Wales still has £500m of EU funding that needs to be spent by the end of this year or it will be lost. This is according to a new report from Audit Wales which examines how public money is spent.
The report found that the Welsh Government had just under £650m of EU grant funding available to spend in 2023. However, despite committing all EU funding to projects, by the end of March 2023 there was still £504m of EU grant funding left to be spent.
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This included £446m for the Structural Funds Programme, used to fund Welsh Government departments, and £58m for the Rural Development Programme awarded to farmers, businesses and external organisations. Across both programmes, the report found that every 1% of EU grant funding not spent equates to just under £27m.
Wales has been a long-term recipient of grant funding from the European Union, but this will end following the UK's departure from the EU following Brexit.
A Welsh Government spokesperson said: “We note Audit Wales’ observations and will consider the report in full as we continue to prioritise the task of maximising the full benefits of available funds.”
The UK Government launched the Shared Prosperity Fund as a replacement to the EU funding, which it is managing itself. The Welsh Government has previously criticised the replacement scheme saying it fails to match the money Wales would have received from the EU.
Audit Wales said the Welsh European Funding Office (WEFO) and the Welsh Government have faced some challenges progressing with the funding programmes, including impacts from the Covid-19 pandemic, inflation, supply chain issues and labour shortages.
The report said both parties are managing risks (such as fluctuations in the exchange rate) to maximise the drawdown of funding, although some of these risks are no longer in their control. If all the planned projects are delivered and claim the committed funding, then expenditure over the 100% EU grant will need to be funded by the Welsh Government.
Auditor general Adrian Crompton said: “I do not underestimate the challenge of trying to maximise the spend of the remaining EU funds. Landing the programmes short involves a loss of money to Wales but landing in the other direction would mean a potentially substantial bill for the Welsh Government.
“Despite difficult circumstances, it is encouraging to see that WEFO and the Welsh Government have committed all EU funding and that there is a positive trajectory for programme spending. That progress needs to be sustained while also managing significant risks and ensuring value for money.”
Welsh Conservative Shadow Minister for Rural Affairs Samuel Kurtz MS said: “Ensuring that all allocated EU funding is spent, and spent well, must be a priority for the Welsh Government. Their historic mismanagement of the Rural Development Programme (RDP) funding, previously acknowledged by the Wales Audit Office, does raise concerns that this can be achieved.
“Whilst I understand the current challenges, I have pressed the Rural Affairs Minister on a number of occasions to ensure this money is allocated and spent. If it isn’t, Wales’ agricultural industry will miss out as large amounts of unspent money will go back to the EU, a scenario we all want to avoid.”
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