The Emerging Picture Where should Wales go Next

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Cohesion Seminar, 18th October 2002

• The Emerging Picture - Where should Wales go
  Next?
• Jack Malan

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Overview

• Current Position
• Emerging Picture
• Key Issues
• Propositions and Options

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Current Position

• Wales is one of the main UK beneficiaries of
  Structural Fund aid taken together the current
  Objective 1 and 2 programmes are worth over 4
  billion of EU and UK aid.
• Although the East Wales Objective 2 programme is
  relatively small, West Wales The Valleys
  Objective 1 is the largest in the UK.
• Past Structural Fund programmes have made a
  significant contribution to regional development.
  However, while this aid has helped Wales keep
  pace with trends in the UK economy as a whole, it
  has not enabled it to catch up.

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UK Objective 1 (2000-06)
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UK Objective 2 (2000-06)
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Community Value Added

• In addition to purely financial gains, Wales has
  benefited from Community Added Value in other
  ways.
• This includes continuity in programming/policy
  framework, good practice in programme management,
  linkages with other EU policies/programmes, and a
  stronger trans-national dimension. These and
  other benefits are difficult to measure but no
  less significant than more tangible
  manifestations of added value.
• There are of course less positive aspects too
  bureaucratic procedures, matched funding
  requirements, small areas and until recently
  short programming periods (Objective 2).

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Structural Fund Trends

• Over the past decade, Objective 2 programmes
  throughout the EU have shifted away from
  investment in physical infrastructure in favour
  of the productive environment. This is less
  true of Objective 1.
• The current West Wales Objective 2 programme is
  broadly in line with other UK regions in terms of
  the allocation of resources to different
  priorities with physical infrastructure still
  predominant.
• However, in the case of the East of Wales
  Objective 2 programme, there is a relatively high
  allocation to productive environment, and
  correspondingly less resources for physical
  infrastructure compared with other UK regions.

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SF Allocations 1989-2006
of total
Objective 2
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Wales/UK Objective 1 Priorities
2000-06
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Wales/UK Objective 2 Priorities
2000-06
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Drivers of EU Cohesion Policy

• With countries from Central and Eastern Europe
  joining the EU, resources will have to be
  switched away from existing Member States to
  support the enlargement process.
• Whilst there has been good progress, Structural
  Fund intervention has not eliminated disparities
  between EU regions and there is a need for new
  and potentially more effective approaches.
• The dynamics of regional development have changed
  with factors such as globalisation and the
  knowledge economy now the key drivers of change,
  and this needs to be reflected in cohesion policy.

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Emerging Picture

• The debate over the future direction of EU
  cohesion policy has started at a relatively early
  stage in the programming cycle. This reflects the
  enormous implications of possible changes.
• Apart from the question of future levels of
  Structural Fund aid, the key question is how
  future programmes should be delivered and the
  respective roles of the Commission, and regional
  national authorities.
• The mid term evaluation of current Structural
  Fund programmes will be have an important
  influence on future policy by providing an early
  indication of post-2006 regional development
  needs and priorities.

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Cohesion Policy Post 2006

• Continuation of Objective 1 and Community
  Initiatives but with reduced funding.
• Partial re-nationalisation of Objective 2
  greater flexibility in defining eligible areas,
  EU thematic priorities but menu approach an a
  national/regional level to specific measures.
• More multi-funding of schemes with closer
  integration of ERDF, ESF and other sources of
  cohesion finance, and greater emphasis on
  mainstreaming horizontal themes.
• Emphasis on more efficient use of Structural Fund
  aid making available funds work harder,
  revolving finance, achieving greater leverage,
  better evaluation, etc.

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Implications for Wales

• From the Welsh perspective, EU enlargement
  presents the opportunities of an enlarged market
  but also challenges including more competition
  for inward investment and reduced Structural Fund
  aid.
• There is a window of opportunity in Wales a
  chance to use greatly increased but probably
  only for 2000-06 - levels of aid to bring about
  fundamental and lasting change.
• Steps need to be taken now to prepare for post
  2006 - the ending of transitional status,
  reduction in level of EU aid, changes in how
  programmes are organised, etc.

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Key Issues

• Is the balance between different Priorities in
  the current Structural Fund programmes still
  relevant given the emerging picture?
• What can be done to ensure full and appropriate
  - utilization of 2000-06 Structural Fund
  resources? Financial absorption for UK programmes
  including Wales - is currently lagging behind
  the Berlin Profile.
• Will current interventions result in sustainable
  structures and outcomes that last into the
  post-2006 period and, if not, what should be
  done?
• More generally, what should Wales be doing to
  influence the debate over future EU cohesion
  policy?

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Developments Elsewhere

• There are plenty of examples of good practice
  elsewhere in the EU, especially in more
  traditional fields of Structural Fund
  intervention, that could be replicated in Wales.
• So far, newer Structural Fund priorities
  financial engineering, information society,
  environment, etc - have proved difficult to
  tackle with relatively few initiatives clearly
  demonstrating positive results.
• Successful regions are generally those that
  have a clear focus on factors determining
  competitiveness - entrepreneurship, innovation,
  information technology, human capital, and
  overall quality of life. They combine this with
  diverse partnerships and devolved implementation
  structures.

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Propositions and Options

• Current Structural Fund priorities in Wales are
  appropriate the real issue is more to do with
  generating good project designs and
  implementation rather than strategy.
• That said, there is an issue of strategic
  coherence ensuring that Structural Fund
  programmes in Wales are closely aligned with
  non-EU schemes and priorities.
• The aim should be to replicate Wales past
  success with inward investment by exploiting the
  indigenous potential for development -
  entrepreneurship and the knowledge economy.

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