Regions of the UK are at risk of losing out on £2.1 billion of funding per year, which includes subsidies for job creation and skills training, if the government does not create alternative funding arrangements when the UK leaves the EU.
That’s according to the Local Government Association, which is calling on the government to work with local councils to replace the European Structural and Investment Fund (ESIF) 2014-2020 programme when it comes to an end in December next year.
The ESIF is currently earmarked to local areas to create jobs, support small and medium businesses, deliver skills training, develop rural economies, invest in critical transport and digital infrastructure and boost inclusive growth across the country.
The LGA says that while a combination of EU rules governing ESIF and the UK’s management of it has resulted in a complex funding process, the fund provides the investment to get vital local projects off the ground.
The government announced that it intended to consult on the design of a replacement, the UK Shared Prosperity Fund (UKSPF), by the end of last year, but no consultation has been forthcoming.
Kevin Bentley, chairman of the LGA’s Brexit taskforce, said: “Brexit cannot leave local areas facing huge financial uncertainty as a result of lost regional aid funding. This funding has been used by local areas to create jobs, support small and medium enterprises, deliver skills training, and invest in critical transport and digital infrastructure and boost inclusive growth across the country.
“With 18 months until funding runs out, the government needs to work urgently with councils to develop a fully-funded and locally-driven successor scheme.
“With national funding for regeneration increasingly being depleted, all local areas have become increasingly reliant on EU money and local areas are desperate to get on with creating jobs, building infrastructure and boosting growth.”
One example is the Solent Jobs Programme, which receives funding from government which is matched by the ESIF. The aim of the programme was to integrate health and employment support, assist small businesses to recruit from an untapped labour pool, and to help get people back into work.
The Solent Jobs Programme has provided employment support to over 1,000 people across the Solent area over the past two years, 40% of whom had been unemployed for more than five years. The project demonstrated that for every £1 spent, £1.70 was saved by the government through a reduction in demand for welfare benefits, health and social care support.
In Nottingham a similar scheme provides employment, skills, and careers support for local residents and employers. It has secured ESIF funding which is matched by the county council and central government. In the first four years of the programme, Nottingham’s employment rate increased by 5.6%, compared to a 3.7% increase for England as a whole.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We know the importance of local growth funding to local places and of providing certainty on its future.
“That’s why we are talking to interested parties on the design of the UK Shared Prosperity Fund to ensure it can support those parts of our country whose economies are furthest behind.”
The ministry added that it has consulted widely on the design and priorities of the UKSPF and that 25 engagement events had been conducted nationwide with a range of stakeholders in order to hear their priorities for the fund.
It added that final decisions on the design of the fund are due to be made following the 2019 Spending Review.