After the EU: How do we distribute funding in Wales?

Edward Sumner, Chief Operations Officer for the Centre for Welsh Studies

Now that the United Kingdom has left the European Union, this presents a once in a generation chance to dynamically shift the way funding for Wales is done. We have a chance to replace the outdated EU Structural Funds and implement a new policy which works for all of Wales by promoting competition and fairness.

When overviewing the system, one must look at the stark inequality of how it has proceeded up to now. One major flaw of the current funding system is how regions qualify for the funding. Only certain parts of Wales have been allowed to receive structural funding. The main reason for this is that these areas have consistently qualified for funding as a “less developed area,” considered to be one of Europe’s poorest regions where GDP is less than 75%.

This has been the prerequisite for all access to funding in Wales, and the Welsh Government has been the judge and jury on the allocation of funds to these set-out areas. The existing arrangements have proven to be less than flexible and have left many parts of Wales including large areas such as mid and the north of Wales without access to crucial funding.

This very inflexible system of regional funding means that the funds have in some cases failed to target the right areas. This is because you may have a very deprived, smaller area inside a wealthier region that fails to meet the EU’s requirements.

Competition

When the UK Government sets out its new system that replaces the EU’s funding for Wales, we want to see a stark change to how the money is distributed. After all, this is not the government’s money – it is the taxpayer’s hard earnt money – and there is a moral obligation to spend it correctly.

The priority must be specifically targeting areas and projects that have tangible, achievable targets to qualify for the funds, unlike the current procedure where money is given in huge amounts without real oversight or checking if targets have been hit. History has shown us that in years gone by this has happened and the funds have been ineffective. West Wales and the Valleys remained a less developed region for 2014-20, despite having been an objective one region in 2000-06 and a convergence region for 2007-13, and its GDP per capita had fallen from 74.1% of the EU25 average in 2000 to 64% of the EU28 average in 2011.

We believe that the fairest way to distribute the money in Wales would be through competitive tendering. In simple terms, the firm offering the highest quality service at the lowest price point would win the contract. This would be fantastic for Wales as there would be no place for nepotism. Tenders or bids would be evaluated on the basis of certain predetermined criteria, such as price, quality and value for money.

From the perspective of the Government, tenders offer the greatest value for the amount of money spent. This is because they can choose from a wide pool of potential bidders to select the ones that can produce the highest quality product or service at the lowest price. This allows the government to save money without having to compromise on quality.

This entire process would encourage healthy competition in the market and prevent complacency and laziness, which in turn provides a boost to innovation and new ideas, whilst also leaving more money for other much-needed projects.

This will be a once in a generation chance to change the way funding is allocated for Wales. In my opinion, the Welsh Government have a history of failing to administer funds in the most efficient way. The other options would be the UK Government or local councils. This must be considered if we are to make a real change from the current failings and waste we have seen over the decades in Wales.