Growing risk to EU funding billions and Brexit uncertainty, councils warn

Posted On: 1st August 2016

The majority of vital EU regeneration funding remains tied up in thousands of growth-boosting proposals yet to receive government approval sparking fears English communities may never receive it and vital projects will be lost, councils warn.Government Opportunities

The Local Government Association, which represents councils in England, is seeking urgent guarantees from the Government that local areas will receive every penny of EU funding they are expecting by the end of the decade.

Local areas in England have been allocated a share of £5.3 billion worth of EU regeneration funding up to 2020. To access the money, each area has put forward innovative proposals, for example to create jobs or build new infrastructure, and it is up to the Government to decide which projects the money can be spent on.

The LGA estimates that billions of this EU funding has yet to be released to local areas. For example, Cornwall and the North-east have both only received 20 per cent of their EU funding allocations so far and Birmingham has only received 25 per cent.

Councils are concerned that Whitehall could hold onto EU funding not already diverted to local areas amid the economic uncertainty caused by the vote to leave the EU. Local government leaders warn any loss of EU funding would be a severe blow to communities across the country.

It could lead to hard-pressed businesses and residents most in need of support losing out on vital projects, such as employment, apprenticeship and skills schemes and tourism-boosting initiatives.

Examples include:

  • Cornwall and the Isle of Scilly has been allocated £480 million in EU funding by 2020 – only 20 per cent of this has so far been legally committed. The Superfast Cornwall Project – part funded by EU cash – has led to the roll out of broadband to 95 per cent of the region. To achieve its target to reach 99 per cent coverage of 30Mps superfast broadband, it has developed proposals for Superfast 2. The project would benefit from £9 million of further ERDF investment which has yet to be approved.
  • Birmingham has 10 ongoing projects with EU funding agreements and spending in place with a value of £58 million. This represents just 25 per cent of its total allocation of £237 million. Projects still waiting for legal funding commitments include Birmingham and Solihull Youth Promise and The Midlands Engine Investment Fund.
  • Greater Manchester’s programmes for supporting people into work are underpinned by European money. Its Working Well pilot programme has so far engaged 4,000 residents on Employment and Support Allowance (ESA) since early 2014 to help overcome their barriers to work. The initiative is being expanded towards 50,000 people who are on out-of-work benefits or in low-paid work, as part of its devolution deal. The expansion will run until March 2020 but is reliant on £14 million of EU cash it is expecting to receive.
  • The North East Local Enterprise Partnership area has received £90 million of its total £437 million EU funding allocation (20 per cent) committed to projects planned to run until 2020. It put forward £104 million worth of projects to Government for approval before the referendum vote. In total, they will assist more than 7,400 businesses, support almost 30,000 people into work and help up-skill people in work.
  • The South East Creative, Cultural and Digital Sector project is worth £7 million including match funding but has yet to receive government approval. It will provide support to 1,065 businesses and 40 entrepreneurs in these sectors and create 170 new enterprises and 120 jobs.

Lord Porter, LGA Chairman, said:

“Communities and local economies have become increasingly reliant on what EU funds can achieve for them. Councils have used EU funds to help new businesses start up, create thousands of new jobs, roll out broadband and build new roads and bridges.

Losing any of this vital money over the next few years would be a real blow for local economic growth and communities.

It is important for the Government to end the current uncertainty and guarantee that local areas will receive all of the EU funding they have been allocated by 2020, regardless of whether decisions over which projects it should be spent on have been made or not. This is essential to avoid essential growth-boosting projects stalling and local economies across England being stifled.

An urgent government commitment to protect all of this funding is imperative so local areas”

Select a page to copy this section to:

Select where in the level you want it inserted: