National service could cost Wales £275m - research

Merthyr Tydfil is one of the biggest beneficiaries of a fund set up to replace financial help from the European Union

The Conservatives' national service plan for 18-year-olds could leave Wales £275m worse off, according to new research.

The Institute for Fiscal Studies (IFS) said Cornwall would be £72m a year worse off, and the north east of England and Tees Valley £46m a year.

Proposals announced at the weekend would use cash from a £1.5bn scheme originally earmarked to replace EU economic aid.

The Conservative Party has been asked for comment.

Shadow chancellor Rachel Reeves accused the Tories breaking "their promises on levelling up".

Labour said it is committed to providing economic help for poorer areas, while restoring decision making powers to the Welsh government.

Plaid Cymru accused the Conservatives of wanting to level down the economy.

Under the plans, 18-year-olds would be able to apply for one of 30,000 full-time military placements or volunteer one weekend a month, carrying out a service in the community.

Conservatives said it would help ensure young people who were not employed, in education or training, or at risk of getting involved with crime, would be diverted away from "lives of unemployment and crime".

The UK Shared Prosperity Fund (SPF) was set up by the UK government to replace the economic help from the European Union.

Currently SPF funding is allocated around community projects, support for local businesses, and help for people to overcome barriers to work.

Funding is high for the west Wales and valleys area that previously received the bulk of EU grants.

It amounts to over £340m for Wales, £106m for the north east of England and Tees Valley, and £83m for Cornwall.

Abolishing the SPF, the IFS said, would represent a "significant downgrading" of the UK government's levelling up policy.

The IFS said the Conservatives estimated that the national service scheme would cost £2.5bn a year, with £1bn from improved tax enforcement, and £1.5bn from winding up the SPF.

Welsh Secretary David TC Davies has denied Wales would lose out from the national service plan

A pilot scheme could begin in 2025, with the whole scheme up and running by end of the next parliament, which could be as late as 2029.

David Phillips of the IFS said the plan would be a "major shift in how funding is allocated", targeting cash at where 18-year-olds would be conducting national service rather than poorer areas.

He said: "The scheme may therefore create opportunities for young people across the UK but would mean hundreds of millions less in funding for community and economic development in Wales, Cornwall and the north and midlands of England."

How national service funding would be allocated is "not yet clear", Mr Phillips wrote.

"In order to provide all 18-year-olds with the scheme, funding would presumably be distributed to a large extent based on the number of 18-year-olds living in different areas, rather than based on areas' level of socio-economic disadvantage."

"Based on mid-2022 estimates of the number of 18-year-olds, Wales would benefit from 4.5% of the national service spending, Cornwall just under 0.8% and the North East and Tees Valley 3.9%."

At the weekend Welsh Secretary David TC Davies, asked whether Wales will lose out due to the end of the scheme, said: "I don't think the young people of Wales will see it that way."

Unlike EU funds, which were run in Wales by the Welsh government, SPF is administered by the UK government via local councils.

The move had been criticised by Labour as rolling back devolution.

Election campaigning in Anglesey, Labour's shadow chancellor Rachel Reeves, said: “The Tories are in disarray with their desperate half-baked gimmick. They’ve broken their promises on levelling up, and undermined devolution time and time again.

“We are committed to delivering funds that promote economic development in communities like Ynys Môn, restoring the decision-making role on structural funds to Wales and backing the creation of good, local jobs.”

Plaid Cymru's Llinos Medi said: “Just as when the Conservatives falsely claimed that Wales wouldn't lose any money under post-Brexit funding, they now falsely claim that Wales wouldn't lose out under their National Service plan.

"The public however can see the truth, that the Conservatives are intent on levelling down the Welsh economy.

“With Labour taking Wales for granted, only Plaid Cymru will fight for economic fairness for Wales and the future of our young people.”