Budget 2021: Treasury to announce £93m for 'Welsh green recovery'

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Some of the cash will help pilot a hydrogen production centre in Holyhead

The UK government will invest £93m in Wales to "turbocharge" a green recovery, the Treasury has announced.

The annual budget on Wednesday will announce a new hydrogen production hub, accelerated funding for three City and Growth deals, and funding for a rail testing site in south Wales.

The chancellor Rishi Sunak said it would help Wales "pave the way to a greener future".

The Welsh Government said it was waiting to see if it was new money.

On Wednesday the chancellor is making his annual budget statement to MPs where he will outline the state of the economy, the UK government's plans for taxes and spending, and forecasts for how the UK economy could perform in future.

It is separate to the Welsh Government's final budget for 2021-22 published on Tuesday, in which the Welsh Government have announced a further £682m of support mainly to help the NHS and local authorities tackle coronavirus.

On Wednesday, Mr Sunak is expected to announce £4.8m to pilot a hydrogen production centre in Holyhead in Anglesey, which would produce and distribute hydrogen made using renewable energy to use in HGVs.

Image source, Reuters
Image caption,
Rishi Sunak said the measures would "pave the way to a greener future"

The Treasury said this hydrogen would be used to "decarbonise high carbon-emitting transport" as part of their plans to reach net zero carbon emissions by 2050.

Ministers claim the project has the potential to create up to 30 high-skilled green jobs, indirectly support 500 jobs and bring investment to the area.

The budget is also set to bring forward £58.7m of funding over the next five years for investment in three "City and Growth Deals" in Swansea Bay, north Wales and mid Wales.

City and Growth Deals use funding from Welsh Government, UK government and other organisations like businesses and universities to support regeneration projects and economic growth in areas such as agriculture, infrastructure, transport and technology.

On Wednesday the Treasury will announce that the Swansea Bay City Deal will get an extra £5.4m per year for the remaining seven years of the deal and the North Wales Growth Deal will get an extra £4.4m per year for the remaining nine years of the deal.

The mid Wales deal will get an extra £1.8m per year for the remaining 10 years of the deal.

The chancellor is also set to announce £30m in funding towards a rail testing complex in south Wales, located at the Nant Helen surface mine and Onllwyn coal washery at the head of the Dulais and Tawe valleys.

The Welsh Government had estimated the project would cost about £150m, and the Treasury say they will "match fund" up to £30m with the remaining £128m from the Welsh Government and private sector investment.

Rishi Sunak said: "These measures will help Wales pave the way to a greener future, create new high skilled jobs and build the infrastructure needed to drive growth in key sectors and build back better."

A Welsh Government spokesperson said: "We await to see the detail on these announcements to determine if any of this is new funding.

"We have not seen any detail on the Global Centre of Rail Excellence, but welcome investment for this project."

Ian Price, CBI Wales Director, said: "If the economy is to snap back into shape, then Wednesday's Budget will also need to incentivise businesses to get spending on jobs, skills and innovation."

The £4.8m that will be announced for a hydrogen hub in Holyhead will help develop plans that have been under way for two years, led by the local social enterprise Menter Mon, which is also involved with Morlais tidal energy

The long-term plan is for hydrogen to be made using electricity generated by the tides. In turn that hydrogen would be used to power lorries and other vehicles.

Similarly the Global Centre of Rail Excellence in Neath Port Talbot is another example of a new skilled industry developing from old.

Onllwyn was the heart of the south Wales coalfield with local pits supplying a coal washery and more recently the Nant Helen opencast site. Welsh Government, two local authorities and now the UK government are investing in testing and research facilities including a high speed track. Work is planned to start this year.

For the city deals, having money from the Treasury brought forward means that they move forward plans and also can reduce the amount that they need to borrow for large scale investments.