European Structural Funds – the third round

10 November 2014

Article by Ben Stokes, National Assembly for Wales Research Service

Image from Flikr by Xavier Häpe. Licensed under the Creative Commons

Image from Flikr by Xavier Häpe. Licensed under the Creative Commons

On Tuesday the Minister for Finance and Government Business is making a statement to Plenary to provide an update on the 2014-2020 European Structural and Investment Fund Programmes.

Last week the European Commission approved the UK Partnership Agreement, the 400 plus page document that sets out how the European Structural and Investment Funds will be used across the UK from 2014 to 2020. The European Commission has confirmed that the allocations to Wales for the 2014-2020 period total almost £2 billion – with £1.6 billion going to West Wales and the Valleys and over £325 million to East Wales.

This is the third time that West Wales and the Valleys has qualified for the highest level of Structural Funds support, which is available to the ‘less developed’ regions of the European Union – regions that have a GDP per head that is less that 75 per cent of the EU average. Cornwall and the Isles of Scilly is the only other area of the UK to have received this designation as a ‘less developed’ region for a third time.

Fifteen years ago, when West Wales and the Valleys first qualified for Objective 1 funding it was seen in some quarters, perhaps understandably at the time, as a once in a generation opportunity to improve the region’s economy. In total during the 2000-2006 period Wales benefitted from £1.6 billion in structural funding which was shared among almost 3,000 individual projects.

When West Wales and the Valleys qualified for the 2007-2013 Convergence Programme, the successor to Objective 1, the Welsh Government made a conscious choice to fund a smaller number of projects with the focus being on larger, more strategic projects compared to the previous round. To date Wales has received £1.9 billion in European funding during the 2007-2013 round, which has been allocated to 289 projects.

The UK Partnership Agreement states that in the 2014-2020 round the Welsh Government will ‘continue to focus its Programmes toward even more targeted interventions’. What this means in practice in terms of the size and number of projects that will be supported remains to be seen.

The Partnership Agreement also states that:

The central aim for the new Programmes will be to create an environment which will support economic growth and jobs. Interventions will take account of the evidence base, current regional policy and practice, research findings and the views of partners and stakeholders in Wales. This approach will guarantee Wales gains the best possible results for its investments.

While the UK Partnership Agreement (and the Welsh chapter within it) set out the high level strategy, the Operational Programmes contain the detail. Last week the Minister for Finance and Government Business stated that she expected both the European Regional Development Fund (ERDF) and the European Social Fund (ESF) Operational Programmes for West Wales and the Valleys and for East Wales to be approved by the European Commission ‘very shortly’.

The Welsh Government has previously stated that the 2014-2020 period ‘should be the last occasion in which any part of Wales should qualify for the highest level of Structural Funds support’. Whether this proves to be the case may be dependent to some degree on the way in which the funds are used in Wales over the next six years or so, and the extent to which the Welsh Government and its partners are successful in securing the greatest possible economic impact. Although, arguably, the wider economic context is likely have a bigger bearing on determining any future qualification.

Either way, it is the content of the Operational Programmes that holds the key to unlocking the economic potential of the structural funds, and it is on the delivery of these Operational Programmes that the Welsh Government will ultimately be judged.