A long-awaited plan by Boris Johnson’s government to replace EU development money after Brexit will leave England’s regions worse off at almost £80m a year than they were when Britain was a member, Whitehall insiders have warned.
The deficit for England in the UK’s replacement fund, the Shared Prosperity Fund (SPF), comes despite a promise in Boris Johnson’s 2019 election manifesto that any post-Brexit UK replacement funding would be “at least the size” of EU funds in “every nation” in the UK .
When Britain was a member of the EU, around £1.5 billion a year was handed back from Brussels to the country’s nations and regions in structural fundsaiming to reduce inequalities and boost investment in business, skills and innovation, and infrastructure.
In October, the UK government announced that the replacement SPF would be £400m this year, rising to £700m in 2023-24 and just the EU level of 1 in 2024-25, the final year of the current spending review. would reach £5 billion a year.
The Government argued that it will only “ramp up” to 2024-25 to reach its EU equivalent, as the UK will receive the final allocation of EU funds by 2023-24.
However, regional politicians, including in Wales, Cornwall and Northern Ireland, have dismissed the government’s argument that old EU money should be counted.
Full details of the SPF are due to be announced on Wednesday, but documents obtained by the Financial Times show that even in 2024-25, when the UK system is set to match its EU predecessor, regions of England, with the exception of Cornwall, in total, will receive Real £78m less than under the EU system.
under the last EU financial equalization, England received an average of £996m at 2024-25 prices, but under the UK scheme they will only receive £918m. According to the documents, funds from a centrally held adult computing fund called Multiply will be used to “reduce the loss to England”.
To match what it would have received from the EU by 2024-25, England would need to have received £3bn in 2024-25 prices from the UK government. Instead, it will receive just £1.56 billion over the three years of the current spending review – nearly 50 per cent less than pledged.
Henri Murison, director of regional lobby group Northern Powerhouse Partnership, said it was a “bitter irony” that northern regions like Teesside and Cumbria, both of which voted in large numbers for Brexit but were major recipients of EU money, are bearing the brunt would bear the reduced grants.
“This is not what we were promised,” he said, warning that the cuts would undermine the effectiveness of the government’s “leveling-up” agenda. “This will be a difficult decision for Red Wall MPs, who will wonder why rising isn’t a higher priority for the chancellor.”
Only Cornwall has been promised funding under the SPF, but again local government officials have warned that the government’s failure to create a seamless transition between the EU and UK systems will result in losses to the region.
Despite Treasury guarantees to match Welsh Government funding warned in February that it faces losses of £1bn in the budget up to 2024. A Welsh Government insider said Cardiff has “continued to pressure” UK ministers on the matter.
In Northern Ireland, ministers also disputed the UK government’s claims that the SPF would eventually match EU funding levels.
The Department for Leveling Up, Housing and Communities said the SPF “will be in line with EU structural funds,” adding that it would be managed more flexibly than the EU scheme.
“Our UKSPF will put local people in control of how UK money is spent, removing unnecessary red tape and allowing local communities to invest in the priorities that matter to them,” said a spokesman.
Additional reporting by Jude Webber in Dublin
https://www.ft.com/content/bf8fa303-c1c5-4307-89c5-7ae1e20f1cbb The UK is failing to deliver on its post-Brexit regional funding commitment