Ideas for a post-Brexit regional policy

The UK’s older industrial areas will be hit hard by the loss of EU funding. Current proposals to replace it are not enough, says Paul Johnson

When the UK finally leaves the European Union, the less prosperous parts of Britain stand to lose billions in EU aid for regional economic development.

In the present EU spending round (2014-20) the UK was set to receive £9bn (at the current exchange rate) from the structural funds, or around £1.3bn a year.

Wales was due to receive £2.1bn – a reflection of the top-priority status of west Wales & the valleys –, Scotland just under £800m and Greater Manchester alone was set to receive about £360m.

Within the UK, older industrial areas have arguably been the prime beneficiary of EU regional policy. The EU structural funds have been, and still remain, explicitly targeted at less prosperous areas, including much of older industrial Britain.

‘Brexit opens up major opportunities for  UK

regional policy, its governance and effectiveness’

Older industrial Britain has gained immensely from this support. There are now countless thousands of jobs in these areas that would not have been there without EU regional policy.

However, these substantial successes have to be seen in the context of the complete destruction of the original economic base of so many communities – the disappearance of industries such as coal, steel, shipbuilding, engineering and textiles. Older industrial Britain continues to be mired in economic difficulties.

The older industrial areas of England and Wales, especially away from the big cities, were the heartlands of the vote to leave the EU. This is regarded as a reflection of alienation from the current model of economic growth and the overweening domination of London and its hinterland.

The government has voiced heightened concern for the places and people ‘left behind’. The reinvigoration of support for older industrial Britain is a key way to address this problem. More generally, the ‘re-balancing’ of the UK economy depends on the promotion of growth and jobs in this sizeable part of Britain. The UK economy will not reach its full potential if places continue to be left behind.

A new, post-Brexit regional policy is central to the delivery of national economic growth. The UK economy as a whole cannot be expected to reach its full potential if substantial parts of the country continue to lag behind in output, employment and productivity.

The Industrial Communities Alliance – the all-party association of local authorities in Britain’s older industrial areas – is hosting a series of regional events to highlight the importance of replacing the regeneration funding from the European regional development fund and the European social fund.

The Alliance welcomes the Conservative manifesto commitment to create a new UK shared prosperity fund to replace the money coming from Brussels but the ‘devil is in the detail’. The Conservative’s promise of a new UK fund is a step in the right direction but has not been matched by a commitment to ensure that funding continues on the same scale or in the same places.

The proposals in the Alliance’s post-Brexit regional policy paper call for the new fund to be set up with a UK budget of at least £1.5bn a year – equal to the monies presently coming from the EU.

The Alliance calls on government to structure the new fund so that it delivers support more efficiently, flexibly and with more local authority control, and to allocate the new fund in fair and transparent ways that give priority to the development needs of less prosperous regions.

Brexit raises a complex range of issues across much of UK policy-making but it also opens up major opportunities for UK regional policy, its governance and effectiveness.

As the UK leaves the EU, the challenge is not to create a huge gap in regional development but to maintain momentum and deliver post-Brexit policies that reflect the needs of less prosperous parts of the country and help build the economy the UK needs for the next decade and beyond.