Welsh inquiry into regional development funding gathers steam

The Welsh Economy, Trade and Rural Affairs Committee has an inquiry under way into how post-EU regional development funding is going. Funding for levelling up, compared to what it has to some extent replaced, basically.

The Welsh government has been regularly making its feelings clear – “smaller, less flexible and narrower” coupled with “delays and mismanagement” from the UK government. Universities in Wales are incredibly unhappy with the drying up of funds for research – Swansea University’s Paul Boyle’s piece for Wonkhe last November sets out the problems.

Evidence sessions began on Thursday with evidence from local authorities, think tank Onward, and the Institute of Welsh Affairs – as well as Sheffield Hallam’s Steve Forthergill, who set out how both sides of the debate are correct, for different versions of “correct”.

In broad terms, we have a slightly ridiculous situation where the Westminster government insists that it has matched funding, and the Welsh government says it is in the region of £1.1bn short. That’s quite the difference.

The calculation depends on the timeframes you decide to use, as the EU structural funding has tapered off rather than simply been switched to UK alternatives (which also cover different, shorter periods).

It also depends on what would have happened with EU funding levels. Structural funding is awarded according to levels of regional prosperity – the wonderfully named Conference of Peripheral Maritime Regions’ analysis suggests that parts of Wales were due to be reclassified as “less developed” or “transition” regions in the latest round, and this is where the £1bn-plus figure comes from. The Institute for Fiscal Studies’ submission to the inquiry spells it out in more detail.

What’s not really up for debate is that the UK replacements for EU funding – primarily the UK Shared Prosperity Fund (UKSPF), as well as the Levelling Up Fund – don’t target research and innovation in the same way. While Thursday’s committee hearing didn’t get into the weeds of this issue, we should expect to hear more about R&D in future sessions.

Universities in Wales drew deeply on EU funds – over £350m in the 2014–20 period – and were the second largest beneficiary in the nation, with a whole host of tangible results: a brain research centre, innovation campuses, a centre for compound semiconductors, and various projects now facing a much remarked “cliff edge”. The UKSPF just isn’t designed for universities to make use of in the same way, with its “hyper local” focus.

This is the other side of the debate – beyond the amount of funding, the Welsh government sees the UKSPF (which includes money for skills, despite education being devolved) as a Westminster power grab, bypassing the nation’s decision-making and macro-level planning and inviting local authorities to fight over funding.

There’s the argument here that research should be funded through, well, research funding, primarily planned for and disbursed by what is now the Department for Science, Innovation and Technology, and that the DLUHC has a stretched budget which is not intended for expensive university projects.

While the debate over post-Brexit regional funding is important in itself, it’s also a microcosm of a wider debate on research funding – there’s a huge risk to funding R&D through short-term tranches of funds, however flashily announced, and when it’s the government deciding how well its own approach has turned out – “marking its own homework” – objective evaluation suffers. The question of whether research and innovation is really and truly part of levelling up is of course a vexed one too, and one that universities are still striving to convince the government on.