Written evidence submitted by Wales Environment Link (SPF0030)
Summary
Wales Environment Link is a network of environment charities in Wales. European Structural Funds have supported the environment sector in a variety of ways and we’ve outlined some key points that need to be taken into consideration for future funding structures. We are particularly concerned to see an adequate replacement for EU LIFE funding, and we would support the Welsh Government’s calls for decision making to be taken locally – i.e. by the Welsh Government for projects in Wales, involving regional areas through councils and local partnerships.
- How effective have existing arrangements for the management of European Structural Funds been?
- What impact have Structural Funds had on the Welsh economy?
The importance of EU funding to Wales
Wales, in particular, benefitted from EU Structural Funds (ESF) and therefore regards the replacement Shared Prosperity Fund as crucial to the future of the Welsh economy, especially as we re-align the economy after both leaving the EU and the long-lasting effects of covid-19 on the economy and the environment sector specifically. Between 2014 and 2020 the UK was set to receive €10.9 billion from ESF, of which €2.4 billion went to Wales[1], the highest of any region. As a country with some regions experiencing particular disadvantages, this was a welcome and levelling investment, of which much was used for regeneration purposes.
Nature and environment
One of the most integral parts areas of EU funding for the eNGO sector has been the EU LIFE Fund. Natural England’s assessment[2] of its impact highlights that the UK was the most successful member state at applying for such funds, with it going to public bodies and environmental NGOs alike. It calls for a replacement UK fund, due to the “lack of alternative funding sources of a similar scale or scope, particularly within the environment strand”, but also recommends some streamlining in terms of the grant management process and clarity on performance metrics.
LIFE Nature has supported ground-breaking innovative nature conservation action in and across the four countries of the UK. It has delivered demonstrable improvements in the natural environment, significant socio-economic benefits, and represents excellent value for money. A dedicated replacement is essential if we are to achieve international targets to recover biodiversity and leave the environment in a better state after Brexit.
The fund has been a catalyst for substantial investment in Wales’ natural environment. Since LIFE’s inception in 1992, 18 Nature and Biodiversity LIFE projects have taken place in Wales with a total value of over €65 million. This is estimated to have produced nearly £250 million in economic growth, and over £1 billion in ecosystem services. The loss of LIFE would not only threaten Welsh nature but may also put livelihoods at risk.
Many of Wales’ biggest species and habitat recovery projects of the past 25 years have been built upon LIFE Nature funding. LIFE Nature is the only fund dedicated to this work and while other funds (such as the Heritage Lottery Fund) can support this work through match-funded projects, they cannot and do not fully replace it.
By offering match funding for projects co-financed by private, civil society and state partners, the LIFE fund is leverage for significant private sector funding enabling the delivery of government nature conservation objectives in Wales. Offering funding at sufficient scale has ensured that LIFE projects are able to deliver significant impacts, and that new and innovative approaches can be tested at a scale that lends itself to wider application. The four nation cooperation has also ensured benefits for the whole of the UK, particularly for nature, which does not respect boundaries and will require continued four-nation working, even if decisions are made on a local basis.
The RSPB[3] emphasises that many of their “achievements in saving special places and reversing the loss of iconic species have only been possible thanks to LIFE funding, including projects to help Little Terns, Roseate Terns , Bitterns, Stone Curlew in the Brecks, Machair in Scotland, and work preventing the vital freshwater habitats at our Titchwell reserve from being destroyed by rising sea levels”.
For example, one case study is the Celtic Rainforests LIFE project, where Snowdonia National Park Authority were awarded €9.5 million over seven years. This multi-partner project was match funded by the Authority, as well as Natural Resources Wales and Dŵr Cymru. The project also secured a £2 million grant under the Welsh Government’s Green Infrastructure scheme.
Celtic Rainforests, comprising a mosaic of two internationally important woodland habitats, are regarded as the ‘temperate rainforests’ of Europe, owing to their open woodland structure, mild and humid conditions, and rich lower plant communities. These habitats are critical for biodiversity, as well as the benefits they provide to people – such as providing carbon storage, water management, and opportunities for recreation. The project targets the suite of threats to the condition of the Celtic Rainforests across five Special Areas of Conservation (SACs) in Mid and North Wales, and seek to restore appropriate management.
Another excellent initiative – unlikely to be funded by any scheme other than LIFE – was the Active Blanket Bog Project; between 2006 and 2011, it restored blanket bogs across areas of mid and north Wales. The project delivered significant and sustained improvement in the condition of over 8,000ha of blanket bogs in the Migneint-Arenig-Dduallt, and the Berwyn and South Clwyd Mountains Special Areas of Conservation (SACs), two of the most important SACs for blanket bog in the UK. In order to restore the blanket bog over 450kms of drains were blocked, 48ha of forestry plantation was taken out and 6472ha of invading non-native species were removed.
As a result, the multitude of benefits included flooding being reduced, water quality and colour have improved, and less organic matter is flushed downstream. The project bought together partners to work together to restore degraded moorland on a scale not seen before in Wales. The benefits are demonstrative for people, places and nature, which is the approach we’d advocate for in future replacements.
- What lessons should be drawn from previous rounds of European Structural Funds in Wales?
WCVA highlighted in their response that many found ESF inaccessible and third sector partners have often by relegated to being a delivery mechanism rather than a project lead. This can be advantageous to some with lower capacity, but it has often meant less say in the design and management of operations, and results in there never being an opportunity for the charity to develop and become more strategic.
It’s also been seen as administratively burdensome and bureaucratic; if future funding could learn from this and make it more streamlined and simpler to run, it would make things easier for both the administrators and the partners involved in the projects.
Many types of funding – from all sources and not just ESF – are very time limited and make it difficult to, again, think of more long-term ways of tackling an issue. ESF having a seven year programme cycle is really helped to provide stability and consistency, so we’d emphasise that this structure and emphasis on long-term funding should be kept.
- What should be the priorities and objectives of the Shared Prosperity Fund and what, if any, improvements are needed to the current European funding system?
The Welsh Government[4] has resoundingly rejected the notion of a ‘Whitehall-managed’ fund, stating that this approach would be “materially damaging to communities and unreflective of EU referendum voters’ intentions.” They have proposed:
“A people and place-based regionally-focussed model of economic development working towards nationally defined strategic outcomes. We will support each region to develop those plans, building capacity where needed, and work together to design investment approaches to drive growth based on each region’s specific strengths and challenges. […] Our overarching framework for investment will set out the rules for the use of replacement funding for regional economic development, recognising those funds are only part of the picture. Those rules will not simply replicate EU rules, but will be consistent with our investment principles for the use of public funds across the whole of Government.”
We would support local decision-making underpinned by overarching principles. Economic development should be tied to nature-based regeneration and taking best practice from projects run by communities, such as Project Skyline[5], a feasibility study into how communities can run their own local landscapes to the benefit of nature, access and local prosperity based on sustainable ideas. Particularly as the economy’s priorities can be restructured after covid-19, this public health crisis can be used as an opportunity to ensure our future ways of working are sustainable and take seriously the environmental crises on the horizon.
Welsh investment will need to be underpinned by the Wellbeing Goals – set out for all public bodies under the Wellbeing of Future Generations Act – and Wales’ ecosystem-based approach to making our environment more resilient. Given the urgent dual crises of climate change and our dwindling nature, we believe increasing support for nature and reducing carbon emissions should be two of the overarching principles for investment of the Shared Prosperity Fund. These are global problems, not just UK ones, and would be an ideal area for both UK-wide cooperation and local decision making to decide how it can most effectively be implemented on a local basis. The urgent nature of these issues, necessitating cooperation on a grand scale, would make these suitable (and likely well supported) principles, which would focus targeted action.
- What level of funding should Wales receive, and how should this be calculated moving forward?
Wales has benefitted from receiving EU funding based on need, and as a levelling support mechanism for one of the least wealthy nations of the UK. Any calculation of the level of Wales’ portion of the Shared Prosperity Fund should continue to recognise this need. It should not be based on the Barnett formula, which would result in far lower levels of funding coming to Wales. We argue that Wales should not lose out in terms of the levels of funding it can currently access as part of the EU.
- Should funding be ring-fenced on a nation or regional basis or should the fund be open to competitive tendering?
The Welsh Government - in its paper on Regional Investment in Wales After Brexit[6] - has highlighted the need for the UK Shared Prosperity Fund to not just be administered from Westminster and to ensure the Welsh Government sets the priorities and direction for the funds. Since devolution, the Welsh Government has managed these and, given that each nation and region will have different needs, it makes sense for them to continue this responsibility for Wales after we have left the EU.
The paper advocates for “effective coordination of UK and Welsh Government policies, on the basis of shared sovereignty and with clear recognition of where responsibility for different interventions rest”, to be done via a Council of Economic Ministers from the four nations meeting twice a year. The Welsh Government has also called for clarity[7] as the UK Government hasn’t yet released any detail about the investment levels or details on how it will work. Plaid Cymru[8] have also warned that, as the current funds stop in 2020, “any timescale from the UK Government which delays decision making and operation of new schemes takes us closer to a cliff-edge which puts existing jobs and structures at risk”.[9]
- 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?
Each nation of the UK should be responsible for administering its own fund, to ensure decision making and country-specific priorities can be supported. Wales was promised the same level of funding if we were to leave the EU during the referendum campaign and that promise should be kept. No one voted to be worse off economically.
The Welsh Government has repeatedly argued that the Barnett formula – which is used to allocate Wales’ funding based on a population share of changes from funding allocated in England – needs to be reformed to a needs-based mechanism. In their paper on funding reform after Brexit[10], the now First Minister (then Finance Minister) Mark Drakeford called for a “a new, rules-based funding system which is embedded in a Fiscal Agreement which is developed in parallel with the other post-EU UK frameworks.” A ‘Barnett floor’ has recently been implemented to ensure Welsh funding doesn’t fall below par too far, but it’s a quick fix for a formula that needs replacing. Lord Barnett[11] himself regretted it’s long-term use, intending for it to be a ‘temporary fix’ and described it as “grossly unfair”.
So we would emphasise that this formula is not fit for using in any future mechanisms and would support calls for a needs-based formula or an entirely different way of allocating spending on a fairer basis.
- What role could, or should, local government and, where applicable, city or growth deals play in relation to the fund?
Funding for city deals could be valued match-funding to SPF investments to enable complementary projects to go ahead. All city deals should be embedding urban nature into their plans, which the SPF can enable if it includes an adequate replacement for LIFE.
- Are there any implications for state aid rules?
We believe there should be a block exemption from state aid regulations for charities protecting nature; this is not a profit-making exercise. This is a public good and there is no business model which allows these public goods to be protected on a commercial basis. The fact that sites providing these public goods occasionally carry out small-scale activities, such as a café, adds complexity for those assessing whether any grants support is a state aid. Provision of these public goods – often protecting areas designated SPAs or SACs under EU Directives – should be given a general block exemption from state aid regulations. Natural heritage should be treated the same way as other heritage types. Support for public goods, such as the protection of the natural environment, cannot distort the market, since there is no commercial provision of these benefits.
NGOs are often unable to maximise the public benefits (for the environment, conservation and biodiversity) effectively and efficiently across all their landholdings because of the complexities and confusions arising from the state aid regulations. The range of measures permitted under current GBER (General Block Exemption Regulation) does permit the targeting of market failures and provision of public goods. However, the lack of a Block Exemption for the protection of natural heritage has resulted in the inability to deliver the range of public benefits these areas provide.
