LGA warns ‘clock is ticking’ to replace EU regional aid

Council leaders have warned that regional aid funding from the EU will run out in 18 months and called on the government to clarify its plans for a possible replacement.

The Local Government Association has warned that funds from the European Structural and Investment Fund (ESIF) 2014-2020 programme will come to an end in December next year.

The ESIF is currently earmarked to local areas to create jobs, support small and medium businesses and deliver skills training across the country.

The government announced in July 2018 that they intend to consult on the design of the domestic replacement, the UK Shared Prosperity Fund (UKSPF), by the end of 2018.

The consultation has yet to take place.

In April, a cross-party group of MPs called on the government to publish more details about the fund, but so far nothing has appeared.

And in May, the Northern Powerhouse minister Jake Berry defended the government’s handling of the fund, insisting ministers have ‘not been sitting on our hands’.

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

‘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.’

Last month saw the launch of the Communities in Charge campaign, which has been backed by Locality, Co-operatives UK and the Plunkett Foundation, and warns that seven UK nations/regions are at risk of losing out on public funding when the UK Shared Prosperity Fund is introduced.

An analysis by the campaign claims that if the government continues on its default setting for allocating money then London and the South East could be the biggest potential winners under the new system, with an extra £1.9bn and £1.2bn in public expenditure respectively between 2021 and 2027.

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