Wales will be nearly £900m worse off by 2025 due to UK Government’s failure to honour its commitment to match EU funds after Brexit - claims the Welsh Government.
Speaking ahead of the imminent publication of the UK Government’s Levelling Up White Paper, Economy Minister Vaughan Gething today called 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.
According to the Financial Times, the governments in Scotland and Northern Ireland also claim to be losing out as do the Northern Powerhouse Partnership, a regional economic lobby group in the north of England.
UK Government said replacement funds will ramp up to the same as those lost by 2024/25.
The levelling up department admitted that spending would not match the £1.5bn average EU payments until 2024-2025.
Welsh Government's claimed 'missing' money:
- The CRF(Community Renewal Fund) 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.
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.”
In response a Department for Levelling Up, Housing and Communities spokesman said: "We have been clear throughout that UK-wide funding for the UK Shared Prosperity Fund – worth over £2.6 billion - will ramp up to at least match receipts from EU structural funds, which on average reached around £1.5 billion per year.
“Alongside commitments to support regional finance funds across the UK via the British Business Bank, this exceeds the UK Government’s commitment to matching EU structural fund receipts for each nation.”
They added that In addition to the UKSPF, the Spending Review also announced the setup of a series of regional access to finance funds.
They said: "These supersede and improve on some of the activities that have been funded in the past from EU Structural Funds, with investment rising to over £200m pa across the UK by 24/25.
"Levelling up is a whole of government agenda which is firmly embedded in our Spending Review plans for each department; it will not be delivered by a single department alone."
