Wales could lose out on £400 million due to EU budget cut, warns first minister

Wales is set to lose out financially because of the cut in the EU budget agreed by David Cameron and other European leaders.

As David Cameron’s Conservative right-wingers lined up to praise the news of a 3.3% cut in the EU’s seven year budget, Welsh first minister Carwyn Jones over the weekend condemned the deal  as bad for Wales.

Citing calculations that Wales will loose out to the tune of £400 million as a result of cuts to the EU’s Structural Funds, the first minister explained:

“This will be felt most in West Wales and the Valleys. The impact on East Wales remains even more uncertain, as its funding allocation will need to be negotiated with the UK government, but we fear that this region too will see a substantial reduction in its funding.

“Despite all of our efforts to promote a fair deal to protect Wales’ interests, the agreement reached by the European council is deeply unfair to the poorest parts of the EU. Significant cuts to the budgets of more vulnerable regions have been agreed to deliver increases in funding for wealthier regions, contrary to the objective set out in the Lisbon Treaty,” he said.

“Some regions, like those in Spain and Italy, have secured special payments to compensate for such cuts, but the UK government failed to negotiate similar protection on our behalf.”

In outlining concerns at the potential disappointment Wales could face as a result of the package agreed by EU leaders on the Common Agricultural Policy, Jones continued:

“The prime minister says this is a ‘good deal for Britain’. He will need to explain how it’s a good deal for Wales. The Welsh government has always recognised the need for discipline in the overall EU budget but it cannot be right for EU money allocated to the UK to be siphoned away from poorer regions, like west Wales and the Valleys – to richer regions elsewhere.

“We must now look to the UK government to make a fair allocation to Wales of its much reduced structural funds budget, so that we can continue our work in transforming the economy of our country.”

Confirming the £400 million cuts figure, Dr Elizabeth Haywood, director of the South East Wales Economic Forum argued that this need not be as serious as it first looks if changes are made to the types of projects funds are spent on. Referring to her time chairing the Welsh government’s City Regions Taskforce Haywood has told BBC Radio Wales:

“We should be looking at some regionally-significant programmes rather than having lots of little dissipated mini-programmes all over the area,” she said.

“If we could actually achieve that this time round, we could end up getting more value out of our European funds.

“I think it’s also got to be remembered that whatever you put in, in terms of European funding, has to be match-funded from somewhere else and of course that’s been getting more difficult as the economy has been in a more difficult state.”

Outlining the Welsh government’s belief that the deal made in Brussels will do nothing to support and encourage economic growth, BBC Wales political correspondent, Tomos Livingstone concluded:

“Over the past few weeks, the Welsh government has been going through all the European projects in Wales with a fine toothcomb looking at which ones are working and which ones are not.

“I suspect that process will now intensify because we have got this confirmation that there is going to be a good deal less money to spend in those areas.

“It is a cut of around £400m for west Wales and the valleys, we expect – under some estimates, they were expecting a rise of £400m.

So very disappointing from Carwyn Jones’s perspective but, as with so much in politics, it depends which way you look at things.”

Meanwhile, David Cameron’s approach to the EU, with a call for a referendum on an as yet undefined new settlement, has come in for criticism from one former Welsh MP.

Speaking to Radio Wales Sunday Supplement programme, the former Labour leader and EU Commission vice-president, Neil Kinnock warned  that the prospects of a UK  leaving the EU would deter investors, a sign, he argued, of Cameron ‘rolling the dice’ and gambling with the country’s future.

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