Assembly to debate Finance Committee report on replacing EU funding in Wales

Published 09/11/2018   |   Last Updated 27/05/2021   |   Reading Time minutes

On 14 November, the Assembly will debate the Finance Committee’s report Preparations for replacing EU funding for Wales. A number of key decisions will be made by the UK and Welsh Governments over the coming months on how EU funding streams will be replaced, including whether Wales continues to receive the £680 million per year it currently receives from EU funds and what level of control the Welsh Government will have over how funding is spent in Wales.

Our article published in September 2018 provides an introduction to EU funding currently received by Wales, and highlights the key issues and recommendations from the Committee’s report, which are also set out in the video below. This article concentrates on the Welsh Government’s response to the Committee’s report, and on key developments since the report was published.

We have published two further blogs recently about EU funding which cover issues relevant to the debate. Our article answering frequently asked questions about the UK Shared Prosperity Fund was published earlier this week, and we also published an article on regional investment in Wales after Brexit in October 2018, which explored the Welsh Government’s proposals for how this might operate in future.

How did the Welsh Government respond to the Committee’s recommendations?

The Welsh Government welcomed the Committee’s report, calling it an important and timely contribution to the debate around replacing EU funds. It accepted all of the 11 recommendations in the report, noting that they supported the position of the Welsh Government on the future of EU funding streams. The key points from the response include:

  • At the Finance Ministers Quadrilateral (where the Chief Secretary to the Treasury meets with the finance ministers from the devolved administrations), the Cabinet Secretary for Finance raised the Welsh Government’s position that leaving the EU should not mean any reduction in the funding available to Wales or impact on the powers devolved to the National Assembly for Wales in relation to economic development, agriculture or any other area.
  • The Welsh Government has established a central unit to develop future funding arrangements in co-production with partners, and this will work closely with its Department for Economy, Skills and Natural Resources to deliver the objectives of the Economic Action Plan.
  • The Welsh Government is working with the UK Government and other devolved administration to agree an appropriate UK-wide framework for agricultural support. It has been agreed by the Welsh and UK Governments that the majority of this framework will be managed through non-legislative intergovernmental co-ordination.
  • The Welsh Government has committed to retaining and building on the role played by Structural Funds in mainstreaming equality, tackling poverty and human rights should it secure devolution of powers relating to the UK Shared Prosperity Fund. It also notes that continued participation in the EU’s Rights, Equality and Citizenship programme is being discussed by the Welsh and UK Governments.

What has happened since the Committee’s report was published?

In relation to regional development, in October 2018 the Cabinet Secretary for Finance announced that he would be setting up a regional investment steering group including representatives from business, the third sector, universities and public services to ensure that the Welsh Government’s approach aligns to its wider economic policy. It has also allocated £350,000 from its EU Transition Fund to establish a partnership with the Organisation for Economic Co-Operation and Development to inform its future regional investment approach and the implementation of its economic action plan.

There have also been a number of developments relating to agricultural funding over recent weeks. The UK Government Secretary of State for Environment, Food and Rural Affairs, Michael Gove MP, announced a review of post-Brexit agricultural funding levels on 16 October. It will be chaired by Lord Bew of Donegore who will be supported by a panel of representatives from across the UK, and the devolved administrations will be consulted prior to the UK Government appointing its panel members. The review’s terms of reference state that it will look at what factors should be taken into account to ensure a ‘fair’ allocation of domestic farm support funding across the UK from 2020 until the end of the UK Government’s current term in 2022. The UK Government has ruled out exclusively using the Barnett formula to allocate post-Brexit agricultural funding over this period. The review will conclude prior to the 2019 Spending Review with the aim of informing future funding decisions.

The Welsh Government’s consultation for its proposals on future agricultural support, Brexit and Our Land, closed on 30 October. It received more than 12,000 responses. Concerns have been expressed by the two Welsh farming unions (NFU Cymru and the Farmers Union of Wales) about the proposals, while environmental organisations such as WWF Cymru and RSPB Cymru have been more supportive, along with CLA Cymru (who represent land, property and business owners in rural Wales).

What key decisions on post-EU funding are coming up?

We should know more about the UK Government’s proposals for how its UK-wide Shared Prosperity Fund will work by the end of the year, as it has committed to consulting on its plans by then. Decisions on the operation and allocation of this fund will be made following the consultation, and will be subject to the UK Government spending review to be held in spring 2019.

The UK Government’s review of agricultural support funding is anticipated to be completed within 3-6 months, following which the UK Government will consider its findings and respond to them. The Welsh Government will respond to its Brexit and Our Land consultation when it has analysed the 12,000+ responses received. On 1 November, the Cabinet Secretary for Energy, Planning and Rural Affairs made three commitments in her speech to NFU Cymru’s annual conference. These were that no decisions will be taken until all consultation responses have been reviewed; that no changes to existing payments will happen without further consultation in spring 2019; and that old schemes will not be removed before new schemes are ready.

Future plans for continuing to participate in, or replacing, other EU funding sources such as Horizon Europe research and innovation funding, the ERASMUS+ student exchange programme, and the European Investment Bank remain the subject of negotiations between the UK and EU.

To stay up to date with what the Assembly is doing in relation to Brexit, you can follow the new Assembly and Brexit pages.

Article by Gareth Thomas, National Assembly for Wales Research Service