Wales is in danger of missing out on post-EU funding due to a "lack of cooperation" between the UK and Welsh governments, a new report has claimed. The UK government has developed new funding schemes which it previously claimed will match the money Wales would have received from the EU after Brexit.
But a new report by the Senedd finance committee has suggested Wales could miss out on vital funding due to a "lack of cooperation between the Welsh and UK governments." It said three new funding schemes - the community renewal fund (CRF), levelling up fund (LUF) and the shared prosperity fund (SPF) - designed to replace previous EU funding in UK nations represented a "seismic shift in the way that money is allocated to Wales", which it claims was the largest recipient of EU funding relative to its population of all the UK nations.
But it said implementing these funds had been "endangered by a lack of engagement between the Welsh and UK governments", difficulties by local councils in submitting funding bids and the UK government "bypassing the Welsh Government and the Senedd" to fund Welsh projects.
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While Wales received £46.9 million - or 23% - of the overall community relief fund funding, the Welsh Government described its allocation as a “scattergun approach” which it said would have been better spent if it had been deployed more strategically. The bidding process for funding was also criticised by some Welsh councils, including Pembrokeshire County Council, which called the community relief fund process "inherently wasteful", and the Welsh Local Government Association (WLGA), which complained over the level of resources councils and other organisations have to put into bidding with no guarantee of success. The WLGA said it was was too soon to judge whether the new funds were less bureaucratic than EU funds but added that there was "still quite an extensive range of evidence and material that had to be pulled together" for those applying.
Minister for Economy Vaughan Gething said it was “plain that some of the projects that have gone in aren’t aligned with Welsh Government priorities”. The finance committee said it was "particularly disappointed to hear about a lack of engagement between the Welsh and UK governments" on funding and called on the UK government to consider the time and resources needed by local authorities to submit bids.
The report also criticised the £2.6 billion shared prosperity fund (SPF), which was launched in April 2022 to cover different parts of the UK until 2024/25. It said there had been "very little detail" on the fund since it was announced in 2017 and noted a number of Welsh councils which said progress on the fund had been "slow" and that meaningful engagement between the UK Government and the Welsh Government had only taken place relatively recently. It said the Welsh Government had not endorsed the UK Government’s approach to the SPF as it said the funding formula "redirects funds away from those areas where poverty is most concentrated" in Wales and that its share of the funding was over £1 billion less than what it would have expected to receive from the EU between January 2021 and March 2025.
While it admitted that the new funding processes were "new and likely to experience teething-problems", the Senedd committee said it had "sympathy with the Welsh Government that it is being bypassed" by the UK government's approach and believed the Senedd was "in danger of being side-lined and that further consideration is required to ensure that effective parliamentary scrutiny of these and any future replacements funds takes place in Wales."
Both the Welsh and UK governments agreed that average funding for Wales through the shared prosperity fund was around £291 million per year and broadly matched previous EU funding. But Welsh Government said funding levels would not match the funding Wales would have received if it was still in the EU as the SPF ramps up and the remaining EU funding tails off. Mr Gething said: "What’s essentially happened is the UK Government have tried to net off the funds we’re still getting from previous rounds of European funds, and say that counts towards them matching the size.
"What I think it’s also worth mentioning in terms of some of the differences is that having netted off in a way that we disagree with, the challenge is that there isn’t any plan or any commitment at all in future years to invest that money that they’re netting off against. So the loss is permanent".
Welsh Government Minister for Finance and Local Government Rebecca Evans also suggested the “only honest answer” the UK Government could give to the question of whether Wales will receive less new funding than it would have done had it remained in the EU was “we will receive less funding”, something the UK Government disputes.
The committee said it was not able to take a view on whether Wales would receive more or less through replacement funds as it did when the UK was a member of the EU because Welsh and UK governments were not considering it in the same way. It said this was "further complicated by the fact the committee does not know the UK Government’s funding plans for years beyond the SPF, which will be key to ascertaining whether previous funding levels have been maintained".
The committee added that it was "disappointing that we have had to spend so much time unpicking the basic principles of each governments’ argument" and that it had received evidence suggesting that the level of funding announced to date by the UK Government was short of what Wales would have received if the UK had remained a member of the EU, though it admitted there was a "level of uncertainty" about Welsh Government's estimates of how much EU funding it would have received in the future. It recommended that an independent body assesses both governments' claims around the levels of future funding and how this compared to previous EU funding.
Finance Committee chair Peredur Owen Griffiths MS said: "The new funding arrangements established since the UK left the European Union represents a seismic shift in the way that money is allocated to Wales, and the role of the Welsh and UK governments in that process. It’s particularly important in Wales, given that it was the largest recipient of EU funding relative to its population of the UK nations.
“Our main concern is that the success of these new funds in Wales is endangered by a lack of cooperation between the Welsh and UK governments. Our partnership isn’t just about sharing money across the UK - it also needs to be about sharing ideas and responsibilities.
“To make sure these new funds have maximum impact and reach the right places, we need a grown-up approach. We found that this aspect of the new arrangements is currently lacking. The committee still has concerns with the UK Government’s approach of using these new arrangements to fund projects in devolved areas, bypassing the Welsh Government and the Senedd. It’s key that we see more robust engagement between all tiers of government.”
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