It is a pleasure to follow the noble Lord, Lord Dunlop, and to echo many of the points he has just made, caution being one of them and care for the union another. I want to illustrate some of his points in what I have to say. I must declare my interest: I am Welsh and I live in a recipient area of huge amounts of European funding.
This part of the Bill is definitely a bolt-on: it has nothing to do with the operation of the internal market or with the four countries being able to trade freely together. This is about the replacement money for the EU funds—how it will be spent and by whom. Fortunately, I asked a question of the Minister in this very Chamber a few months ago about the European money that came to Wales. I was given a guarantee, which I am hopeful the Minister will repeat today, that the people of Wales will get, pound for pound, what the European funds gave them. That was the guarantee given in this Chamber by the Minister. If he wants to check, I can refer him to the relevant Hansard. The point I am making is this. It was not a question of the receipt of the money: I am pleased to bank the £2.2 billion that the European funds have given to the people of Mid and West Wales—that is two million people—over the last six years, but I am worried about how that money will be spent and what effects it will have. Effectively, this part of the Bill puts the cart before the horse. We have to agree a whole set of rules which cross devolved boundaries in ways we can only guess at, and nowhere are we given clear answers to fundamental questions about upholding and respecting the devolution settlements in the UK.
The implication in this part of the Bill is that it will have no impact on the functioning of the Barnett formula or on additionality, referred to by the noble Lord, Lord Dunlop. However, that is only an implication. Will the Minister give us today the answer to that fundamental question: will it have no impact on the normal functioning of the Barnett formula?
There has been no problem thus far with the UK Government seeking to spend money in Wales, in collaboration with the Welsh Government. Long may it continue, and I will encourage the Government. However, the key word is collaboration. Now, we are being asked to approve a law so broadly drawn that it will have a coach-and-horses effect on the powers of devolved Governments. I have to say to the Government that if it is not done collaboratively, spend does not necessarily mean approval. Approval will not automatically be given when the legal framework is in the hands of the devolved Governments. Factors such as planning approval, environmental impact assessments and curriculum development legislation all have a bearing here.
The Explanatory Memorandum implies that the UK Government will determine what moneys are available and how they are spent. The Welsh Government have had major control over the design and implementation of EU structural funds spent in Wales. For a few years, I had that responsibility in the Welsh Government. It is different, of course, for the smaller cross-EU programmes such as Erasmus and Lifelong Learning, which includes Comenius for school exchanges. These programmes were centrally designed but nevertheless locally administered.
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The Government have said that they will at least match pound for pound the EU funds previously spent in Wales. As the largest recipient per head of EU funding, this has significance both in the amount to be spent and the economic impact it can have. How these funds will be managed is not at all clear. This Bill gives a strong indication of the direction of travel the UK Government wish to take. The Explanatory Memorandum on the powers in this part of the Bill says that this power will allow one-off items of expenditure or the creation of funding pots.
The clear implication I draw from this replacement funding statement is that the UK Government will spend the money they want and create biddable pots for the rest. Can the Minister confirm whether that is indeed the intention and that no block allocation of funds will be made automatically to devolved Governments, whether with or without guidelines? That is the matter of control I am referring to. If so, as I suspect, then Wales will lose financial powers and the UK Government will use these replacement funds in a way that could confound its policy objectives—objectives contained under the powers devolved to it.
Can the Government explain how they see the spending of these moneys being carried out? Will there be allocations for each of the four nations? Who will administer those funds? Will the Governments of the three nations be required to bid for funds against the UK Government’s criteria? How do the Government intend to get approval for projects that bisect the legal responsibilities of those Governments? I understand the distinction between EU funds that were universally provided across the UK and much larger structural funds which provided a financial and economic incentive to the poorest parts of the UK, most notably in Wales. While a distinction could be drawn between the structural funds and funding for such things as educational exchanges, it still makes absolute sense for them to be administered by the Government who have control of the school curriculum, for example.
There is much good work that the UK Government could do. They could become a world leader in tidal lagoon energy generation; they could electrify the railway between Cardiff and Swansea; they could provide alternative approaches to the broadband provision for the hardest-to-reach communities in Wales—all without having to meddle in the domestic matters over which Wales has control. I wonder, however, having heard the noble Lord, Lord Dunlop, whether this is the rationale behind it.
The impact assessment refers to investing in culture, sport and education. When you look at the impact assessment and try to find out why the Government want to invest in those matters, it says, because of our “shared values”. I would be grateful if the Minister explained what those shared values are; it would help me to understand precisely what the intention is. The check on the unfettered use of previous EU structural funds has been that of match funding. Do the Government intend that their own projects will require financial support from the Welsh block grant or from other forms of Welsh money?
There are so many unanswered questions in this part of the Bill that I am drawn to the conclusion that what we have before us is based on political rather than economic reasons. This part of the Bill wants us to take on trust the way the Government will behave towards the other Governments in the UK. It has failed to answer the big questions that need to be answered before we can agree to enshrining so many important matters for the four countries that make up our union and, most importantly, how Wales is going to get its £2.2 billion, promised in this very Chamber.