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4.13 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): I congratulate the hon. Member for Ogmore (Huw Irranca-Davies) on a confident and interesting speech—erroneous in parts, but a good speech well delivered, which I am sure augurs well for him.
I also visited Ogmore, of course, unsuccessfully, and I got wet a few times as well. I come from Snowdonia, so I know what rain is all about, but with such rain every day, I could not understand why the Ogmore farmers do not grow rice. I found that the Conservative candidate was terribly wet. I congratulate the hon. Member for Ogmore sincerely on his speech.
I shall speak about objective 1 funding in Wales and the forthcoming comprehensive spending review. One of the main issues that has concerned the National Assembly and been highlighted in recent weeks is the disparity in funds allocated to the 15 local partnerships. Evidence from the funding allocated to the 447 projects approved thus far demonstrates clearly that some of the more prosperous—if I may so describe them—parts of the objective 1 area seem to be doing well in terms of allocation per head, but those in the most deprived areas are doing badly. It is extremely worrying that the funds are not getting through to the areas most in need. That might well create a problem in achieving the increases in gross domestic product that it was hoped would result from objective 1.
I consider, as does my party, that ways must be found to achieve a more balanced allocation, so that every part of the objective 1 area benefits more equitably from the funding. That is why Plaid Cymru, the party of Wales, highlighted the need to set more regional economic targets for the Welsh economy. Regional targets are essential if we are to ensure more balanced development. Adopting targets only for the objective 1 area as a whole and for the non-objective 1 area will not succeed in gaining the necessary increase in GDP. Ways must be found to target the most deprived areas.
One relevant factor is the quality of the local partnerships and the varying amounts of experience in preparing applications for European funding. Action such
as more training for local partnerships that are under-performing must be undertaken urgently. What is the Welsh European Funding Office doing to address the problem?The current financial position is that by the end of December 2001, commitments totalling £288.5 million have been made. However, the indicative financial allocation set for the end of December 2001 in the single programming document was £347.92 million. There is thus a shortfall of more than £59 million. The programme is about £60 million behind schedule.
The reasons given for that do not stack up. In a paper recently presented by WEFO to the Economic Development Committee of the National Assembly on 16 January, it was stated that
- "a key factor in not yet allocating funds up to the level of the Indicative Financial Allocation set out in the SPD was the decision by the Infrastructure Partnership and the Business Assets Strategy Partnership to spend sufficient time developing an Infrastructure Strategy before allocating grant."
Over the past two years the matter has been brought up time and again, but the Executive have done nothing about it. As a direct result, it was impossible to apply for money for projects in those sectors during the first two years of the programme. We hear in this place how important infrastructure and ICT are, but we are being held back.
In the course of my speech, I shall put numerous questions to the Secretary of State. I do not expect that he or the Minister who winds up will be able to address them all, but I would appreciate a response in the form of a letter in due course. I do not mean to be unreasonable, but I am sure that these are matters of common interest to all who are concerned about the Welsh economy.
As I said, applications could not be made for money for the three sectors that I specified. The delay became unacceptable and has undoubtedly contributed towards increasing the gap between the indicative financial allocation and the commitments already made up to the end of 2001. That demonstrates the incompetence of the Government in Wales in running the objective 1 programme.
It is estimated that more than 30 partnerships and committees are directly involved in administering the programme. There are 15 local partnerships, 10 regional partnerships, one programme monitoring committee and four strategy partnerships. On 18 January, the chair of the monitoring committee announced the establishment of two new groups—a monitoring group and an advisory group on implementation. With so many bodies, it is no surprise that people are confused about the whole process. Apparently, the private sector had had enough months ago, when the Confederation of British Industry decided that it would not actively participate in the programme, saying that business people did not have the time to attend meetings and spend hours attempting to find their way through the process.
I know that the issue has a resonance across the political spectrum and there is a need to simplify matters in order to proceed as quickly as we can. There is a danger
of the whole process being hijacked by local authorities. It seems that those who know how to play the game, as it were, are doing well, but the danger of that for small organisations is that if they are out of favour with a local authority, there is not much chance of their being successful in their applications.It is unhelpful to compare our performance with that of other UK regions that are in receipt of objective 1 assistance. Such comparison is unfair and pointless because each area has different problems and a different way of tackling them. However, we should be comparing the performance of our programme with our targets, as set out in the single programming document. As the failure to reach the indicative final allocation anticipated by the end of 2001 shows, it is evident from such comparison that we must improve our performance, and fast.
There is significant under-commitment in priority 5 of the programme, which concentrates on rural development and sustainable use of natural resources. Several hon. Members have mentioned problems in rural areas. The problems should be highlighted and we should deal with them urgently. Measure 7 of that priority, which targets enhancement and protection of the natural environment and countryside management projects, is seriously under-committed. Will the Secretary of State liaise with the WEFO and the First Minister about that? We need to encourage the establishment of quality projects under that aspect of the programme, and the need is greater now because of the fallout of foot and mouth, and so on.
We must emphasise the need to establish a wider sense of ownership of the programme. Action needs to be taken to ensure that some of the big players, such as the WDA, do not feel that they own it. The process tends to be finance-driven rather than policy-driven, and there is genuine fear that that will continue, as the new regulations introduced for 2000 to 2006 exert annual pressure to demonstrate that money is being spent and require proof of spending at the end of every two years. The whole programme may well be preoccupied with the need to spend, and concentrate on that instead of quality. There is a need to shift from a finance-led approach to a policy-led approach.
We also need to de-bureaucratise the process. It must be dug out of the realm of civil servants. There are concerns that elected Members of the National Assembly and the Economic Development Committee in particular do not have a sufficient role in the process, and that it is dominated by the Government of Wales and officials. Of course, the Assembly as a whole should have a role. Perhaps it could undertake an annual review to consider how EU programmes are progressing. That work could be done in a wider framework of considering domestic performance policy as well. Such an arrangement would obviously provide an opportunity for approved integration and cohesiveness between the European Union and domestic programmes of the sort that has been lacking in the past, and would also avoid duplication. The Assembly as a whole should have overall control of all European Union programmes, as it should ensure that objective 1 contributes to overall economic development in Wales. A lack of overall strategy in the objective 1 SPD, with the lack of adequate baseline data and cohesion between strategy, priorities and the measures within them, directly resulted from the fact that no overall national economic
development strategy was in place. Such a strategy should have been in place at the beginning of the National Assembly's work. It would have guided the preparation of objective 1 and other important programmes.That leads me to the comprehensive spending review. As we know, the Chancellor's CSR is due for publication later this year. It will set out the funding arrangement for 2004 to 2007, and will therefore cover the second half of the objective 1 programme. In effect, it will determine how much funding Wales will receive not only as part of Barnett, but—we hope—in the form of additional resources to cover EU funds.
Will the Secretary of State guarantee that Wales will receive additional resources over and above Barnett to meet the EU funds that we are entitled to draw down? What discussions has he had with the First Minister about the need to ensure that Wales will receive the full amount of resources, in addition to the block grant, to cover all EU funds that we are entitled to draw down? What discussions has he had with the Chief Secretary to the Treasury on this issue? Last time, we did not receive the full amount necessary to draw down all the European funding or any additional resources to match fund the projects, so we must call for an additional allocation on top of the block grant. I am fully aware that the Secretary of State knows that, and I hope that he will lobby as hard as he can. I know that it is a difficult issue and that there are other competing claims on Treasury moneys, but I ask him please to listen. This is an opportunity that Wales must not miss, for the good of the whole objective 1 area and beyond.
The mid-term evaluation of the objective 1 programme in 2003 offers the opportunity to reconsider the priorities and measures and the financial allocations that they contain. What discussions will the Secretary of State have with the First Minister on the mid-term evaluation of objective 1 funding? What discussions has he had with the Department of Trade and Industry in relation to the next round of European structural funds from 2006 onwards? What guarantees can he and the First Minister give that they will ensure that the interests of Wales—it has to be said that they differ from those of the UK Government—will be heard? It is not in the interests of the UK Government to argue for increases in the amount of structural funding that is allocated to the UK, because, as we know, the Fontainebleau agreement acts as a disincentive. Welsh interests differ from those of the UK Government as far as the next round of funding is concerned. My party believes that the principle of additionality must and should be applied to each individual programme, instead of only at the member state level, to ensure that structural funding is additional to domestic funding. The baseline for the future financing of the structural funds should be increased from the current 0.45 per cent. of EU gross domestic product to at least 0.65 per cent. The money could be found by moving resources from the common agricultural policy. However, we would oppose any moves to renationalise regional policy, as there must be a strong regional dimension in cohesion policy.
Since the last comprehensive spending review, Wales has received, on average, an extra £140 million a year above the Barnett block to cover the extra cost of EU grants. Of course, that is welcome. It has gone fairly far, but it has not gone far enough to pave the way for drawing down all the European structural funds and using them to
their full potential. Of course, extra money is welcome, but we need more money again. I know that the Secretary of State hears such views all the time, but in the context of this particular debate, I must point out that it is absolutely vital for a substantial addition to be made to the Welsh block grant. I am not telling him anything that he does not know himself; but it is none the less vital.Some petty politics has been going on on both sides of the House. Some claim that the extra money is the much-needed match funding, but unfortunately, it is not. This is the money that is given to Wales by Europe. Unfortunately, it has to go through the Treasury first. In order to use the money, it is necessary to match the amount in addition to its usual budget—the infamous match funding. Unfortunately, we have not seen a penny of that money from the Treasury, and it has to be drawn down from the various departmental budgets, which are already stretched to their limits in the National Assembly. I doubt whether any match funding will be provided by the Treasury in the next CSR unless the Secretary of State and the First Minister lobby hard to urge upon the Financial Secretary and the Chancellor the need to provide these much-needed funds so that the European grants can be used to their full potential and the National Assembly does not have to rob Peter to pay Paul. I congratulate the Chancellor on providing the European component of grants in addition to the Barnett block in the last CSR. I urge the Secretary of State to ask the Chancellor to continue that precedent by doing the same again this year.
We are approaching a make-or-break period for the structural fund programmes. They have been slow to start and it has taken some time to get the infrastructure in place. Academics, economists and politicians on all sides realise that we are now in the middle of the seven-year process and that this is an important time. The last CSR covered two to four years of the European funding programme and provided a welcome £140 million on top of Barnett. During the middle years of the programme, most of the grants come from Europe. We therefore hope and expect that there will be a significant increase in the funds that are made available in this year's CSR. Plaid Cymru's Professor Phil Williams AM, has carried out research estimating that an additional £62 million a year will be needed to cover the increased level of European grants allocated to Wales in the next few years.
The Secretary of State obviously appreciates the importance of the issue. I urge him to lobby his colleagues along the lines that I have suggested and ask him to bear in mind the special needs involved in the programme. I know that he is aware of them; I am merely reminding him. Will he make objective 1 a real success throughout Wales?
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