LGA warns £1bn of regeneration funding could be sent back to Brussels

Town hall bosses have warned almost £1bn of EU regeneration and skills funding is at risk of being sent back to Brussels.

The Local Government Association has warned £914m of European Social Fund (ESF) cash could be returned because it has not been allocated by ministers.

The ESF provides funding for employment schemes, education and training both here in the UK and around Europe.

According to the LGA, £3.1bn of funding was allocated to the UK for the time period of 2014 to 2020.

A total of £1.5bn has now been allocated to projects around the country, but the LGA claims there is still £1.6bn left to be spent and at the current rate, £914m will not be spent in time and so will be sent back to Brussels.

The LGA added that the Department for Work and Pensions has made it ‘difficult’ for local areas to access funding, and of late has seen funding drying up for long periods.

It has also called on 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.

In September, the Government published its second tranche of briefing documents on what would happen if the UK leaves the EU next March without a deal in place, including reports on the European Social Fund and the European Regional Development Fund Programme.

‘The current situation with the European Social Fund is leaving local areas facing huge financial shortfalls as a result of a lack of investment,’ said the chairman of the LGA’s Brexit taskforce, Cllr Kevin Bentley.

‘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,’ added Cllr Bentley.

‘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.’

Research by the Joseph Rowntree Foundation last month claimed a ‘No-Deal’ Brexit scenario could cost families already trapped in poverty an extra £480 a year in living costs.

The report concludes that in all scenarios, the cost of living is likely to rise and real wages to fall after the UK leaves the EU in the immediate period.