Monday, October 17, 2011


Last week, the BBC’s Dragon’s Eye programme revealed that despite billions of pounds of European funding, West Wales and the Valleys have become poorer during the last decade.

According to the programme, the latest official figures show that GDP per head in the region has fallen from 66.8 per cent of the EU average in 2000 to 64.4 per cent in 2008, the latest year for which figures are available.

The only other parts of Europe to see a drop in their relative prosperity over this period are Malta, two regions of Portugal and four regions of southern Italy.

Every other region that has received the highest level of European funding, including those in Greece, Latvia, Slovakia and Spain, have become wealthier over the same period.

This is a shameful indictment of the use of this vital funding package to turn around the Welsh economy during the last decade.

Defenders of the policies of successive Assembly Governments trot out the line that the first round of funding, known as Objective 1, was not focused enough and spread around too many projects. They then say that the current round of so-called Convergence funding, which will have fewer strategic projects, will make a bigger difference.

However, the facts from the Welsh European Funding Office (WEFO) that administers and manages the funding for the Welsh Government paints a very different story.

According to their latest data, the main Structural Funding programme – known as the European Regional Development Fund – has so far paid out £213 million in grants to various organisations.

And what are the outputs from this funding?

Well, as of May 2011, 4,849 gross new jobs had been created, which equates to a cost per job of £44,000. Believe it or not, this is higher than the amount received by LG during the ill-fated inward investment project.

Worst still, WEFO had estimated that, at this stage of the funding round, 7,348 jobs should have been created, so less than two thirds of the new jobs expected have come to fruition.

And if we look at what has happened geographically, we see that the European fund has had little impact on some of the poorest areas in Wales during the last five years.

For example, in Anglesey, only 246 new jobs have been created as a result of European funding, with 255 jobs created in Blaenau Gwent and 178 in Merthyr Tydfil.

With unemployment in Wales recently rising by 16,000, surely there should be a greater impetus within the programme on job creation.

However, it is not only in terms of new jobs that the programme is behind its targets.

During a month when the Assembly Government has appointed six new entrepreneurship champions, the number of new businesses being created through European funding is also well behind target. Instead of 3,019 firms being set up by May 2011, only 1,105 had been established i.e. only 36 per cent of the expected target.

The other major programme for learning and training – the European Social Fund – has also underperformed in key areas. For example, there are 44,000 fewer participants on European funded training programmes than expected. Of those who are have benefitted from taking part in education and training opportunities, only 32% of those estimated to enter employment are doing so.

Worst of all, there are 12,500 fewer young people being trained through the European Social Fund, which should not be surprising given that WEFO has only paid out £14.2 million to project sponsors against a commitment of £95 million. This is at a time when we have record unemployment amongst young people in Wales.

If WEFO was a business and such targets were being reported to the board of directors, there would be alarm bells ringing throughout the organisation and heads would roll.

Yet if you read the monitoring reports produced for various committees by officials, there seems to be no urgency to address this worrying set of results. In fact, the impression is that those in charge of the funding are more focused on spending the money so as to avoid clawback rather than on generating outputs that can positively benefit the Welsh economy.

This is simply not good enough. It is shameful enough that Wales will have to apply for a third round of funding. However, the woeful underperformance of the current funding programme is, frankly, unacceptable when businesses need vital support to grow and create jobs.

So what is to be done?

The new Minister for Business has made her mark with the business community during the last three months and, given her straight-talking no-nonsense style that is focused on delivery, I would expect that she would be appalled at such complacency.

Certainly, if this continues and no action is taken, I would expect the opposition parties to call for a full investigation by the National Audit Office into the performance of WEFO and the failure to hit key programme targets.

At a time when we have this additional money available to make a difference to the economy, it simply isn’t good enough to perform so dismally in terms of job creation, enterprise development and training for young people.

Wales, and the Welsh economy, deserves better.

Western Mail column 15th October 2011.