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Economy Minister calls on UK Government to replace Wales’ lost £1bn in “levelling up” drive

Gweinidog yr Economi yn galw ar Lywodraeth y DU i roi’r £1bn yn ôl i Gymru fel ymdrech i ‘godi’r gwastad’

The Welsh budget will be nearly £1 billion worse off by 2024 as a result of the UK Government’s failure to honour its commitment that Wales would not lose “a single penny” as a result of the UK leaving the EU, Economy Minister, Vaughan Gething, has revealed today.

Speaking ahead of the imminent publication of the UK Government’s Levelling Up White Paper, the Minister is today calling on the UK Government to respect devolution and replace Wales’ missing £1 billion.

The Minister said the ‘drift and indecision’ that has characterised UK Government Levelling Up plans is now costing Wales jobs and development projects.   

Economy Minister, Vaughan Gething, said:

“More than two years on from the grand promises made by the Prime Minister, it is now clear that Wales is being left with less say, over less money.  

“Drift and indecision in Whitehall is costing our least well off communities jobs and projects at the worst possible time. Last year’s Spending Review confirmed that the UK Government has broken its promise to replace EU funding for Wales in full and there is no sign that the White Paper will change this.

“If the UK Government had kept its promise, Wales would have been receiving £375m in new money each year from January 2021. Instead Wales‘ share of post EU funds stands at just £46.8m in 2021/22.

“Our own analysis shows that the Welsh budget will be £1 billion worse off by 2024.

“This is not “levelling up”, it’s levelling down.”

At last year’s Spending Review, the UK Government confirmed the Shared Prosperity Fund (SPF) to replace EU funding would “over time” amount to £1.5 billion per year UK-wide.

However, in 2022/23, the SPF will be worth only £400m UK-wide. Had Wales and the UK remained in the EU, Wales would be set to receive at least £375m a year.

But in 2021/22, Wales has received just £46.8m from the pilot Shared Prosperity Fund – the Community Renewal Fund (CRF) – for 165 projects.

Welsh Government analysis shows the UK Government’s approach to replacing EU funds means Wales will lose around £750m over three years (2021-22 to 2023-24) for the Structural Funds.

Taken together with the loss to farm funding of £242m, it means since the UK Government took over allocating replacement EU funds, to the end of this spending round period in 2023-24, the UK Government will have netted-off or otherwise not replaced close to £1 billion of EU funding for Wales. 

The Minister added:

“Any plan worthy of credibility would have been published last year with clear priorities for stronger local economies in a rebalanced UK economy. In its place we have half baked, incoherent funding pots hatched in isolation in Whitehall.

“Difficult decisions have already been taken here to protect priorities like our commitment to deliver 125,000 apprenticeships in this Parliament. Filling a hole left by lost EU funds promised to Wales restricts our ability to support strong proposals that would bolster our economic strengths.

“The unconstitutional Internal Market Act is being used to override democratic devolution by stopping decisions about Wales being taken in Wales.

“My message to UK Ministers is clear – respect devolution and restore the missing £1 billion promised for Wales.

“It is not too late for the Secretary of State, Michael Gove, to offer a way forward based on co-design and co-decision making. It is not too late to compromise in good faith.”

Notes to editors

  • The CRF pilot was announced as a £220m UK-wide fund for 2021/22. The UK Government announced bids worth £200m. Wales was allocated nearly £46.8m (23% of the total allocation).
  • Through EU funding arrangements, current and new programmes overlap by two years. Had Wales and the UK remained in the EU, Wales would have access to receipts from the current EU programmes for commitments already made to projects, as well as access to new allocations from January 2021 averaging at least £375m annually over seven years to support new projects.
  • The CRF announcement means a shortfall of at least nearly £330m in terms of allocations this year (2021/22)
  • UK-wide spending review profiles confirmed for the Shared Prosperity Fund as £400m for 2022/23; £700m in 2023/24 and £1.5bn in 2024/25.
  • If Wales gets a 23% share of the SPF allocations over the next three financial years, Wales may be looking at £92m (a shortfall of £283m); £161m (a shortfall of £214m); £345m (a shortfall of £30m), respectively, using the average £375m annual figure.