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Written Statement - The EU’s Multiannual Financial Framework for 2014-2020

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Alun Davies, Deputy Minister for Agriculture, Food, Fisheries and European Programmes

The EU’s long-term budget, or Multiannual Financial Framework (MFF), for 2014-2020 will set out the maximum amounts that can be spent, and on which policy areas (including the Structural Funds and the Common Agricultural Policy), in the annual budgets during that seven-year period. The MFF is agreed on the basis of unanimity between the Governments of the Member States and, for the first time, must now be ratified by the European Parliament. It is due to be discussed at the European Council, on February 7-8.

The Welsh Government has been very proactive in making the case for Wales on the MFF since before the European Commission published the first overall MFF proposal in 2011. Welsh Ministers have consistently made it clear, both to the UK Government and directly to the EU institutions, throughout the MFF negotiations that a Budget cut would not be in Wales’ interests. We want spending maintained at current levels, both on the CAP and the Structural Funds, to help us through the current economic challenges.

The Welsh Government’s overarching objective in the MFF negotiations has been an agreement that would deliver jobs and growth for Wales. I have affirmed this focus, and our strong desire to see spending maintained at current levels on the CAP and Structural Funds, at every meeting of the Joint Ministerial Committee (Europe), involving Ministers of the UK Government and the other Devolved Administrations, since June 2011. I have also taken every opportunity at the JMC(E) to state the importance to Wales of support in the MFF for research, development and innovation from the Horizon 2020 initiative and for potential investment in the infrastructure for transport, telecommunications and energy networks under the Connecting Europe Facility as these are important drivers of growth and jobs.

I have made the case for Wales and the overall size of the MFF to the Minister for Europe on many occasions and on the CAP directly to Defra Ministers and through my attendance at every meeting of the EU’s Agriculture and Fisheries Council since September 2011. I have held similar discussions with BIS Ministers on the importance of the Structural Funds to Wales, and particularly West Wales and the Valleys, and attended meetings of the General Affairs Council in June and November 2012, when Cohesion Policy and the Structural Funds were on the agenda.

The Finance Minister and Leader of the House has also discussed directly on the MFF with the lead Treasury Ministers through a series of bilateral meetings and calls starting in 2011.

Welsh Ministers have also stated the case for Wales on the MFF, and the importance of EU funding and programmes, directly to the European Commission and the European Parliament. The First Minister met with Budget Commissioner Lewandowski and Regional Policy Commissioner Hahn in Brussels last year and both Commissioner Hahn and Agriculture Commissioner Cioloş have visited Wales in the last 12 months and had discussions that included the MFF.

I have met with the lead MEPs on both the Structural Funds and the CAP on several occasions to state the Welsh Government’s view of the importance of those programmes and the overall budget.

However, despite this forceful and consistent presentation of the case for Wales through all the avenues available to us, there can be no certainty that any deal on the MFF at this week’s summit meeting of EU leaders will satisfy all our objectives.

Of particular concern is a potential reduction in the amount of Structural Funds to be allocated to West Wales and the Valleys. This possibility emerged in a proposal, for last November’s summit on the MFF, made by the President of the European Council (Herman Van Rompuy) to change the formula for the allocation of Structural Funds to the poorer, or “less developed” regions of the EU. If adopted, this change would result in reductions in funding for these regions and the cuts would disproportionately affect less developed regions in wealthier Member States, such as West Wales and the Valleys and Cornwall and the Isles of Scilly in England, which could see significant cuts. For West Wales and the Valleys the proposal would mean a reduction of some £400m for 2014-2020 compared to the funding for 2007-2013 whereas a freeze in the overall MFF, allowing for inflation, could have seen the region receive increased funding of around £400m. These reductions, of around £800m in total, would, perversely, be at the expense of increases in funding for wealthier regions.

In addition to the position on Structural Funds the signs on CAP are not encouraging. There have been three versions of the CAP budget so far. Each proposes a reduction overall, ranging between 3% and 9% compared to the funding for 2007-2013.

The First Minister has written to the Prime Minister on the MFF and I have written to the BIS Minister with responsibility for the Structural Funds. The Finance Minister has spoken to the Financial Secretary to the Treasury, who leads on the MFF. We have made it clear that the Van Rompuy proposal would have serious consequences for the vulnerable communities in regions such as West Wales and the Valleys while increasing the funding for wealthier regions across the EU.

We have stated that this outcome would be in direct contradiction of the agreed UK negotiating position to focus Structural Funds on the poorest regions in the EU and that the UK should be a strong advocate for amending the Van Rompuy proposal in order to limit the cuts in funding for less developed regions. We have also argued that the UK Government should seek additional payments for the poorest regions in the UK (West Wales and the Valleys and also Cornwall and the Isles of Scilly) in order to mitigate the effect of these proposed cuts and to consider proposing a “safety net” provision for these regions that would place a limit on the cuts that could be made in their allocation of Structural Funds.

Welsh Ministers will continue to take every opportunity to make the case for Wales in the MFF negotiations and subsequently, as appropriate, in negotiations with the UK Government.