Europe 2: Why mobilising Euro funding matters to Wales

On 22-23 November in Brussels EU Heads of State and Government, including Prime Minister David Cameron, will attempt to reconcile their potentially ‘un-reconcilable’ positions, and reach agreement on the so-called ‘Multi-annual Financial Framework’ (MFF) for the EU for the 2014-2020 period. In layman’s terms this means trying to agree the EUs overarching budget for the next seven years.

Does any of this matter to us? Yes it does, and quite considerably. Wales currently receives around €4.5 billion for Structural Funds to support social and economic investments in the poorest parts of the country, and from the Common Agricultural Policy. This is not to mention the other EU funding that we receive through participation in research, education, culture and other ‘centrally’ managed programmes in Brussels. A bad deal for Wales, or worse still no deal, would lead to a substantial loss in this funding and a great deal of uncertainty for Welsh communities over the coming decade.

Much of the rhetoric coming from the UK – and from some of the more ‘hardline’ net contributors to the EU budget, including Sweden and the Netherlands – is the need for substantial cuts, in line with the austerity measures being introduced by ‘national’ governments across Europe. should the UK Government and its allies be successful in this argument, there is no doubt that Wales would lose out. Through my work as Committee of the Regions representative for Wales, I have argued that it is precisely during these difficult periods, when other sources of investment are extremely difficult to come by, that we must more than ever defend the EU budget. I am not a lone voice – the vast majority of Member States support this view, as does the European Parliament, the Committee of the Regions, and a plethora of sub-state authorities, networks and organisations across the EU.

In July this year I was appointed as ‘rapporteur’ by the Committee of the Regions – the Brussels-based ‘body’ that brings together politicians from sub-state authorities across the EU – to write a report on creating greater synergies between EU, Member State and sub-State budgets. This work is motivated by the EU budget debate. It also reflects a recognition that with the EU budget representing just 1 per cent of overall EU GDP, effective alignment of budgets and public investments is essential if Europe is to deliver on the core objectives of the Europe 2020 ‘jobs and growth’ strategy.

It is also wrapped up in a much bigger debate about the future of the Eurozone, and the drive towards closer economic and monetary co-ordination, including surveillance of Member States budgetary processes, aimed at bringing public debt and public deficits under control. This debate is very much taking place at the level of Member State governments (think David Cameron, George Osborne and their equivalents) and the EU Institutions, with little involvement or recognition of the role of sub-State authorities within the governance cycle, beyond the standard line that these are ‘internal matters for the Member States concerned’.

Over the last couple of months I have met with politicians, EU officials and stakeholders in Brussels and in Wales, including the EU Budget Commissioner Janusz Lewandowski and former Director General of DG Employment Hywel Ceri Jones, to gather evidence to inform my report. This will go through a two-stage adoption process: a committee stage on 28 November, followed by adoption in plenary in Brussels at the end of January.

What is clear from this first phase of work is the crucial role that sub-State authorities play in Europe in supporting public investments. Figures from the OECD show that of the 7 per cent of general government expenditure spent on average each year on public investments (including capital infrastructure), over two thirds is accounted for by sub-state authorities. The vast majority of this falls within the priority areas  that are key elements in delivering on the Europe 2020 objectives – education, economic affairs, housing, communities and environment.

The other key point is that, by providing a stable, seven-year funding pot the EU Structural Funds programmes can be used to (i) focus local and regional efforts on medium to long-term investment strategies; and (ii) create a multiplier effect by aligning local and regional funds to deliver on these common priorities. Over the last three to four years the benefits of this approach have been patently clear. Areas where EU Structural Funds have been available, including Wales, have been able to use the funds to support investments that would otherwise have been impossible, given the cuts in public funding and the lack of readily available private finance.

The real debate Member States should be having on 22-23 November is not about the size of the EU Budget, but rather about how to more effectively align and mobilise EU, State and sub-State resources to deliver on the Europe 2020 objectives. If it led to concrete actions, such a debate would go a long way towards stimulating the much needed and long overdue economic recovery across Europe, the Eurozone area, and within Wales.