Regional investment after Brexit

The First Minister describes Welsh Government proposals for replacing EU Structural Funds after Brexit.

Understandably, much of the debate about Brexit has focussed on how the UK leaves the EU. The spotlight has been on the terms of our exit, a possible transition period and when talks on a new trade deal can begin.

Little time – in public at least – has been given to what will replace the existing rules and systems in the UK on a range of issues once we are no longer in the EU. A crucial area for Wales will be the future of regional investment. Currently we receive £370m a year from the EU for investment in some of our poorest communities, supporting businesses, infrastructure and helping people into employment.

Despite the undoubted problems it brings, Brexit does offer some opportunities, including greater flexibility in the way we can organise regional development. That is why we have just published proposals on what can replace these funds in our latest Brexit paper ‘Regional Investment in Wales after Brexit’.  Our proposals see Brexit as an opportunity to change regional investment so we continue to support economic development, learning from the best of the past.

EU funds have made a difference. They have helped more than halve the gap in economic inactivity rates between Wales and the UK. Up until the banking crisis of 2008 and the great recession which followed, people in West Wales and the Valleys became better off every year, and year on year.

The historical gaps in employment and activity rates between West Wales and the Valleys and the UK average have closed. Improvements in employment have been driven by increasing economic activity; areas specifically targeted by successive EU and Welsh Government investment programmes. The gap in economic inactivity rates (excluding students) between Wales and the UK has narrowed from 4.9 percentage points in 2001 to just 2.2 percentage points at 30 June 2017; West Wales and the Valleys saw a decrease of 7.1 percentage points in this time, from 28.4% to 21.3%.

Long years of austerity have been tough, but three successive rounds of EU Structural Funds will leave people in Wales better off, and better prepared, than they would have been. That is why we need regional funds to continue.

However, our proposals are dependent on two key decisions from the UK government. Firstly, we want every penny of the £370m that we currently receive from the EU each year to be replaced by the UK Government and added to the Welsh Government’s annual budget, with no constraints, no top-slicing.  We are simply asking for the promise made during the referendum – that Wales would not lose out on a penny if we left the EU – to be kept. This pledge must now be honoured or the people of Wales were misled.

Secondly, the decisions on regional investment must continue to be made in Wales. We will oppose any proposals for a UK wide ‘shared prosperity fund’, administered from London. Any move to a system where unelected officials in Whitehall can veto much needed investment in our local communities would be completely unacceptable and a betrayal of devolution.

The people of Wales are best placed to make those decisions and to create a new system for the future. We have the local knowledge, the people and the networks to deliver this. Over almost 20 years we have built up the experience, working closely with the regions of Wales, businesses and communities, who know what they need and the kind of investment that would benefit them. We have networks across the country and the machinery on the ground to effectively devise and deliver regional investment. Whitehall simply does not have this capacity or relationships. It would be irresponsible for the UK Government to try to bypass the established partnerships and structures that we have built up over two decades. Any effort to do so would result in disruption, incoherence and ineffectiveness.

Our constructive proposals include a new, simplified and less bureaucratic way of supporting Welsh communities and driving economic development. We want to simplify the rules, administration and systems for regional investment funds. We will develop plans for the regions of Wales led by partnerships involving local authorities, businesses and communities in those areas. Our approach to regional investment will focus on places where it is needed and in line our recently launched Economic Action Plan.

At a UK level we need an agreed approach on a range of issues. That is why we have suggested that the four national governments of the UK agree rules on regional support to avoid a race-to-the-bottom that could damage communities. We also advocate the creation of a Council of Economic Ministers from all four nations to ensure co-ordination of policy across the UK.

Leaving the EU presents many challenges, but also some opportunities. We must think now, together, about the kind of Wales we want to build in the future and how best to achieve it.

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Carwyn Jones is the First Minister of Wales.

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