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Analysis

Poorest regions get EU boost replaced by Brexit bluster

by Clare Maclure | 28.06.2019

In Redruth in Cornwall a well is being drilled 4.5km under the ground to harness geothermal power to generate renewable electricity. It is hoped the project, which is benefitting from a £10.5 million grant from the EU, will not only prove the commercial viability of this method of tapping renewable energy but also generate jobs in one of the UK’s least developed regions.

It is just one of many projects the EU is backing in the UK with its fund to tackle regional inequality by boosting local communities. Currently the UK benefits to the tune of £2.2 billion a year from EU structural funds – a funding stream that will disappear with Brexit. The money is allocated on a matching funds basis so the UK government, along with other partners, also contribute to these projects. 

But the Conservative government are no fans of the EU structural funds, describing them as “expensive to administer and poorly targeted”. In its 2017 manifesto the party promised to replace them with a UK Shared Prosperity Fund (UKSPF) to “reduce inequalities between communities in our four nations”. 

Since the election, no further details about what the UKSPF will look like has been forthcoming. The government says it plans to consult but has yet to publish any proposals – and today Brexit minister Kwasi Kwarteng admitted the details of the consultation, which were due to be published by the end of 2018, will not be released until next year.

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The EU is currently one of the biggest financial contributors to local and regional economic development in the UK and there are many private and public sector organisations that are anxious to know where replacement funding is going to come from. 

There is no clarity on four key issues: the monetary value of the fund; how the money will be divided across the countries and regions of the UK; what activities will be eligible for support; who will decide how the money is spent.

Interested parties are waiting to see if the government will replicate current levels of EU funding (on top of the matched funding it already provides) or reduce its funding commitment. As the UK contributes more to the EU budget than it receives in grants, the government has implied that it could fund the regional aid budget and have money left over. But there will clearly be many competing interests hoping to get a share of the “Brexit dividend”, which in any case looks set to be a fantasy since the economic impact of Brexit will mean there is less money to go around for all government departments.

EU regional funding has been allocated for the UK up until the end of next year but there is clearly much work to be done and many controversial issues to be resolved if the UKSPF is to be up and running to take over. Things certainly won’t be resolved by October 31, when Boris Johnson plans to leave the EU “do or die”.

Funding the fight against inequality between UK regions is yet another issue on the Brexit to-do list. If the strategy and implementation is botched, it is the UK’s poorest regions and communities that stand to lose out. 

Far better to stay in the EU where funding for those areas is guaranteed, while making sure the system works even better for the areas and people who need it. The boost to the economy from ditching Brexit will also leave the government with more money in the long run to spend on tackling regional inequality in the future – if it so chooses.
Join us and March for Change on July 20, to tell the next prime minister we want to stop fixating on Brexit and fix Britain instead.

Edited by Luke Lythgoe

One Response to “Poorest regions get EU boost replaced by Brexit bluster”

  • That’s just the British poorest regions. The bigger issue to the EU are the poorer regions such as the former Communist nations in Eastern and those in Southern Europe, that now get confronted with drying streams of funding after the UK leaves. In all honesty, Cornwall, like another such vulnerable region called Wales, voted to leave; this uncertainty of funding of such useful initiatives is one of the less pleasant consequences of that vote in 2016. If we do get the chance to hold a second referendum I sincerely hope that people there remember what the EU did for them.