Monday, February 14, 2011
EUROPEAN STRUCTURAL FUNDS IN WALES
During the session, I not only reviewed the performance of the current programmes of Convergence and Competitiveness funding received by Wales for the period 2007-13, but also the previous programme of support that was available during the period 2000-06, especially the Objective One programme for West Wales and the Valleys.
While some politicians would like to think that the management of the Objective One programme has been a unqualified success, the statistics show that, despite £2bn of European and public money being spent in the region over seven years, its economic performance relative to the rest of the UK declined by 3.1%.
In contrast, the other three UK regions in receipt of Objective One funding grew over the same period – Cornwall increased its relative prosperity by 9%, South Yorkshire by 1.9% and Merseyside by 0.3%.
Given this, it was not surprising that West Wales and the Valleys qualified for a second round of European funding for the period 2007-13.
In addition, the rest of Wales also qualified for so-called competitiveness funding to help develop business and skills within the more prosperous areas of the nation. In total, this amounts to around £1.9bn of European funding across Wales, to be matched by private and public finance.
So what has been the progress of these new funding programmes? Are they having a real effect on the performance of Wales plc?
According to the Welsh European Funding office (WEFO), a total 208 projects have been approved to date, which are able to draw down EU funds of £1.47bn. This represents a total project investment of more than £3bn.
However, allocating money to projects is one thing. Making sure that money has a real effect on the economy of Wales is another.
For example, WEFO’s latest data shows that 5,343 jobs have been created as a result of European Structural Funds. Of these, 3,956 jobs have been created in the Convergence region and 1,387 jobs in the Competitiveness region. However, this is compared to an overall target of 35,540 new jobs i.e. after four years of the programme, only 15% of the jobs target has been reached by the projects funded.
Of course, it is generally appreciated that the programme has been extremely slow in getting projects approved and most of the initiatives funded have only just started to be delivered. Nevertheless, it means that, during the next five years, more than 30,000 jobs remain to be created by the various projects approved.
However, the job creating performance across Wales is not even.
For example, the Competitiveness Fund for East Wales – which covers areas such as Cardiff, Wrexham, Flintshire, Powys and Newport – has hit 66% of its gross jobs created target as compared to only 10% for the Convergence Programme. Indeed, while East Wales only has access to 6% of the funding available to West Wales and the Valleys, the Competitiveness programme has generated a quarter of all the jobs supported by European money (with 361 jobs created in Cardiff alone).
Within the Convergence region itself, 476 jobs have been created in Swansea (or 12% of the total). In contrast, the Convergence counties with the lowest level of job creation to date are Merthyr Tydfil (95 jobs), Conwy (102 jobs) and Blaenau Gwent (126 jobs)
A similar result is found in relation to new business creation.
To date, 1,304 enterprises have been created across Wales as a result of European Structural Funds as compared to an overall target of 5,544 new enterprises. Of these, a third (439 new firms) have been created in the Competitiveness area, with Cardiff, Newport and Powys in the five top counties for new enterprises. Again, we see a major difference in performance with East Wales already achieving 86% of the target for enterprises created as compared to 17% for West Wales and the Valleys.
Within the convergence region, Swansea has created the most businesses (117), and the counties with the worst entrepreneurial performance are Blaenau Gwent (23 new firms) and Denbighshire (32).
Therefore, much remains to be done in terms of job creation and entrepreneurial performance of our poorest region, especially as European funding seems to be utilised far more effectively in the more prosperous parts of Wales.
It could be argued that this difference in performance reflects the capacity of both parts of Wales to be able to utilise the funds effectively.
On the other hand, differences in the types of programmes supported and the way they are implemented within each region could be having an effect.
Whatever the explanation, such a massive difference in performance should give Welsh policymakers cause for concern, especially as it is critical that this funding should be having a real and positive effect on our most deprived communities.