the Minister discuss the funding gap between the end of the current funding and the beginning of the shared prosperity funding, which puts community projects at risk before the shared prosperity fund even pays out a penny? With European funding provision ending in some areas as early as April, there is a real funding gap and it is causing anxieties and insecurities in our communities. Can the Minister respond to that important question?

Our collective vision should be a programme that genuinely powers up people, places and nations. It should have a focus on need. It should have fairness in its DNA and put devolved nations in the driving seat, as leaders in their localities, with not a penny or a power taken away. I look forward to the Minister’s response.

Photo of Neil O'Brien Neil O'Brien Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 5:15 pm, 1st March 2022

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate Claire Hanna on securing this important and timely debate. It was also good to welcome the Minister of State for the Northern Ireland Office, my right hon. Friend Conor Burns, who was listening to all the extremely important points being made as closely as I was.

Given the short time available, I will come directly to the important points made by hon. Members. I am not here to argue the toss with them, but to try to start to set out how we will work together to do all these things. As hon. Members know, the shared prosperity fund will provide £2.6 billion of new funding for local investment by March 2025; it is a significant scheme. It will be provided through a funding formula, rather than a competition, which is important. While there are advantages in funding competitions, because they get people sharpening their pencils, there are a lot of advantages in formula allocations, because people have the same certainty that places used to have through some of the European structural funds.

Photo of Stephen Kinnock Stephen Kinnock Shadow Minister (Home Office) (Immigration)

On the point about funding, the Minister has just mentioned the figure of £2.6 billion. Does he therefore accept that the manifesto commitment has been broken? The manifesto commitment was to match the previous funding, which would mean £1.5 billion per year over a seven-year planning cycle. The comprehensive spending review is only a three-year time horizon, so will the Minister accept that the manifesto pledge has been broken?

Photo of Neil O'Brien Neil O'Brien Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I will come to quantums later in my speech, but no, we will keep our manifesto promises.

The hon. Member for Belfast South raised really important points, and I hope I can start to set Members’ minds at ease. Jim Shannon, whose health I would have feared for had he not been here today, was right when he said that we are all on this journey together.

I agreed with Ben Lake when he said that we must work with devolved Governments and local people, not over their heads. I also agreed with the sensible speech made by hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), who said that we must use the experience of local partners who know what is needed and how to run these kinds of schemes.

In Scotland, Wales and Northern Ireland we are very clear that we want local partners, at all levels, to be able to shape what is done to this funding and how it is allocated. In Northern Ireland, we have a unique local government landscape in our work on the UKSPF, so we proposed to deliver at a Northern Ireland-wide scale, which will enable us to have an allocation that is felt to be fair by all communities and that will make the most of all the fantastic opportunities that there are across Northern Ireland.

The development of that single Northern Ireland plan will draw on the insight and expertise of local partners, including the Northern Ireland Executive, local authorities, businesses, the community and the voluntary sector, in order to maximise all the local intelligence, insight and knowledge that they have. We have engaged with the Northern Ireland civil service, the Northern Ireland Local Government Association and Solace on UKSPF.

I have also reached out to the Northern Ireland Executive’s Minister for Finance and I plan to discuss the UKSPF further with him on Thursday. I had a very useful meeting with Minister Lochhead from the Scottish Government on Friday, and I am setting up a meeting with Vaughan Gething of the Welsh Government, as well. We are keen to work with all of the devolved Administrations to shape the way this funding is used.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Environment, Food and Rural Affairs)

When the Secretary of State for Levelling Up, Housing and Communities delivered his statement on the levelling-up White Paper, he acknowledged to me that the First Minister was advised of an innovation accelerator that was being put into Glasgow in a phone call only the night before. Can the Minister guarantee that that sort of behaviour will not continue in the future?

Photo of Neil O'Brien Neil O'Brien Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I think that innovation accelerator is terribly exciting, but I can guarantee to the hon. Lady that as part of UKSPF we are engaging at all levels with devolved Governments and other local partners with important expertise. We will also be setting up an inter-ministerial group, with ministerial representation from all the devolved Governments, so that we have a regular forum on the breadth of my Department’s work to discuss these matters and to ensure there is an open dialogue across the whole UK.

The UKSPF has been designed to empower local places in all four nations of the UK. My Department is engaging with local government associations—including the Local Government Association, the Convention of Scottish Local Authorities, the Northern Ireland Local Government Association and the Welsh Local Government Association—ahead of and following the publication of the pre-launch guidance.

We will continue to engage with the devolved Governments and wider partners on the design and operation of the fund so that we can get the best outcomes across all the UK, because there are so many different priorities. The hon. Member for Strangford talked about fishing communities, and we heard from Stephen Farry about important community groups. There are many different partners that we have to engage in shaping this important programme.

We are engaging with the Northern Ireland Executive at an official level regarding the concerns they raised about programmes that are currently running under the European social fund. That dialogue will help to push on arrangements that maximise that fund delivery in Northern Ireland. However, it is worth thinking about the totality of these different funds because, as well as the shared prosperity fund, we also have the levelling-up fund and the community renewal fund, which is a one-year fund to transition us on to the UKSPF.

For Northern Ireland alone, if we look at some of those different sources of funding, my Department has provided £49 million via the levelling-up fund, £12 million as part of the community renewal fund, and funding through the community ownership fund, which enables different community groups to take things into community ownership. At the same time, we have made important long-term commitments in Northern Ireland, as in Scotland and Wales, through the city and growth deals. In Northern Ireland, those are worth £670 million—funding that is being matched by the Northern Ireland Executive. That is in addition to Northern Ireland-specific schemes, such as Peace Plus.

One of the challenges on my mind, as a Minister, is how we can all work together to ensure that the schemes work in such a way that they are more than the sum of their parts. I am conscious that there are a number of different schemes there; how do we ensure that the totality of the opportunities in Northern Ireland, which are very exciting, are best served by the confluence of all these different funding streams? It is useful, through t UKSPF, to have some funding that is not challenge-based but formula-based, and therefore, in that sense, a bit more flexible to provide bits of match funding to complement those other, existing funding streams.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government)

The Minister mentioned the importance of his Government working in partnership with the devolved Governments. I am sure we are all pleased to hear that. Would he therefore like to comment on the conclusion of the House of Lords Constitution Committee in its report in January that the UK Government have ignored—and continue to ignore—devolution and the devolved Governments in this process?

Photo of Neil O'Brien Neil O'Brien Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

There will always be a range of views on these questions. As my Secretary of State set out in his evidence to the Scottish Parliament the other day, our strong belief is that all these things will work best if we can engage not just the devolved Governments but local partners across the whole the UK.

It is worth putting these issues in the context of the wider funding settlement, as well as the funds that are specific for regeneration and community renewal. In the spending review, hon. Members will have seen that we have £15 billion for Northern Ireland annually for the next three years—the highest figure since devolution. There will be £41 billion for Scotland—again, the highest figure since devolution—and £18 billion for Wales, which is, again, the largest figure, in real terms, since devolution. So the context is that of a wider public spending settlement, and although we would always like to have more money to do things, that will enable us to do some really important things for some communities, particularly in Northern Ireland, which experienced extremely high levels of deprivation—I think that we would all recognise that.

Hon. Members have raised some of the things that the community renewal fund is doing. I would stress some of the positive things that that funding is doing, which leads into the work of the shared prosperity fund. The hon. Member for Belfast South rightly quoted the wise comment of her former leader that the best peace process is a job.

The hon. Member for North Down stressed the importance of skills—again, quite rightly. The community renewal fund is giving half a million pounds to the NOW Group to support people with disabilities through specialised employment academies and job mentoring. It is also giving nearly half a million pounds to South West College, Southern Regional College and Queen’s University Belfast to upskill construction operatives to fill that skills gap, and there will be just over £500,000 for a hydrogen training academy to deliver training for 180 people, to get a skilled workforce that can take advantage of the exciting opportunities that are opening up in Northern Ireland in hydrogen and clean technology. Those funds are doing a great deal of good. By working together, we will get the most out of these different spending streams.

The hon. Member for North Down asked a specific and very important question about section 75. We understand the importance of respecting the unique equalities considerations in Northern Ireland. We recognise the importance of not only meeting our legal obligations under the Equality Act 2010 but giving due regard to the additional equalities considerations that apply in Northern Ireland. I hope it is obvious from the tenor of my comments and from what I have said today that we are always—always—keen to have solutions that are felt to be fair by all communities and that see all communities working together.

I thank hon. Members, who have put forward genuinely important points in today’s debate. Over the coming weeks, we will work with other parts of the Government—represented here today—as well as partners across the UK, to finalise our policy development. Later in the spring, we intend to publish the full UK shared prosperity fund prospectus.

I hope I have got across in my comments the sense that our intent is not to go over the heads of anybody but to enable devolved Governments, local government and other partners to shape what is done in different parts of the UK and where the money goes, and to be involved in generating and contributing ideas at all levels, so that we can make the most of the opportunities that we collectively share. That is the tenor of where we are coming from on this entire agenda.

Once we have done that—we will be doing it, as Members can probably tell from the meetings I have talked about that are under way or that are forthcoming— we will publish the full UK shared prosperity fund prospectus. We want to try to keep the process as simple as we can so that we can give local partners the information they need to begin investment planning. I genuinely look forward to working with hon. Members from across this House; a number of them have already come to me with important suggestions and ideas about things we can do on this agenda. I look forward to working with all Members who are here today to deliver on our shared ambition.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party, Belfast South 5:27 pm, 1st March 2022

I thank Members for their participation and for their points. My constituency near-neighbour, Jim Shannon—I concede it is a very beautiful place—set a very helpful and constructive tone, but Members across the House have reflected a concern or two. Colleagues coming from different political perspectives in Wales were certainly on the same page about the risks to devolution and the anxiety that the gaps in information have created.

Stephen Farry asked some key questions, based on his experience as a skills and employment Minister with a lot of first-hand experience of driving and directing the predecessor funds. He asked some important questions about equality impact assessments, particularly in relation to Northern Ireland.

Patricia Gibson gave a comprehensive and convincing summary of Scotland’s concerns and presented some very stark figures that I, too, would have liked to hear the Minister’s response to and that I completely understand will have breached the faith and confidence of people in Scotland.

Mike Amesbury and Stephen Kinnock, who is the chair of the all-party parliamentary group, reflected the concerns about a Whitehall-led, top-down approach. I was made aware that at a 2019 Conservative leadership hustings in Cardiff, the now Prime Minister pledged a strong Conservative influence over these funds, but people in Northern Ireland, Scotland, Wales and many other parts of the UK have expressed different aspirations and have different needs, which must be respected and protected.

Delivery partners with decades of experience, as well as ideas and track records, are clearly ready across the different regions to play a part, to build the economy and to ensure that everybody has the skills and the capacity to access the economy. However, there needs to be a joined-up approach. The Minister referred to the city deals, which work precisely because they work from the bottom up, catalysing private investment and doing so by having direct partnerships with local business and research partnerships.

As I say, seeing is believing. I gave the example that in Northern Ireland a vacuum of information was followed by an alarming allocation that raised even the most benign eyebrows in Northern Ireland. So I appreciate the tone of the Minister’s response about how people will be engaged, but I have to say that, in the absence of further information on the parameters of the fund and how it will engage with devolved Administrations, we remain to be convinced.

Question put and agreed to.

Resolved,

That this House
has considered the shared prosperity fund and the devolved Administrations.

Sitting adjourned.