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Written Statement - The Agreement on the EU’s Multiannual Financial Framework

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The Rt Hon Carwyn Jones AM, First Minister of Wales

On 8 February 2013, European Union Heads of State and Government reached agreement on the EU’s long-term budget, or Multiannual Financial Framework (MFF), for 2014-2020.

The European Council reached agreement that the maximum total ceiling for payments in the period 2014-2020 will be €908 billion.  The agreement still requires the consent of the European Parliament before it can come into effect.

The Welsh Government’s overarching objective in the MFF negotiations, as we have made clear at every opportunity, has been an agreement that would deliver jobs and growth in Wales. We therefore have some concerns about particular aspects of the deal reached by the European Council.

Changes to the formula for the allocation of Structural Funds to the poorer, or “less developed” regions of the EU such as West Wales and Valleys, will have a disproportionate impact on some of our most vulnerable communities. West Wales and the Valleys (and, also, Cornwall), will lose out to wealthier regions, including those within the UK. For West Wales and the Valleys, the agreement would mean a reduction of some £400m for 2014-2020 compared to the funding for 2007-2013 – this figure would be much greater of course in real terms. This is contrary to the EU’s objective, as set out in the Treaties, to narrow income differentials across the Union.

Furthermore, the impact of the European Council agreement for East Wales remains uncertain, as its funding allocation will need to be negotiated with the UK Government, but we have concerns that this region too will see a substantial reduction in its funding.

While other Member States, including Germany, Belgium, Ireland, Italy and Spain, have sought, and secured, additional special allocations for regions adversely affected by the overall budget settlement, the UK failed to negotiate similar protection for Wales.

We must now look to the UK Government to make a fair allocation of support to Wales in order to address our much reduced Structural Funds budget so that we can continue our work to lift the economy of our country.

As regards the Common Agricultural Policy, it is difficult at this stage to extrapolate Member States’ individual allocations either for direct payments to farmers or for the rural development funds and we expect the details to emerge over the coming weeks and months. However, we will be pushing the UK Government hard to ensure that our allocations reflect the challenges faced by our rural communities and the industry more generally.

We will be working to maximise the benefits to Wales of the budget allocated to enhancing the EU’s competitiveness for jobs and growth, including under the Horizon 2020 programme for research, development and innovation and the Connecting Europe Facility for transport, energy and broadband networks.

At this stage, it is difficult to calculate accurately the level of support that Wales will receive from the EU budget. My Ministerial colleagues and our officials are already in negotiation with UK Government and information on allocations will be provided as and when it becomes available.

Overall, where the agreement failed to provide adequate support at the EU level for our vulnerable communities, we will be looking to the UK Government to cover the shortfall.