£1 billion at risk of being sent back to EU

The Local Government Association has warned that the government is unlikely to invest almost £1 billion in local communities through the European Social Fund (ESF), risking the money being sent back to Brussels.

The ESF is worth an estimated £3.1 billion of investment into the UK economy and runs from 2014-2020. However, the government has so far only been able to confirm that 48 per cent of the money has been allocated despite having had nearly five years of the seven year period.

Based on the spending continuing at this level, which actually shows signs of slowing down rather than increasing, the LGA said this could result in £914 million being sent back to Brussels. Therefore, council leaders are urging the government to ensure that all ESF cash is allocated before its end date of 2020 to ensure that local communities are getting the investment they desperately need.

Kevin Bentley, chairman of the LGA’s Brexit Taskforce, said: “The current situation with the ESF is leaving local areas facing huge financial shortfalls as a result of a lack of investment. 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.

“To help ensure we have an economy fit for the future, we urge the government to act urgently to ensure that local communities are getting the investment they desperately need, as well as learn from this experience in developing UK Shared Prosperity Fund. Without action there is a risk that nearly a billion of pounds of investment into our communities will be lost and local areas and economies will be denied desperately-needed funding.”