Duncan Forbes analyses the impact on Wales of leaving the EU.
Brexit is likely to have a major impact on the Welsh economy. If this is negative, as it is widely predicted to be, it is the individuals, households and communities with the least resilience, lowest skills and least connectivity that will be worst affected. Our work in the field of regeneration tries to stem or reverse this effect. How will our ability to do so be affected?
What happens to EU funding which supports regeneration?
The EU pours money into Wales through the Structural Funds programme, rural development funding and the Common Agricultural Policy. The Structural Funds programme and Rural Development Plan both support regeneration and together they are worth £2.2 billion in the period 2014-2020. Wales is a net beneficiary from the EU, receiving more than we pay.
It is pretty undeniable that these programmes have had a significant regenerative effect. Between 2007 and 2013, the data on the last EU programmes report that in Wales they created 36,970 jobs, helped 72,600 people into work, supported 11,925 enterprises and supported 229,110 people to gain qualifications. The programmes funded improvements to public infrastructure and services such as railway stations, roads, swimming pools, renewable energy generation, learning campuses and town centre improvements within the parts of Wales that were eligible. They also funded research and development.
So what happens to this funding if the UK leaves the EU? During the referendum campaign, those campaigning for us to leave promised that organisations receiving EU funds would still do so once we had left. What they didn’t promise, however, was that when the existing EU programmes expire in 2020, the Government would introduce any new equivalent or comparable programmes from 2021 onwards. And anyway, how much can we rely on the pledges that were made when other promises, such as more funding for the NHS, have already been shown to be hollow.
It’s too early to say what the outcome will be but in my view it is unlikely that Wales will see equivalent funding to replace the lost EU money. Whilst we can be confident that the Welsh Government will want to have direct regeneration programmes in place if it has the finance available, we can’t have any confidence that the current UK Government will see this as a priority.
The impact of uncertainty
Whatever the eventual funding position, uncertainty itself risks killing off regeneration plans.
Any major infrastructure improvement takes many years in the planning and delivery. Even relatively small scale site assembly involving the acquisition of a few empty and redundant buildings can take several years if compulsory purchase is required.
Skills programmes take time to establish and recruiting good staff requires a promise of some continuity and certainty of their employment prospects.
Although at present, funding is still technically available from the EU programmes until 2020, no-one really knows how that would work if we leave the EU in 2019 and there are already signs of reluctance to invest much time in preparing and planning projects for funding for fear that the time may be wasted.
Environmental protection
Many of the laws protecting our environment originate from Europe and ensure that there is a balance between economic regeneration and the environment. One can argue about whether the balance is always right, but in any development there will always be economic pressure to cut environmental corners. So there is a risk that if these laws are repealed when we leave the EU and not replaced by Welsh Government, many development schemes may focus solely on short term profit and costs ignoring the long term impact on our environment.
Is there an upside of leaving the EU?
There are two EU regimes that it will benefit regeneration in Wales to be without where we might hope that the UK Government do not replace them.
The first is the EU procurement regime. Its constraints are nowhere near as great as many public bodies would have us believe but nevertheless they are used as an excuse for procurement strategies that favour large and giant national and multi national businesses for public sector contracts at the expense of Welsh businesses who do not have the scale or the contract bidding teams to compete. There is no evidence that large scale frameworks provide any better value for money than a range of smaller contracts for which SMEs based in Wales can compete. Without EU procurement rules, public bodies can procure local businesses and make it a condition that they pay the living wage. Both would have a major regenerative effect.
The second is the State Aid Rules. Again the constraints are not as great as we are often led to believe, but they would be no loss. Without them, Welsh Government could have an unfettered strategic approach to supporting Welsh businesses helping to create jobs and increase skills.
Conclusion
The greatest impact of leaving the EU will be economic forces beyond our control and these may dwarf our attempts at regeneration. I suspect there will be less money for regeneration programmes post Brexit. But with less constraints imposed upon them and if ( and only if) they integrate their programmes more effectively, Welsh Government, local government and partners might be able to make what money we have go further.
Duncan Forbes is chief executive of Bron Afon Community Housing and a director of CREW