Vaughan Gething MS, Minister for Economy
Yesterday, the UK Government announced the approval of four regional investment plans for the Shared Prosperity Fund (SPF) in Wales, the replacement to former EU funding that the Welsh Government was responsible for determining with scrutiny from in the Senedd. This means that with less than four months remaining in this financial year, funding allocations for 2022-23 can now be released to Welsh local authorities to spend on projects covering communities and place, local business, and people and skills that should have already commenced. There is no prospect of the entire annual budget being spent in the remainder of this financial year.
The entire SPF allocation of £585 million to Wales is £1.1 billion less compared to EU funds. This dramatic funding cut has been exacerbated by a series of delays since the SPF was first announced in 2017. In contrast, the Welsh Government was ready to start a post-EU investment programme almost two years ago in January 2021. By then we had already worked intensively with the OECD and our Welsh partners to create the strongest possible model for Wales. It is important to remember that the £585 million figure for Wales is before the £101 million top slice imposed by the UK Government for the ‘Multiply’ programme that they have created in the devolved area of adult numeracy.
As a direct result of the UK Government’s approach to the SPF, the Welsh Government and the Senedd is being bypassed on a plainly devolved matter. Universities, colleges, the third sector and businesses have also been shut out of directly accessing funding. As a result many of these sectors are now reporting redundancies and the closure of vital schemes.
In light of the economic crisis and the hole in the public finances the UK Government must rethink the future direction of SPF including a co-decision-making role for Welsh Ministers and support for previously EU funded critical pan-Wales programmes. A number of these are vital to supporting productivity and growth, such as Business Wales, apprenticeships, the Development Bank and our innovation programmes.
This announcement should be seen in the context of a Welsh Government budget that could be worth up to £1 billion less in real terms in 2023-24 alone compared to what we expected last year. The SPF is part of a system that undermines devolution and has little regard to the needs or the wishes of Welsh partners.
The entire approach to the Shared Prosperity Fund has been chaotic. Despite the SPF first being announced in 2017, the Fund was hastily put together earlier this year. It has put enormous strain on local government to develop projects and put in place administrative and governance procedures in unfeasible timescales. Not a single penny of the SPF has been spent in Wales to date.
My Ministerial colleagues and I have raised the problems created with a series of UK Ministers and we will continue to do so. A substantive discussion on this issue is planned for the next meeting of the UK Finance Ministers in the New Year.
Despite the Welsh Government having no access to the SPF and no decision-making role in how the Fund will be delivered in Wales, we are working with local authorities and other Welsh partners to mitigate as many of the consequences as possible.
The Strategic Forum for Regional Investment, chaired by Huw Irranca-Davies MS, is continuing to meet so local government and stakeholders can share information and lessons learnt.
Finally, I would like to thank members of the Finance Committee for their recent report on post-EU funding arrangements. The Welsh Government has provided a response to the Committee’s recommendations. I look forward to further scrutiny on this issue in the weeks and months ahead.