The latest alarming revelation makes fair funding for Wales all the more important

Martin Shipton

Once again, Wales finds itself at the centre of a numbers game where the odds are stacked against it.

The latest potential injustice was teased out during a debate in the House of Lords the other day. Plaid Cymru peer Carmen Smith sought clarification about the UK Labour government’s intentions when a new post-Brexit regional aid programme is introduced in 2026.

It has been suggested that such money may be channelled to local authorities in England. If that happens, the normal mechanism for funding Wales, Scotland and Northern Ireland would be to allocate cash on the basis of the population-based Barnett formula. In which case Wales would be very much worse off.

Up until now, largely as a follow-on from needs-based allocations from our time in the EU, we have had much more than a “Barnett share”. But when Baroness Smith (as she is formally known) asked the Levelling Up Minister Lord Khan – of whom most of us have never heard – whether Wales would receive regional aid on a needs basis after 2026, he wouldn’t commit himself and said the matter was still up for discussion.

In limbo

This is extremely worrying. Lord Khan’s response leaves Wales in limbo. Have UK Government Ministers really not considered how regional aid will be distributed after 2026? Or is it that Wales, Scotland and Northern Ireland simply aren’t on their radar, and are seen as annoying inconveniences to be dealt with later? The fact is that in government terms, April 2026 isn’t far off and a decision needs to be made pretty soon.

Let’s hope the Welsh Government at least is on the case and making use of its much-trumpeted “working together partnership” with its party colleagues in Westminster to secure a positive outcome.

The root of the problem, of course, is that when we left the EU, we gave up funding certainty and threw ourselves on the mercy of the UK Treasury, which has never, in truth, been favourably disposed towards Wales.

Inside the EU we knew exactly where we stood in terms of regional aid funding. There’s a simple formula that decides whether a region is entitled to top-level regional aid funding or not. If your Gross Value Added (GVA) per head (a variation on Gross Domestic Product – GDP – per head) is less than 75% of the average for the EU as a whole, you’ll get the funding automatically.

Shame

It’s a matter of continuing shame for the UK that it doesn’t distribute regional aid on the same basis.

As soon as it could after the UK left the EU, the then Conservative Westminster government decided to introduce an element of pork barrel politics into regional aid policy. In Wales, the Welsh Government was excluded from involvement in the assessment of aid projects and the distribution of grants to them. Instead local authorities were forced to engage in an unseemly bidding competition for funds, with the distinct possibility that money would be diverted from poorer areas to somewhat more prosperous ones, if doing so was seen by the Tories to be politically advantageous to them.

Such reprehensible conduct, which is an affront to good practice, was enabled by an allocation system with no real rules. It was on a par with the extra £1bn given to Northern Ireland by Theresa May as a bribe to the DUP for its support after she lost her Commons majority in the disastrous (for her) 2017 general election.

The £1bn bribe and the shameless corruption of the debased post-Brexit regional aid arrangements have seriously damaged Britain’s integrity. Now Wales has to battle once again for its fair share.

It would be good to think that the latest threat to Welsh funding will be seen by voters as a cause worth making a fuss about. Sadly that won’t be easy to achieve. Many – perhaps most – people in Wales are woefully ignorant about the funding of their public services and don’t think of it as a topic worthy of their attention. Such nonchalance has very much suited successive UK governments, which are happy to save money by seeing injustice for Wales persist.

Fairest deal

But there’s no getting away from the fact that the allocation of public sector resources is a matter of crucial importance for the people of Wales. For as long as Wales remains within the UK – and there is no immediate prospect of that not being the case – our politicians must fight for the fairest deal. Getting the fairest deal means going beyond the change to an EU-style allocation of regional aid money based on need to a broader, all-encompassing arrangement where the nations and regions of the UK receive all their public funding in line with a needs-based formula.

It’s doubtful whether Lord Khan or more senior UK Ministers have such a reform in mind. But it’s a matter they – and politicians from other parties – need to be challenged on between now and the Senedd election in May 2026.

There’s no doubt that Plaid Cymru will campaign for this change, but what of the other parties? Welsh Labour has previously used the campaign slogan “Standing Up For Wales” in the run-up to elections. Will it dare to do so again without committing itself to support a fair allocation of resources?

During their long 14 years in office, the Welsh Conservatives began by talking up the “respect agenda” and ended by stripping the Senedd of powers and money. Will they adopt a different approach under new management?

And then there’s Reform. Essentially an English Nationalist party built on the personality of Nigel Farage and hostility to immigrants, it has so far shown no interest in developing a specifically Welsh policy agenda. Nor, so far as its supporters in Wales are concerned, has it needed to. It mustn’t, however, be allowed to coast comfortably towards May 2026 without being challenged. Where does it stand on the issue of fair funding for Wales?

Basket case

Many of its supporters in England doubtless see Wales as an economic basket case that continues to suck England dry. The idea of giving Wales more public money because of the adoption of a needs-based formula would almost certainly be regarded as total anathema by Reform’s Mr Angrys. But what would the party’s supporters in Wales think? It would be good to believe that they cared enough to make a policy commitment, but maybe they’re so preoccupied with illicit small boats landing in Kent to devote attention to such a weighty matter.

For those of us who do care, the first priority must be to secure the regional aid funding that Wales needs and deserves. Carmen Smith told me: “It’s beyond worrying that the Labour UK Government can’t even commit to keeping the same level of regional funding as the Tories did. That should be the absolute bare minimum.

“We should remember that, under EU regional funding structures, West Wales and the Valleys got the highest level of regional funding available across the whole of Europe. That was to reflect the poverty and deprivation we sadly still have in Wales under Westminster.

“The idea that regional funding might, in future, be handed out based on population share completely misses the point of what regional development funding is for. If Labour now thinks that post-industrial areas of Wales don’t need extra support to deal with the unique challenges they face, then they’re in even more troubled political waters than they already seem to be.”