Wales facing a return to ‘austerity’ unless lost EU funds are replaced, Economy Minister warns
A failure to replace lost EU economic funds could see austerity measures return to Wales, Vaughan Gething has warned.
The Minister for Economy says that while Wales has lost £375 million a year in EU economic aid, the UK Government has yet to confirm plans on what replaces it.
He said that unless the shortfall is addressed, the Welsh Government would have to ‘balance budgets’ and make the kinds of decisions taken when ‘austerity was at its height’.
In an interview with the Financial Times, he says: “The chancellor said there won’t be a return to austerity.
“Actually, if money disappears . . . you could find yourselves having to make choices that look very similar to the choices I was having to make as a minister when austerity was at its height.”
The EU structural funds ended in December 2020 but the UK Government has pledged to replace the shortfalls in Wales, Scotland and Northern Ireland.
Westminster plans to create a Shared Prosperity Fund (SPF) with around £1.5 billion made available annually but there are no details on exactly how this will work.
In the meantime, a Community Renewal Fund provides £220m in funds but this covers all of the UK nations with Wales expecting to receive only around £10m.
UK Government Chancellor Rishi Sunak rejected claims that spending cuts were a return to austerity during an interview in November 2020, saying, “there’s absolutely no way in which anyone can say that’s austerity, we’re spending more money on public services than we were.”
Wales, Scotland and Northern Ireland have complained that the SPF plans by the UK Government bypass the devolved administrations.
First Minister Mark Drakeford has described them as an “enormous power grab” which would, “do more to hasten the break-up of the Union than anything else since devolution began.”