Is there life after EU funding?

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ViewsAugust 15th, 2016

The argument about EU structural funds following the Brexit vote is missing the point, says Victoria Winckler

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The Chancellor has announced that the UK Government will ‘honour’ all EU funding commitments made before the Autumn Statement, up to 2020. The First Minister has responded that the announcement doesn’t go far enough.

But behind the headlines there’s a quite widely held view that West Wales and the Valleys deserve to see their EU funding disappear because they voted leave. To give just one example, a well-known commentator said recently “Give them what they voted for and let’s see how they manage without”.

But it’s not quite so simple.

First, Wales’ leave vote was by no means down only to the Brexiteers in West Wales and the Valleys.

As the Electoral Commission’s data shows, the majority of people in 17 out of 22 of Wales’ local authorities including those in East Wales as well as West Wales and the Valleys voted to leave, so the result wasn’t simply because the valleys turkeys voted for Christmas and Cardiff didn’t. Leave voters were everywhere.

And because leave voters were everywhere, Cardiff itself played a big role in the leave vote.

There is a degree of smugness in some quarters that Cardiff returned the biggest proportion of remain votes in Wales at 60%. But in a referendum it’s the sheer number of votes that matter – and the truth is that 67,816 Cardiffians voted leave. That’s more than twice as many leave voters as in Merthyr and Blaenau Gwent combined. Indeed such was the size of Cardiff’s leave vote that one in thirteen of all of Wales’ leave voters were in Cardiff.

Second, Cardiff and the rest of east Wales will lose out on EU funding too.

It’s often not recognised that Cardiff is a significant beneficiary of EU funding. While it’s true that the bulk goes to West Wales and the Valleys, some £203 million of EU funding goes to East Wales – the border strip that stretches from Flintshire through Powys down to Cardiff and the Vale of Glamorgan. Most of this funding is earmarked for various employment and training activities – including apprenticeships, support for young people not in education, employment or training and so on. On top of this, East Wales’ farmers benefit from agricultural payments and East Wales’ higher education institutions e.g. Cardiff University benefit from EU research funding. So all parts of Wales  – East and West – will be affected by the loss of EU funding, irrespective of the numbers who voted to remain.

And if this were not enough, Cardiff will also be affected indirectly by the loss of the EU funding elsewhere in Wales. Cardiff is extraordinarily dependent on the rest Wales, especially the south east, for its prosperity. A cut in EU funding will mean fewer trained workers to come and work in the capital, less investment in road and rail to get them there, less advice and support for growing businesses and arguably more Welsh public funding needed to replace the lost EU moneys The Valleys’ funding loss will be Cardiff’s loss too.

Third, the ending of EU regional aid is the least of Wales’ worries.

Cardiff University estimated that in 2014 Wales received £658 million in regional and agricultural subsidies. Big bucks, but compared with a total Welsh budget of around £15 billion it’s not that much – less than 5% of total spend. Much more important is why Wales’ EU-funded regeneration efforts – which don’t forget date back nearly 30 years (the first EU programmes were one specifically for Mid Glamorgan from 1987 – 1991 and then ones for Industrial South Wales and for Rural Wales from 1989 onwards) – have not achieved the transformation expected.

It was never the intention that any EU moneys would be a long-term income stream, so there needs to be some honest reflection about why Wales’ disadvantaged areas still need cash help after all this time (and this is not about blame – though the commentariat have been quick to point fingers to the third sector / local authorities / poverty professionals / whatever else is in their sights).

The question that nobody is asking is much more important than squabbles over who is to blame for the loss of EU funding and whether the compensation package is adequate. The question is this:

How should Wales develop its economy when EU funds have dried up?

For thirty years, Wales’ economic development policies have been shaped by those of the structural funds. So what do we do when there are no EU ‘priorities’ or ‘axes’ to direct where investment goes? What do we do when there is no restriction on funding ‘mobile infrastructure’ or pre-16 learning (to name just a few)? And what should we do when substantial parts of the Welsh economy are at risk of relocating elsewhere?

These questions are far, far more important than seeing the loss of EU funding as some sort of warped justice for the leavers in the valleys or arguments about whether the compensation offered by the UK government is enough.

But will they be discussed?

Victoria Winckler is Director of the Bevan Foundation.

She was responsible for overseeing the first EU programme in Mid Glamorgan in the late 1980s, co-wrote several EU programmes for south Wales in the early 1990s, and was instrumental in West Wales and the Valleys securing Objective 1 status in the early 2000s. Then she needed a break and went off to the real world.

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