Written evidence submitted by the Isle of County Council (SPF0015)

Introduction Anglesey is just over 700km in size and is mostly made up of small towns, villages and farm land. The 225km of beautiful coastline, made up of a mixture of sandy beaches and rocky coves, attracts a large number of tourists, especially during the summer. The A55 road connects the island to the rest of and is a main route to and from Port. Almost 70,000 people live on Anglesey. 61% are of working age and 76.5% of these are in work - this is higher than the Welsh average.

The number of working-age population that are either managers, directors or senior officials is higher than the Welsh average and we have one of the highest rates of self-employment in the country – mostly small and sole trader businesses. The Island is split in to 11 wards, each being served by more than one County Councillor. There are 30 County Councillors in total. Being an Island, Anglesey has some unique socio-economic challenges through being rural in nature and its peripheral location. This has led to an outward migration of young people an increasingly ageing population and a rise in second home ownership.

Anglesey is amongst the happiest places to live in Wales. In a recent Annual Population Survey undertaken by the Office for National Statistics, Anglesey was ranked 1st in Wales in relation to overall Life Satisfaction. In terms of happiness Anglesey was ranked 2nd in Wales. Anglesey is also amongst the safest of places to live in Wales.

Specific Responses

1. How effective have existing arrangements for the management of European Structural Funds been? Like many other Council’s in Wales, the Isle of Anglesey County Council (IACC) has found arrangements can be varied with response times to queries being dealt with quickly and at other times taking much longer. This can often be detrimental in establishing projects and in working with other grant funders. It is appreciated that appropriate checks need to be taken but IACC believe they could at times be dealt with much quicker. Complexities in the awarding and delivery of funding has caused delays in the distribution of funds and delivery on the ground affecting the positive change brought through investment. In any future replacement scheme lessons must be learned from the shortcomings of the process and administration of EU funding and these be addressed in the proposed UK Shared Prosperity Fund (UKSPF). It is suggested the following be addressed: • A proportionate approach to audit and compliance with a degree of trust in existing systems being incorporated as part of the design of the fund;

1 • A recognition of the match funding constraints that organisations delivering the UKSPF face (lack of private sector confidence after the recent public health crisis); • The need for local input into the design and management of the fund with greater flexibility to take account of differing challenges in the various regions across Wales (addressing perceptions programmes are often designed for the South Wales Valleys, not ); • Innovation being recognised as an important element of the fund, but this should not be interpreted as being only about university spin outs; • A priority to promote inclusive growth by tackling economic and labour market inequality; • A new priority, hitherto constrained by EU rules, to finance infrastructure and connectivity, and • A focus on outcomes rather than inputs.

2. What impact have Structural Funds had on the Welsh economy? The basis of Structural Funds has been to invest in job creation and a sustainable and healthy European economy and environment. On Anglesey, they have played a vital role in reducing disparities on the Island and Wales/UK as a whole for many years. The funds have enabled wider private sector investment through infrastructure development which has attracted income which may otherwise have been invested elsewhere other than Wales. It should be noted however, that benefits between rural and urban areas have been very different. Under the current 2014-2020 programme, Anglesey has benefited from such funding through the European Regional Development Fund and the European Social Fund. This provides investment for key policies such as Modern Apprenticeship schemes (TRAC) and Urban Regeneration through the Connectivity & Urban Development Theme, amongst others. The loss of this funding will have a significant impact on the ability of the Local Authority to work in partnership with community and third sector bodies (Menter Mon), other funding bodies (the Lottery Boards and ) to deliver the kinds of initiatives that will drive inclusive economic growth and promote wellbeing and cohesion in communities across the Island. There is no doubt that Structural Funds have had a positive impact on the Welsh Economy and certainly the impacts on Anglesey are viewed as very positive. The following table1 highlights the areas where structural funds have had the greatest impact.

Unitary Enterprises Enterprise Gross jobs Participants Participants Participants Participants Authority assisted s created created (ESF entering entering gaining (ERDF (ERDF) (ERDF) employment further qualifications 1 https://gov.wales/eu-structural-funds-programme-2014-2020-key-indicator-achievements

2 (ESF learning (ESF) (ESF) Isle of 290 56 249 6573 600 2163 62 Anglesey

It should also be noted that the Structural Funds have a very wide ranging remit and help both the rural economies of Anglesey as well as the larger industrial elements.

3. What lessons should be drawn from previous rounds of European Structural Funds in Wales? In addition to continuing and encouraging the close work of local authorities through regional partnerships for economic development, such as the North Wales Economic Ambition Board (NWEAB) and Welsh Government, there is a need to ensure that lessons are learnt from previous EU funding streams whether they were successful or not. The replacement of EU funding should be done through a single funding pot that reflects the strategic nature of regional ambitions for Wales allowing more flexibility than currently available. Any future funding should be supported by evidence and highlight the variances between Rural and Urban areas. This should avoid the unnecessary gaps, inconsistencies and overlaps that have undermined the combined delivery of the various EU Structural Funds in the past. It will be necessary to ensure that the devolved levels of the EU Structural Funds are retained for any form of UK-wide EU replacement funding. While Welsh Government should retain an over-arching role it should not necessarily dictate regional priorities/ working and more co-operation and co-working should be encouraged. Simplification of this potential new funding would allow us to do away with certain EU imposed earmarks, or the expectation of spending far lower percentages of rural funds in village renewal and economic diversification. This is both an opportunity to reflect regional needs, especially for areas such as Anglesey which are largely rural and to reflect and invest in their communities needs. In addition, there is no need to replicate the same match-funding rates currently set by EU rules. Match funding obligations could be done away with altogether. A replacement fund with no match funding will be more effective, efficient, easier to allocate and spend, speeding delivery and the impact of the funding on the ground The principle of additionality should be retained. This means that spending priorities should focus on medium term priorities that need to be locally determined, but refer to wider national and international priorities. While there is recognition of the added value of some of the policy and governance elements of the EU funds, there is a clear view that we should not be tied to path dependencies and should develop Wales’s relevant replacement frameworks. We also need to manage expectations however. There should be no illusion that it cannot be expected any replacement fund to address deeper structural issues such

3 as a lack of access to services in deeply rural areas but there should be a clear focus on tangible and achievable outcomes, rather than outputs.

4. What should be the priorities and objectives of the Shared Prosperity Fund (SPF) and what, if any, improvements are needed to the current European funding system? While the UK Government has indicated its intention to provide successor funding to EU Structural Funds through its proposed UKSPF, unfortunately there still remains little or no detail as yet on the scale, objectives or allocation of such funding. In the absence of such detail to ensure the continuity of experience in both the formulation and successful delivery of projects it is strongly suggested the priorities of any new fund should be closely aligned on the successes of the previous European funding while being responsive to both UK and regional needs. The training and upskilling of individuals and projects to stimulate economic development (such as urban regeneration and providing industrial premises due to market failure) has been successful and should be continued. Support to established and new enterprises should also be prioritised. The rural economy on Anglesey has also been helped through European funding and where possible this should be maintained. Furthermore, it is suggested the following principles be adopted:  Wales-based  Linked to the Well-being goals and ways of working  Delivered through existing Regional Partnerships (i.e. NWEAB)  Co-operation in relation to Project Development and Delivery central  Commitment beyond a single parliamentary term/two Spending Review periods Available funds at least commensurate with existing ESIF funding allocations  Focused medium to long term objectives relating to inclusive economic growth and wider societal/international goals but also with sustainability goals of Welsh Government  Consolidates the scope and resources currently disbursed by the several existing EU funds (the single pot approach)  Targets territorial inequality and opportunity, urban, rural and mixed urban- rural areas.  Mainstreams reporting and audit using existing domestic arrangements  Opting into territorial cooperation programmes with EU (INTERREG, European Network on Rural Development, etc) where relevant, given Anglesey’s long standing connections and co-working with Ireland.

5. What level of funding should Wales receive, and how should this be calculated moving forward? The allocation of funding should be based on addressing need, not through the use of the existing Barnett formula mechanism. The Barnett formula currently penalises

4 Wales, in comparison to Scotland and Northern Ireland, receiving the lowest per capita contributions. In the current 2014-2020 period, while the EU regulations defined a basic formula to allocate the EU funds across the UK, a decision was made to allocate additional funds to Wales based on its need. In future, rather than being tied to any existing (EU or UK) allocation formula, a careful, needs-based assessment is required before any policy decision is made at governmental level It is likely that any replacement scheme for European Structural Funds will encompass the whole of Wales and not just the areas of highest deprivation. As such the level of funding needs to be the same as it currently is if not more. Current treasury allocation processes could see a big reduction in per-capita funding and a new funding model would need to be developed. It isn’t yet clear if the fund will be managed by the Welsh Government or centrally though Westminster but similar arrangements to those currently established through WEFO would be a sensible approach. Funding levels should match the scale and ambition of regionally-prioritised programmes to ensure that the right amount of investment addresses the appropriate interventions that are required. Any funding mechanism that is adopted should be fair and transparent with input from the UK Government and the Devolved administrations. IACC agree with the Welsh Government that the UKSPF should not be allocated via the Barnett formula but should be allocated on the basis of Need

6. Should funding be ring-fenced on a nation or regional basis or should the fund be open to competitive tendering? IACC would welcome ring-fenced allocations based on a fair and transparent funding formula based on the current EU funding principles. Links to established regional priorities and programmes would need to be ensured. Where no regional priorities exist then funding on a National basis linked to an established national framework would be appropriate. This framework could be open to competitive tendering. It would also be sensible to adopt an approach whereby any underspend could be reallocated to other regions.

7. What timescale should be adopted for each funding round? How should responsibility for funding and administering the fund be divided between UK and devolved governments? To develop meaningful projects that can deliver real impact and outcomes aligned to regional priorities, the preference would be for commitments made for at least one if not two parliamentary terms. This would provide certainty and ensure the best projects could be planned and executed in good time, rather than backing only those

5 projects that can be delivered in set timescales determined by funding availability and not need.

8. What role could, or should, local government and, where applicable, city or growth deals play in relation to the fund? In Wales, policy and governance structures have developed to reflect the regionally- focussed approaches i.e. City Deals and economic Growth Deals in North Wales and in Mid Wales. This provides a platform to further evolve - and the Welsh Government have expressed a commitment to a regionally-focused model of economic development.

As such Local Government and growth deals are central to the delivery of any agreed fund. For over 20 years Local governments in Wales have played a key role in the delivery of European funds. They understand the needs and issues within their communities and have established sound working relationships with the businesses that operate within them. This makes them ideally suited to the delivery and monitoring of locally based projects.

The role of local government would be to both build on the good practice and knowhow accumulated in designing and delivering EU frameworks over several decades, while also acknowledging that the local authorities have their own existing focus in creating the right business climate for SMEs, who collectively are the largest employers in the country. Any new UK place-based policy and funding arrangements must be developed with Local Government to ensure they are sufficiently place- specific and draw from all the territorial capital (resources, infrastructure, knowhow) of a given area.

Regional co-ordination through the NWEAB shouldn’t necessarily become a different delivery model, nor should it mean an additional layer of governance. It could be a new approach to the delivery of regional priorities and opportunities within a national policy framework but delivered locally.

9. Are there any implications for state aid rules? We are not aware that the UK government has declared what the approach to state aid will be but in the spirit of the level playing field and managing public finance to support private enterprise in normal day to day economic activities it may be fair to assume it should not be significantly different. IACC has not encountered any serious limitations to its use of EU funds as a result of the state aid regulations. IACC also recognises that without some form of maximum level of interventions private business investments will be attracted towards areas offering the highest level of assistance. IACC sees no benefit in bidding against its neighbours to attract investment, however as in the current intervention levels it needs to reflect the need for a differing intervention level based on distance from markets and available skills and economic deprivation. May 2020

6