David DeansWales political reporter
PA Media
Eluned Morgan has been first minister of Wales since summer 2024
Wales will get £547m from the UK government over three years to boost the economy with ministers in Cardiff to decide how the money is spent.
The Welsh government is to launch a consultation to decide what to spend its share of the UK’s local growth fund on.
It is the second scheme designed to replace economic aid previously provided by the European Union. This is in turn replaces an earlier UK government programme, which Cardiff-based ministers were not involved in.
First Minister Eluned Morgan vowed to reach “all parts of Wales” with the cash. But she admitted it was worth “slightly” less than the Tory UK government’s predecessor scheme, which amounted to £585m over three years.
Opposition parties criticised the policy, which one party said only “notionally” replaced EU funds.
Large parts of Wales qualified for economic aid during the UK’s membership of the European Union. The country received £375m a year under the arrangements, which were administered by the Welsh government.
The previous UK government replaced that with the Shared Prosperity Fund (SPF), which did not involve the Welsh government in the same way.
Its structure was a source of friction between the Conservatives and Welsh Labour.
The Welsh government said it has now agreed a framework with the Labour UK government, the process to allocate funding, with the delivery plan to be developed and led from Cardiff.
Ministers will begin an exercise to decide how to do that later this month. It has talked about helping people gain new qualifications, help and grow Welsh businesses in key sectors such as health and AI, and address issues that hold back growth.
‘We had to battle’
Speaking to BBC Radio Wales Breakfast, Eluned Morgan said: “In the next few weeks we will going out to consult with local government, with the private sector, with the third sector just to see… we make sure that this reaches all parts of Wales”.
Morgan defended the previous spending of EU structural funds, saying there were “thousands” who benefited from training programmes that they paid for.
The first minister said getting the money – 22% of the entire local growth fund pot – was “not straightforward” and that “we had to battle for that”.
She acknowledged that it was “slightly smaller” than the SPF. “Let’s remember, we always knew there was a price to pay for Brexit,” she said.
The UK government’s Welsh Secretary, Jo Stevens, said: “Decisions about how this money is spent are best made by people in Wales and we are working with the Welsh government to achieve our shared priority of delivering growth, prosperity and opportunity across the country.”
It is not clear how the fund will break down year-on-year. BBC Wales was told it would not be an equal sum for each of the three years it will run.
The Welsh government says the money will be a mix of capital – which can be spent on infrastructure – and revenue, which can be spent on services.
The division between the two is not yet known but it is expected to be more capital than revenue.
Welsh Conservative Samuel Kurtz said: “Under Labour, Wales was promised more funding, not tens of millions of pounds less.”
He said the Welsh government having control of the fund “does not fill me with hope, as they routinely waste taxpayers money on vanity projects”.
Plaid Cymru’s Luke Fletcher said until his party sees the detail “we will reserve judgement on whether this truly represents a restoration of powers that Wales enjoyed prior to Brexit”.
“The new local growth fund only notionally replaces the EU structural funds that Wales lost from Brexit,” he said. “£500m over three years – with as yet no clarity on where and how it is to be spent – falls far short of what’s required to tackle decades of underinvestment and deep-rooted deprivation.”
A Reform UK Wales spokesperson said: “People in Wales know Labour won’t solve the problems that Labour themselves created.
“Labour, along with Plaid Cymru, are responsible for the poor state of our economy here in Wales.”
The announcement comes ahead of the publication of the draft budget on Tuesday.
Labour will need to agree a deal with another party to get its plans through, with a vote expected in the Senedd in early 2026.
Laws governing Wales say that if a budget is not passed automatic cuts are implemented to the next financial year.
Morgan said: “We will be putting down a budget that by January will make sure that we are supporting public services.
“It will be up to other parties to decide whether they are prepared to see the kind of destruction that will happen as a result of failing to pass a budget, particularly the impact that could be on our local authorities.”
