The UK Government has been accused of a "straightforward breach of a manifesto pledge to fully replace EU regional funds coming to Wales and other parts of the UK.
The Welsh Government has calculated that it will be worse off by nearly £1bn a year over the next three years. It said around £750m would be missing in structural funds, which had gone to the least well off areas of the nation, and £242m in support for farmers.
A statement issued by the Department for Levelling Up, Housing and Communities said shows that the amount of newly budgeted UK funding will not fully match the EU funding to Wales until the 2024-5 financial year. Figures from the latest spending review show annual spending will rise from £400m this year to £700m in 2023-24 and £1.5bn in 2024-5.
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Boris Johnson made the pledge in the Conservative party manifesto in the run up to the 2019 election to "at a minimum" match the £1.5bn a year in EU regional funds that had been coming into the UK.
Economy minister Vaughan Gething said: "Difficult decisions have already been taken here to protect priorities like our commitment to deliver 125,000 apprenticeships in this Parliament. Filling a hole left by lost EU funds promised to Wales restricts our ability to support strong proposals that would bolster our economic strengths.
"The unconstitutional Internal Market Act is being used to override democratic devolution by stopping decisions about Wales being taken in Wales."
He told the Financial Times: "It is a straightforward breach of the manifesto pledge".
The Department for Levelling Up, Housing and Communities spokesperson said that the UK-wide funding designed to replace EU regional funds would not match the EU funding until the 2024-5 financial year.
A spokesperson said: "We have been clear throughout that UK-wide funding for the UK Shared Prosperity Fund – worth over £2.6 billion - will ramp up to at least match receipts from EU structural funds, which on average reached around £1.5 billion per year.
"Alongside commitments to support regional finance funds across the UK via the British Business Bank, this exceeds the UK Government’s commitment to matching EU structural fund receipts for each nation."
In the spending review last year, the UK Shared Prosperity Fund was called the "centrepiece" of the levelling up agenda and it will "focus on restoring a sense of community, local pride and belonging across the country".
During the election campaign, Mr Johnson had said he would match Welsh EU cash. "There will be the full allocation of funds for Wales," he told a hustings in Cardiff.
Cardiff South and Penarth MS Mr Vaughan said: "More than two years on from the grand promises made by the Prime Minister, it is now clear that Wales is being left with less say, over less money. Drift and indecision in Whitehall is costing our least well off communities jobs and projects at the worst possible time. Last year’s Spending Review confirmed that the UK Government has broken its promise to replace EU funding for Wales in full and there is no sign that the White Paper will change this.
"If the UK Government had kept its promise, Wales would have been receiving £375m in new money each year from January 2021. Instead Wales‘ share of post EU funds stands at just £46.8m in 2021/22.
"Our own analysis shows that the Welsh budget will be £1 billion worse off by 2024. This is not “levelling up”, it’s levelling down.
"Any plan worthy of credibility would have been published last year with clear priorities for stronger local economies in a rebalanced UK economy. In its place we have half baked, incoherent funding pots hatched in isolation in Whitehall."
* An earlier version of this story used the headline 'It will take years to match EU funding in Wales, the UK government admits'. Although the UK government's documents and statement show it is not budgeting the same amount of new funding in the next two financial years as would have been budgeted in a new round of EU structural funds, the UK government says this does not mean it admits it is not matching EU funding.
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