Strategic Forum for Regional Investment in Wales meeting, 7 October 2021: minutes

The Chair opened the meeting and thanked attendees for formally confirming their membership of the Forum.

The Chair noted that successful bids to the UK Government’s Community Renewal and Levelling-Up funds were still not known due to ongoing delays, but the meeting would include updates from the Welsh Government and WLGA on recent developments, as well as sessions on future provision of skills and business support, and an update on the work taking place with the OECD.

The Chair thanked members for reviewing the draft Terms of Reference circulated prior to the previous meeting. He added that comments received were slightly beyond the current scope of the Forum but would be useful in informing the review of the Forum and its future role at the end of the year.

No further comments were received and the Terms of Reference were accepted by members and will be published on the Welsh Government website.

The 14 July meeting minutes were also cleared by members for publication.

The Chair noted that the Minister for Economy made a statement in the Senedd on 28 September which covered important messages on the UK Shared Prosperity and Levelling-Up funds. He invited Peter Ryland (PR) to make some further remarks on the Welsh Government’s position regarding these funds.

PR stated that there had been a recent shift in approach from the UK Government which has now initiated a piece of work from the Office of National Statistics on indicators and outputs for the Shared Prosperity Fund (SPF).

However the lateness of this exercise is worrying and the prospects of a full SPF being underway in 2022-23 are slim. It is likely that the pilot Community Renewal Fund (CRF) will be extended next year as the UK Government has delayed the announcement of successful bids by three months and under current plans projects need to be completed by the end of March 2022.

PR said that the Economy Minister made a point of reaching out to the new Secretary of State for Levelling-Up, Housing and Communities, Michael Gove, in his Senedd statement and has also written to him to request a meeting ahead of the UK Spending Review on 27 October. The Welsh Government has a genuine willingness to collaborate with the UK Government on the basis of respect for the devolution settlement and shared decision-making.

PR noted that the Economy Minister had recently met with Higher Education partners to discuss these issues. He added that while there may be potential for better engagement with the UK Government following the UK Cabinet reshuffle, the delays in delivering these funds will put delivery partners in Wales under real pressure next year.

Following PR’s remarks, members made the following comments:

• The UK Government has indicated to Universities that its approach to research funding will be based on regional and closer-to-market interventions.
• The third sector has concerns about how decisions will be made on applications to the UK Government’s Community Ownership Fund. It is believed that UK Government decisions may be based on spread across areas, rather than on merit. Also the UK Government is using deprivation statistics for England, but not for devolved nations, so there is inconsistency in the approach. Around 9% of applications submitted in the first round have come from Wales, seeking £3.7m of funding.
• National third sector bodies from each UK nation have collectively written to Michael Gove to request more structured engagement on the SPF.
• The third sector has a meeting scheduled with the Minister for Economy to discuss the impact of the UK Government’s approach on future third sector delivery. 

The Chair thanked PR and invited Tim Peppin (TP) to provide an update on behalf of the WLGA.

TP said that it seemed likely that successful bids to the CRF and Levelling-up Fund (LUF) would now be announced in November after the UK Spending Review.

TP noted that some local authorities had written to applicants to ask about the implications of the delay on the delivery of potential projects. He added that there was an expectation that the CRF would be extended by three months to June next year.

The UK Government has created a taskforce with the four Local Government Associations to discuss the SPF. Two meetings have been held so far with the UK Government listening to feedback without providing any new information.

TP said the WLGA had stressed the following points at the taskforce meetings:

• The importance of clear terms of engagement, and calls for a political member group meeting, not just a meeting of officers
• The importance of local determination, fitting into a national strategy
• The need for proper engagement and genuine co-production in the design of the SPF
• The need for long-term funding commitments
• Avoidance of competitive bidding processes
• The importance of devolved government involvement
• The preference of an integrated single-pot approach
• A focus on outcomes and clarification about what we are trying to achieve with the funding

TP added that WLGA Leaders had written to Michael Gove to request early engagement on the SPF. The WLGA had also recently been invited by UK departments DEFRA and DLUHC to a roundtable event to discuss rural funding in the context of the SPF.

The Chair thanked TP and introduced Huw Morris (HM) and Duncan Hamer (DH) of the Welsh Government to provide an update on future provision of skills, employability and business support.

HM said the Welsh Government was facing a challenging budget and political environment.

In the period 2014-2020, Welsh Government had contributed circa £681m to match fund £435m of European funding across Apprenticeships and employability support, and provided the underpinning strategy and funding around employability and skills. 

There are gaps in skills provision via Department for Work and Pensions (DWP) and Job Centre Plus (JCP) programmes and following the end of EU-funded interventions, which Welsh Government needs to meet. This is particularly prevalent with people furthest from the labour market and facing the greatest challenges to accessing employment.

HM added that low rates of unemployment and high rates of vacancies is also presenting a particular challenge.

HM said that the Welsh Government will be launching a new employability strategy in the New Year by which time the budgetary situation, future UK Department for Work and Pension plans, and the impact of the phasing out of EU funding from 2022/23 will be clearer. The employability strategy will be developed closely with Welsh partners.

DH said that there were similar, major challenges to Business Wales and the sponsorship of the Development Bank for Wales. For Business Wales, there will be a £25m funding gap when EU funding ends and that there is still no clarity on whether national programmes will be supported through the SPF.

Business Wales is experiencing a post-lockdown surge in demand for start-up and SME support. For Covid resource sought by businesses, 80 per cent of applications were supported by Business Wales. DH also noted that they had been working closely with local government more than ever before in response to the Covid pandemic and welcomed this approach going forward.

Rachel Garside-Jones (RGJ) noted that the Economy Minister will set out a vision, as well as the opportunities and risks for post-Covid and Brexit economic development at an Economic Summit being held on 18 October. The Summit is to be followed by an oral statement in the Senedd on the following day.

In response to the updates from HM and DH, members made the following comments:

• Query on contingency plans for Business Wales if the Welsh Government cannot access SPF funding.
• Statement that the FSB will support the Welsh Government in its efforts to secure funding to fully maintain the Business Wales service.
• Query on whether local government can help fill the gap in funding.
• Universities offer significant support to grow businesses, and are key to business survival, but will also be affected by the loss of EU funding.
• Query on the latest developments with the proposed UK innovation deals.
• Comment that the UK Government plans for the SPF will create local authority footprints that will collide and conflict with the regional approach that has been developed in Wales and also taken forward via City and Growth Deals.

In response to these comments, the following points were made.

• There is a strong case for maintaining Business Wales as a single national support service. The situation is fluid given the funding and political environment. While EU funding will cease in September 2023, elements that need to be procured can take 12-18 months.
• UK innovation funding needs to be more fairly distributed. A graphic was shown illustrating the more equal spread of innovation funding within Wales via Welsh Government schemes (Sêr Cymru) compared to UK Government schemes (Innovate UK).
• Corporate Joint Committees (CJCs) are seen as the way forward in integrating local involvement in regional approaches to economic development.
• A local government member noted the importance of planning early and local government working collaboratively / regionally to help address the emerging gaps.
• It was confirmed that EU funding can go onto the end of September 2023, but not beyond due to EC spending timescales.

The Chair thanked HM and DH and for the comments from members. He introduced Sheilah Seymour (SS) to provide an update and take questions on the Welsh Government’s new two-year project with the OECD. He noted that a paper on this work had been circulated prior to the meeting, which will also be published on the website.

Members raised the following points:

• The potential for the project to consider cross-border working, including impacts and consequences.
• The scope for the WLGA to contribute to the project.
• A query on the two-year duration of the project given the pace of change.
• The potential engagement of the UK Government in the work.

In response, SS made the following comments:

• It is early stages for the project, but the potential for cross-border elements will be explored with the OECD, and the WLGA will be engaged as one of many stakeholders that the OECD will be keen to hear the views of.
• Two years is a standard duration for projects of this nature, however there will be interim findings and reports that can support Ministers at earlier stages.
• This work has been raised with the UK Government via Ministerial correspondence. It is hoped that the UK Government will be more open to genuine engagement with the new Secretary of State in place.

No other business was raised by members.

The Chair thanked members for their attendance and contributions. The next meeting will take place in November following the UK Government Spending Review on 27 October. A diary marker will be sent to members when the meeting date is confirmed.

Chair

Huw Irranca-Davies MS

Members

Welsh Government Attendees