Ian Shires

Liberal Democrat Councillor for Willenhall North Ward, Liberal Democrat Group Leader, Walsall MBC Learn more

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Concern mounts over EU funding cliff edge

by Ian Shires on 12 February, 2020

Published in the Local Government Chronicle 12 FEBRUARY 2020 BY 

Fears are growing over a looming gap between the end of the final period of European structural funding and the introduction of the UK Shared Prosperity Fund (UKSPF) intended to replace it.

The UKSPF is intended to tackle inequality and deprivation, but a lack of details emerging from government on the form it will take is causing real concern, particularly in areas reliant on EU funding.

Under the terms of the Withdrawal Agreement, the UK will continue to participate in the current 2014-2020 European Structural and Investment Funds until programmes end in 2023. But a big question mark hangs over the question of what will replace them and when.

Although funding for some programmes runs until 2023, local government will not be able to bid for any future funding until the UKSPF is up and running.

Nigel Wilcox, executive director of the Institute of Economic Development, believes it is “highly likely” there will be a funding gap before the UKSPF is put in place. “If it goes to a green paper and white paper, then proper legislation, it’s almost impossible,” he warned.

Coventry City Council chief executive Martin Reeves told LGC the Society of Local Authority Chief Executives & Senior Managers had been “pushing for certainty” on the UKSPF for a long time.

Mr Reeves, who is Solace finance spokesperson, said: “Clearly if we’re not careful there will be a bridging gap between [EU funding and the UKSPF] and some real challenges.

“A lot of these programmes are infrastructure delivery that take years. It’s in no one’s interest if we face a gap, not least UKPLC.”

The Conservative manifesto committed to ensuring that £500m of the UKSPF is used as skills funding for the disadvantaged and pledged to at least match the size of the European Structural and Investment Fund, which is worth £10.5bn over six years from 2021. But the government says final decisions about the design of the fund will not take place until after a cross-government spending review.

Although it is assumed MHCLG will have a monitoring role over the UKSPF, many of the mechanisms for looking after the current EU funding will “start to dissipate” and the people working on them “will soon start looking for new jobs,” Mr Wilcox claimed.

He accused Whitehall of “radio silence” on the topic.

“In the meantime, industrial strategies have been written and people thought that would create hooks to bid for the shared prosperity fund, but nobody is sure,” he said.

Ian Miller, chief executive finance lead for the District Councils Network, said there has been a “failure from government” on the UKSPF. “Any ongoing activities will be under grave risk to continue,” he said. “[The replacement] needs to be in place in good time. Organisation need to grant awards in the autumn for due notice for January [when the transition period ends] and we need to know the purposes of the funds…This is becoming very urgent.”

The chief of a rural district council in the midlands told LGC he was extremely concerned about what will replace EU funding which is “just £5,000 here and £10,000 there, but adds up to a lot in the bigger picture”.

He has made representations to government to make sure UKSPF funding won’t just go to towns and cities but rural places too, and had reassurances back that it will.

The Sunday Times  reported in December that a “large chunk” of the UKSPF will go to projects in Labour’s former ‘red wall’ constituencies. It claimed the fund will be spent on clean energy research and development, green-collar jobs and transport connectivity.

The LGA, which is lobbying for the UKSPF to be a localised, place based fund, is calling on Whitehall to reveal details of the fund in next month’s budget. LGC understands there are “strong hints” from government that there is now “some speed” on this.

There are also concerns that rushing the introduction of the fund would lead to the opportunity to streamline the process for applying for funding, which is widely viewed as overly bureaucratic, to be missed. Mr Wilcox said public organisations have historically found EU funding “too bureaucratic”. “The amount of documentation that you have to keep… In some cases, people have thought it too difficult to get involved,” he said.

Another senior local government source criticised the way EU capital projects are separate from the social funds, and spoke of “debureaucratising” the rules. “There is an opportunity to pull [the UKSPF] together into a flexible fund. We would have lost an opportunity if we just replace like for like.”

MHCLG says it has been working closely with interested parties across the UK while developing plans for the fund, with government officials holding 25 engagement events attended by over five hundred representatives from businesses, public bodies, higher education, the voluntary and charity sector and rural groups.

A spokesperson said: “The government is committed to creating a UK Shared Prosperity Fund which binds together the whole of the UK, tackling inequality and deprivation in each of our four nations.

“We continue to work closely with interested parties across the UK as we develop this fund.”

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