Oral - Convergence Programmes for West Wales and the Valleys

I promised this Assembly, some months ago, that I would make a statement to the Assembly on discussions with the European Commission on the convergence programme for west Wales and the Valleys when significant progress had been made. That day has now arrived.

We submitted the draft European regional development fund and European social fund programmes to the commission just before Christmas. These programmes have been the subject of intensive and extensive negotiation with the different departments of the commission and while we have led that process, our partners in Wales have been fully consulted and fully involved on all the relevant points. Wales is the first part of the UK to submit any of its programmes to the commission and maintaining this momentum is vital if we are to get the programmes under way as soon as possible. I am therefore pleased that, on Monday, I received a letter from Commissioner Hübner that stated:

‘I am delighted to confirm that my services in DG Regional Policy have reached an agreement with WEFO on all items of substance for the ERDF convergence programme. This is a significant achievement’.

So, I am proud to advise Members that not only are we the first part of the UK to reach agreement with the EU, but we are also among the first in Europe. While it will take a few weeks yet to complete the usual legal formalities, we are now in a position to move forward with real purpose.

So what now for the people, communities and businesses of west Wales and the Valleys? First, we have the opportunity to continue the job that we started with Objective 1 and take forward the continued transformation of the region’s economy. The convergence programmes will bring an additional £1.42 billion of European grant. The agreed ERDF programme alone brings £856 million to support research and development, innovation, enterprise, transport, strategic infrastructure, energy, the environment and sustainable communities. When non-European public funding and private sector investment is added in, this represents a total investment of over £2 billion. Secondly, we can actually get on with doing the work now. The new strategic frameworks will help to focus new projects on key priorities to make an early start to deliver. The Welsh European Funding Office is already gearing up for this. We have appointed the expert members of the new all-Wales Programme Monitoring Committee and will be inviting nominations from sectors for their representative members. The new committee is expected to meet for the first time in early May.

The agreement reached with the European Commission allocates £215 million to help us to create a knowledge-based economy, in line with the Lisbon agenda for growth, skills and jobs; £132 million to encourage the development and growth of new and existing businesses; £147 million for transport, which is a 50 per cent increase on the present structural funds transport budget; £79 million to develop new business sites and premises; £54 million for investments in clean and renewable energy; £52 million to tackle environmental risks; and a further £52 million to promote environmental technologies. That is all part of the climate change adaptation programme. There is also £108 million to regenerate our most deprived areas through improving urban centres and stimulating the economic potential of our communities.

There is also good progress in terms of the European social fund, and a final agreement is anticipated within the next few weeks. This programme would deliver an additional £571 million of European grant, levering in a total investment programme of over £1.1 billion to improve the skills of the workforce and reduce economic inactivity in west Wales and the Valleys. In summary, therefore, we can look forward to total additional investment in west Wales and the Valleys of well over £3 billion.

This agreement also permits me now to clarify the issue of the sufficiency of match funding, which is vital to delivering the new programmes successfully. Our record on match funding the 2000-06 programmes speaks for itself. The facts show that our assessment in 2000 was spot on, that no good project would fail for want of match funding and that we could meet our obligations to match fund within existing budgets and without reducing provision for our core programmes. That same funding stream is in our budget lines and will continue to be available for new round structural funds purposes for the 2007-13 period as old round projects come to an end.

The new programmes align much more closely with the Government’s own strategic aims, and vice versa. This new alignment approach facilitates the use of Assembly Government expenditure to match-fund projects, which not only brings the structural fund expenditure right to the heart of what we do as a Government, but also increases the available resources on which we can draw, at no extra cost. As with the 2000-07 programmes, match-funding contributions will continue to be made by other parts of the public sector—by project sponsors, in particular—by the voluntary sector and, importantly, by the private sector. That is a strong basis for the confidence that we will be able meet the match funding requirements of the new programmes. I can repeat that no quality, eligible project will fail for lack of match funding. There is no need to seek additional resources from the Treasury and I will not be doing so. We have proved, by delivering the old programmes, that we can also deliver the new ones without overstretch.

I will also update Members on where we are with the east-Wales programmes. These were submitted to the commission at the beginning of March and have now passed the formal admissibility test. We expect the negotiations on these programmes and the Ireland/Wales cross-border programme to get under way shortly. It is no accident that the programmes are making such good progress. I have been determined that my Government should pick up, embrace and tailor the commission’s policies on economic development, skills and the environment and weave them into our policies and strategies for Wales, and into convergence in particular.

I conclude by congratulating the Welsh partnership on its achievement of being the first in Europe. The programmes have been developed in close consultation with trade unions, equality bodies, higher and further education, environment agencies, local authorities, and the private, voluntary and community sectors over a period of around 18 months. The partnership has demonstrated a real unity of purpose and this bodes well for the successful implementation of the new programmes.

I also thank our negotiating team, which has worked under a lot of pressure over recent weeks to deliver this agreement, and the Welsh European Funding Office team, which has been responsible for preparing good quality programmes.