Monday, 26 June 2017

Clear vision needed for post-Brexit regional funds

(Pic : Getty images)
The Senedd's External Affairs Committee have called for the Welsh Government to start planning for a post-Brexit, post-EU funding Wales in a new inquiry report published last week (pdf).

Chair of the Committee, David Rees AM (Lab, Aberavon) said:

"The opportunities that will arise from Brexit to refresh our approach to regional policy....must be seized. Carrying on as we are is not an option and everyone....needs to start thinking about approaches to tackling some the economic challenges we face as a nation. It's a call to arms that none in Wales should shy away from."

Key Recommendations:

  • Ensure funding from the UK Government is "future proofed"; examine the benefits of a needs-based funding formula (after today's announcement this one can be shelved).
  • Continue to press the UK Government on a formal post-Brexit inter-governmental structure and decisions on where powers over regional policy will lie.
  • Present a clear vision and direction for regional policy post-Brexit (including a new industrial strategy).
  • Commission expert research to determine how effective current regional policy has been.
  • Set out how to boost private sector investment in research and development.
  • Post-Brexit regional policy should be more focused on economic development and public sector collaboration than social programmes.

When the UK leaves the EU, Wales will no longer receive structural funding (previously known as Objective One), currently worth £2billion between 2014-2020. It's works out as £458-per-head for Wales, compared to the £100-per-head UK average. The money is used to support economic and social programmes in regions where economic output is less than 75%-per-head of the EU average.

West Wales & The Valleys is one of only two UK regions eligible for these funds. The UK has the highest economic inequality between its nations and regions of any EU member, and there were calls by witnesses to ensure post-Brexit regional development policy benefits the whole UK.

Funding has been guaranteed by the UK Government until 2020. After that, nobody knows. The Welsh Government-Plaid Cymru Brexit white paper claims Welsh funding will need to be topped-up to make up for the loss of EU money. However, Prof. David Bell argues this wouldn't take into account Wales' specific needs, while the funds could still be cut by the UK Government.

Structural funds have neither significantly improved matters nor failed; areas get out a bit more back than they put in but it "doesn't do any magic". Prof. Kevin Morgan added that Wales' expectations that the funds would be transformative were "wholly unrealistic".

The Welsh Government expect powers over regional development that are either already devolved or exercised at an EU level to remain/be devolved. Any changes would require a new law at Westminster and/or consultation with the Senedd. There's no idea what will actually happen, with Prof. Morgan again warning that responsibilities shouldn't come without the money to fund them.

In terms of what may be different about a Wales-only regional development policy, there were calls for: better community engagement/understanding, simplification of the rules, proper monitoring of the success of any schemes and greater flexibility in what support can be used for. All suggestions address weaknesses that exist in the current system.

Denmark was cited as a nation to learn from. As a predominantly rural nation, they established five regional councils with responsibility for economic development, securing full participation by local businesses and trade unions, as well as working to each region's individual strengths. Where businesses played a full part in these regional bodies, an additional 8,300 jobs were created.

Innovation is becoming more important in regional development policy too, with Wales being historically poor at submitting quality applications for research funding. As a result, only 1.2% of UK research funding is spent in Wales. It was argued the figure needs to hit something close to 7% to close the economic productivity gap with the rest of the UK.

Why should this matter to you?

If you've ever been on a training or employment course, undertaken research at university, or made use of social programmes for minority groups like the disabled, the likelihood is they've been at least part-funded by the EU. If that funding isn't replaced there's a good chance these programmes will have to be cut back or closed.

EU funds have been wasted in Wales and if, after Brexit, the rules were flexible and the current levels of money are maintained by the UK Government, we may all see concrete benefits instead of the "hidden" ones only experienced by a few (like funding research).

One of the Leave campaign's main claims last June was that by leaving the EU, the UK would have more of its own money to spend on itself. What happens to structural funding in Wales will decide whether we were told the truth or lied to.


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