Saturday, 8 December 2012

What Wales gets from the European Union

It's bloated. It's bureaucratic. Its budget is yet to be (formally) decided.
What does Wales actually get from EU membership?
(Pic :
I don't think issues surrounding the European Union are, really, at the forefront of most people's minds. It does look as though an agreement on the EU budget for 2013 is imminent after an EU Commission climbdown, but the agreement for the budget between member states for 2014-2020 remains at an impass. These matters impact Wales whether we like it or not.

The EU budget

A few weeks ago, Conservative backbenchers and Labour MPs voted against a rise in the EU's budget, and passed an amendment calling for a real-terms cut. You can argue this is a reasonable stand – if national governments have to make sacrifices, shouldn't Brussels?

The relationship between Wales and the EU is slightly different than many other parts of the UK. Although the EU failed to agree a budget at their last summit, any cuts or freeze will be noticeable here. A failure to agree to a budget would put long-term projects at risk.

Plaid Cymru MEP, Jill Evans, spelt out some benefits of Wales within the EU, working out that every Welsh person is getting back £40 more than is put in. That roughly works out at Wales being £120million better off as a whole.

That doesn't sound like much, but I think the benefits are much wider. It's also fair to say that some of this money may well have been (perceivably) mismanaged. I said this a few months ago:
"EU-funds appear to be used for things like public realm improvements, or incredibly niche schemes, spreading funds far too thinly. In the period 2007-2013, £1.5billion has been spent on the public sector (mainly universities), £99million on the third sector (including ~£6.1million to the likes of AWEMA), and just £23million in the private sector."

It's also worth pointing out that the EU's own strict guidelines, regulations and rules mean that an awful lot of effort needs to go into getting the funds in the first place. That doesn't mean that some of the people bidding for these funds are always suitable. Note Jac o' the North's account on that.

It's also right to point out that seeing grants as the be all and end all solution in Wales, or a natural "Welsh way of doing things", is perhaps creating an incredibly damaging, short-term, dependant mindset.

A Jocelyn Davies AM (Plaid, South Wales East) motion passed the Senedd – including support from Welsh Labour AMs – that pressed the Welsh Government to "make representations" to the UK Government, opposing the budget cut.

Are (UK) Labour equally concerned about the "threat" posed
by UKIP as the Tories seemingly are?
(Pic : The Times)

Now, I don't know why Westminster Labour have decided to lurch towards euroscepticism-lite. Maybe they're just hardening their stance to appear "tougher on Europe" than they were in government to stave of a UKIP threat amongst the working class.

I don't have any truck with UKIP's views, but in terms of public debate, they've opened a window – even if it only lets in muck spreading wafts. They're eccentric - with a Colonel Blimp jingoism and a twee view of the UK's place in the world – but deserve to, and will, be taken seriously in 2014 and 2015. However, I think it's too soon to be building them up as an electoral force. Due to FPTP, the chances of them gaining MPs will be slim.

Welsh Labour are, seemingly, more pro-Europe that the Westminster party. They might be disciplined on the surface, but there's a history of differences causing "tensions". The first chinks in Tony Blair's armour came from Wales in the shape of Rhodri Morgan.

If Carwyn Jones were taken seriously as a head of government by his own party, instead of being seen as a loyal provincial governor, I'd put £10 on him verses Ed within two rounds.

It's also heartening that Welsh politicians can debate these matters of importance in a reasoned and mature manner, while British politicians try to out-clown each other in the Westminster lobby on News 24 trying to prove who wants to cut the most.

How does Wales benefit from EU membership?

Broader benefits

Jobs – The First Minister acknowledges that at least 150,000 jobs were based wholly or entirely on EU membership, and 50,000 were employed directly by companies from other EU member states. You could also suggest EU membership imperils Welsh jobs – especially if operations move to more attractive places in eastern Europe. It's also fair to say these jobs wouldn't disappear overnight if the UK left.

Free trade & membership of the world's largest economy – As I highlighted back in September, Wales is less reliant on the EU for our exports than the UK as a whole. But having free and open access to a market of half a billion people in one of the wealthiest parts of the planet (in spite of what's going on) is a no-brainer.

Carwyn Jones recently said that 50,000 people in
Wales were employed by companies based elsewhere in the EU -
including ~500 at (German-owned) Siemens Diagnostics in Llanberis.
(Pic : Daily Post)

Free movement
– Although the UK isn't part of the Schengen agreement, being able to move visa-free between large economies like England, Germany and France - as well as faster-growing economies like Poland - should be considered a huge benefit. It's a shame we tend to focus on those coming in instead of thinking about going out – in business terms especially. It also has spin offs like guaranteeing free health care in EU nations.

Peace & political stability – The timing of the EU being awarded the Nobel Peace Prize was...."amusing". The EU has developed a strength in its diversity - when it was once a weakness. Instead of Europe's great powers using smaller nations as chess pieces in their quest to dominate the continent (or further afield), disagreements are now thrashed out around negotiating tables in Brussels and Strasbourg. There's also a strong commitment to liberal democracy in all member states – though that's starting to slip in places like Hungary. It's just a shame the European institutions are so cumbersome, but maybe they need to be.

Harmonised pan-European regulations – Whenever we hear about EU laws, they are usually BS about straight bananas and weights and measures. What about mobile phone roaming? Environmental regulations? Standards on chemical safety and water quality? Car and air safety standards? Veterinary and agricultural standards? Cross-border crime fighting? It's also important to point out that the much-maligned European Court of Human Rights isn't part of the European Union.

Specifically important benefits for Wales

Agricultural Programmes – Includes the European Fisheries Fund, European Agricultural Rural Development Fund (worth about £195million to Wales between 2007-2013) and Common Agricultural Policy (CAP). The CAP alone is said to be worth £350million to Welsh farmers every year.

The Common Agricultural Policy is due for reform, but
without it, would Wales have much of a farming industry left?
(Pic : BBC Wales)

You can argue that farms shouldn't need subsidy, and should be encouraged to become more commercially viable – that's supposed to be amongst these funds main aims. These funds are in desperate need of reform – especially since EU enlargement - and make up a sizable chunk (€270billion) of the EU's total budget. I think attempts at reform have probably been blocked by the French and Spanish, who benefit disproportionately from the current arrangements. The UK does too, it has to be said.

Convergence Funds – Commonly referred to under the umbrella of "Objective One", or the more grand European Regional Development Fund (ERDF). These funds are worth up to £1billion over a 6 year period. It looks like West Wales & The Valleys might qualify again in 2013. That's not really good news, as convergence funds have to be match-funded by the Welsh Government and are a sign of a weak economy.

These funds have had a big impact on the university sector in particular. Jill Evans mentioned using EU funding to electrify the north Wales mainline recently, and that's the sort of project you would expect this money to be spent on. However, as noted earlier, I believe many of the projects over the last few decades have been well-meant, but haven't delivered anywhere near the outcomes – especially in terms of economic development and infrastructure – that West Wales & The Valleys desperately need.

"Objective One" is probably the most visible
sign of the EU in Wales. But is the money
being invested wisely?
(Pic : Ceredigion Council)

European Social Fund – Another branch of "Objective One". This is worth around £690million over six years. These funds are used on the "social schemes". For example : reducing economic inactivity, "social justice", up-skilling. But it also makes its way to the third sector, who haven't covered themselves in glory of late. The rules are incredibly specific and so full of hoops, that I doubt much money makes it to the front lines.

Specific Investment Funds – This includes the JESSICA framework (funds aimed at developing urban areas). It could be considered a branch of the main convergence funding. The Welsh Government have set up and Urban Development Fund and the Regeneration Investment Fund under this EU framework. It's supposed to be used on regeneration projects. In fact, a chunk of RIFW's cash is going to be spent on Neath town centre over the next few years. Again, the outcomes and management should be questioned. The JEREMIE initiative also helps/helped the Welsh Government's finance arm (Finance Wales) support small and medium businesses. It was/is worth £150million.

Erasmus– A pan-European exchange programme. Although it's said only 630 students (and 112 staff) from Wales have participated in the programme last year, compared to the all-UK figure (~12,000 participants) that's roughly what you would expect – perhaps slightly more than our population share. Cardiff University also hosted one of the largest overseas Erasmus contingents in the UK. Even brief periods living and studying in another EU state would obvious help cross-cultural understanding and – hopefully – international relations should they grow up to become business or political leaders.

What we also get, and what we'll get in the future

London Mayor, Boris Johnson, recently mooted a "pared down" relationship
with the EU - citing Switzerland and Norway. That might suit London, but
would it suit Wales, or the UK as a whole?
(Pic : BBC)

Bone-crushing levels of bureaucracy. No (Welsh) voice at the top tables. The pointless spectacle of moving between Strasbourg and Brussels. The ongoing "will they, won't they" fiscal union debacle. Nigel Farage. Uninspiring leaders at European level. And a voice for lunatics on the far-left and far-right in the European Parliament.

And it's fair to point out that there's significantly more subvention/subsidy from the UK that there is from the EU. We might be £40 better off in Europe, but thanks to leaky submarines, West Ham's new stadium and RBS – and other, more important things like social security – we're estimated to be about £4000 "better off" in the UK. Even if most of that is borrowed via the Treasury's credit card.

So although I clearly believe there are benefits to Welsh membership of the EU – via the UK at the moment – there's a need for reform.

The Lisbon Treaty went a long way towards doing that. It merged several institutions and created, in effect, a European constitution. But I think things are coming to a head due to the eurozone's fiscal problems.

My hunch is that the worst of the Euro fiscal crisis is behind us, but there's nothing ahead but a decade of stagnation. I think a new treaty is inevitable – probably creating a full fiscal union between eurozone members – and, ultimately, a "two-speed Europe".

Guess who'll be trundling along in the outside lane, indicating to take the next exit - with Wales in tow. Would that be in Wales' interests? It's a big question, and one that's perhaps too difficult to answer at the moment.

But, at the end of the day - whether you're Welsh, Slovene, German or French - we're all Europeans aren't we? If you even consider the British Isles a part of Europe. It appears the Leader of the Opposition in the Assembly doesn't.

Stronger together....


  1. Very helpful, Owen. I was thinking of writing something too, but you've covered it in more depth. Maybe I can add a few things.

    Links to Jill's calculations for the amount of direct financial benefit (as opposed to the general trade benefit) Wales gets from the EU are at the bottom of this this page. The figures assume that Wales has a pro-rata share of the UK's contribution to the EU: but Wales probably only contributes about 80% of that, so the net direct benefit is almost certainly larger.


    I also looked at how much the UK would have to still have to contribute for access to the EEA (European Economic Area) single market if it were to leave the EU, and therefore be in a similar position to Norway, Iceland, Switzerland and Lichtenstein. If Norway is the model (see this page) the bulk of their €340m contribution went to "development projects for reducing social and economic disparities in the EU" (which I take to mean the convergence and development funds). So in effect a UK outside the EU would still pay much of what it pays now. The big thing it wouldn't pay for is the CAP and CFP, but in effect the UK doesn't pay much into that because that's what the rebate is meant to compensate for.

    The size of the contribution is linked to GDP. On a PPP basis, the UK's $2,316bn is nearly 9 times bigger than Norway's $266bn (from Wiki), so the contribution would therefore be about €3bn at 2009 levels.


    I do find it very significant that the Welsh Government are talking of the UK's policy on the EU not being in Wales' national interests. There does seem to be political movement away from the EU, spearheaded by UKIP and the Tory right, and this is only likely to increase rather than decrease. If we who want an independent Wales respond to this anti-EU drift wisely, it could become a major factor in the break up of the UK.

    However it must be said that in terms of public opinion there doesn't seem to be very much difference between Wales' view of the EU and that of the UK as a whole. These figures are from an Opinium poll last month:

    Has the UK's membership of the EU been a good or bad thing?

    Wales ... good thing 28%, bad thing 52%
    Scotland ... good thing 27%, bad thing 45%
    UK ... good thing 28%, bad thing 45%

    How would you vote if there were a referendum on EU membership?

    Wales ... remain 33%, leave 55%
    Scotland ... remain 31%, leave 49%
    UK ... remain 29%, leave 56%

    So the question for me is how we go about creating a more positive view of the EU in Wales.

  2. Thanks, MH. Some excellent contributions, as always.

    I agree that using the UK contributions as a pro-rata benchmark might underestimate what Wales receives. I'm not sure if those figures take into account the UK's rebate or not, but what's unquestionable is that there's a net-benefit for Wales.

    I honestly don't understand why some people are advocating remaining in the EEA without being a fully paid-up member of the EU. It's a bit like (theoretical) Welsh nationalists arguing for remaining in the UK, not sending any representatives to Westminster, but still contributing towards certain items. I think that's similar to what Boris Johnson is advocating. So, is the eurosceptic argument almost entirely about EU laws, institutions and regulations? And knowing the UK would still have to make contributions to access the single market blows one of UKIP's big arguments for withdrawal out of the water.

    There's a definite euroscepetic/UKIP core in Wales, but I think it's down to lack of information and understanding. If they're buying newspapers that scream "Back off Brussels", or actually believe some of the nonsense stories about EU regulations, then it's no surprise that people might have a negative view. Stories like AWEMA don't help, as Objective One is becoming a by-word for waste and corruption, even when 90%+ of EU projects are fine, and there are strict guidelines and regulations.

    I suspect most, if not all, in Plaid are pro-EU along with the Lib Dems. Once again, it's going to be an internal Labour wrangle. Maybe they'll finally get around to standing up for Wales. If they back down - when they've made it so obvious that the EU benefits Wales - then they'll lose some credibility on Europe.

    They'll stick a damp finger in the air and determine which way public opinion is going. I suspect they'll probably end up falling in line behind the Westminster party in supporting EU-membership but calling for "reforms" that "only Labour/Ed Miliband can deliver in a strong UK blah, blah, blah." And the cycle continues.

  3. If there is a referendum once the Welsh and Scottish people are properly informed about the benefits to their countries of the EU they may vote to stay in. However the case for England is less clear. So if England voted out this in the end could cause a constitutional crisis giving a case for both Welsh and Scottish independence within the EU. Whilst in a more integrated Europe the economies of Wales and Scotland would improve the economy of England outside of Europe would decline.

  4. Thanks, Anon.

    Firstly, any referendum bill has to pass. I think Labour will try and junk it (somehow) if they win power in Westminster in 2015, or are forced to form a coalition with Lib Dems.

    Secondly, there's not that much of a difference in euroscepticism between Wales and England. Even Scotland is only marginally less so than the UK. I think if Welsh Labour in particular makes a case for a yes vote clear - as Carwyn Jones has made it obvious he sees benefits for Wales in the EU - then the scenario could unfold as you say.

    That would be a game-changer, but it won't be a "constitutional crisis". When push comes to shove, and we're forced to choose between the two unions, the Unionist parties will stick to what they know.

    And there's no hope of independence in the EU while maintaining the UK as a political union. It'll cause Brussels too many headaches if every stateless nation in Europe decides they want to "have their cake and eat it" like that.