Councils at risk of losing £5.3bn EU cash

Council leaders are warning that local authorities are at risk of losing out on £5.3 billion in just 18 months if the government does not put in place replacement funding arrangements for once the UK leaves the EU.

The Local Government Association is urging the government to work with local areas to set out a firm plan to replace the European Structural and Investment Fund (ESIF) 2014-2020 programme when it comes to an end in December next year. While a combination of EU rules governing ESIF and Whitehall’s management of it has resulted in a complex funding process, the investment acts as match funding to get vital local projects off the ground.  

With councils currently operating with limited funds and facing a financial blackhole in the near future, ESIF funding acts as a life-line for local areas to make the investments that really make a difference to people and communities.  

The government said in July 2018 that it intended to consult on the design of the domestic replacement, the UK Shared Prosperity Fund (UKSPF), by the end of 2018, but has not yet done so.

Ongoing delays and uncertainty on the detail of UKSPF is a huge concern for councils and communities who are set to face a £5.3 billion funding gap once the UK leaves the ESIF programme. The LGA is stressing that time is running out to design a replacement programme that works best for people and places, and does not repeat the bureaucracy that hampered the management of the ESIF programme.

UKSPF should be a fresh opportunity for local areas to align funding to local priorities, increase productivity in their economies and tackle some of the largest inequalities in local communities, leaders say.

Kevin Bentley, chairman of the LGA’s Brexit Taskforce, said:  “The clock is ticking for the government to set out a firm plan to replace this funding into the next decade and beyond. 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.”