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Funding to link the Welsh language to the economy has been announced by First Minister Carwyn Jones in a bid to stem an alarming decline in the number of speakers.

Mr Jones said the next three years would be “crucial” and said the bulk of the funding (£1.2m) would be ploughed into boosting the use of Welsh in the community over the next two years, mostly through the Mentrau Iaith network which will receive a £750,000 share to shore up the use of Welsh in traditional strongholds.

Another £400,000 will also fund pilot projects to improve the way businesses provide services in Welsh in the Teifi Valley.

The draft plan, which will go through consultation, comes after the last Census in 2011 revealed a drop in the number of Welsh speakers over the previous decade, including in areas considered heartlands including Carmarthenshire and Ceredigion, where Welsh became the minority tongue.

But the Welsh language campaign group, Cymdeithas yr Iaith Gymraeg, said there was little substances in Mr Jones’ announcement.

The group has been protesting in a vigil outside the Senedd this week against the government’s alleged inaction in measures to boost the language.

Mr Jones said the measures could lead to more opportunities to use the language on a daily basis. He also issued more detailed guidance to councils to give due regard to the impact on the language in future development plans.

He said: “There is no denying that this is a crucial time for the Welsh language. The next decade will show whether or not we have succeeded in responding to the results of the 2011 Census.

“The Gynhadledd Fawr [Big Conversation] put particular emphasis on Welsh in the context of the economy and the community. I am convinced that these are central challenges and therefore I’m pleased that we have been able to invest in projects which maximise the link between the language and the economy as well as organisations that promote and facilitate the use of Welsh at grass roots level.”

The measures will also change the system of learning and teaching Welsh in English-medium schools so pupils “are supported to speak Welsh confidently”, he said.

The government will also launch a national campaign to change people’s behaviour so they are encouraged to use the language more in their daily lives.

But Robin Farrar, chair of Cymdeithas yr Iaith Gymraeg, said: “There was no real substance in Carwyn Jones’ statement today.

“The government has been promising an announcement for weeks and it’s been a year and a half since the Census results. All we have here is a draft of a policy – when will we see them act?”

He added: “The report says that the Welsh language will be core to the definition of sustainability in the Future Generations Bill – this is encouraging but there is no move to make the language a material consideration within the planning system.

“There is further delay and a lack of ambition in terms of education. We are calling for Welsh education for all – there is no clear aim, and no reference to the foundation phase.

“And although the figure of a £1.2m investment in the Welsh language, there is only a £400,000 increase – the rest is money being shifted around, and not extra money.

“It is clear that the government understands what areas need to be addressed but there are no significant steps, or bold and innovative plans still, and there’s no detail.”

Plaid Cymru Welsh language spokesman Simon Thomas said: “It’s most disappointing that the First Minister has again failed to deliver any robust schemes, and has instead announced yet another consultation document.

“Although the Government’s statement today does contain more substance, a whole year has gone by since they launched their consultation, and there is very little flesh on the bones.

“In the three years since the census, we have been waiting for action by the Welsh Government, but all we have had is a series of consultations, endless investigations and empty statements, with no rigorous action.”

Aled Roberts, the Welsh Liberal Democrat spokesman for the Welsh language, said: “Language campaigners consistently say that we need reform in the planning system to protect the language, but no regard has been given today to the need for local councils to review their development plans to consider the Welsh language.

“The fact that many local councils won’t do so for many years misses the opportunity to form sustainable Welsh-speaking communities in those areas.

“The Welsh Labour Government is still yet to publish two stages of its language standards. Last week’s report by the Welsh Language Commissioner shows a clear need to improve Welsh medium healthcare, and the people of Wales should have clear right to deal with utility companies and other organisations through the medium of Welsh. Until clear standards are in place, we won’t be any closer to making Welsh a living language.

“A lot of focus in today’s announcement has been on support for Welsh-speaking heartlands. The parts of Wales where the position of the Welsh language is weaker should not be forgotten.”