£5.3 billion of EU regional funding runs out in 18 months and the government has no plan

Engineers installing superfast broadband in Cornwall, funded in part by ESIF cash. Post-Brexit, ESIF grants will run out nationwide in December 2020. Picture: Simon Burt/PA Archive/PA Images - Credit: PA Archive/PA Images

Billions of pounds in EU funding for the UK’s most disadvantaged areas is due to run out in 18 months, and the government still has no firm plan to replace it after Brexit, say councils.

They are are calling on the government to act on its promises for a Shared Prosperity Fund (UKSPF) – the cash that was promised to replace the EU’s European Structural and Investment Fund (ESIF), which will run out in December 2020.

The government announced it would consulted on this by the end of 2018, but councils across England and Wales have yet to hear a peep about any firm plans, says the Local Government Association (LGA).

The LGA says that ongoing delays and uncertainty on the detail of UKSPF is a huge concern for councils and communities which will face the massive funding gap once the UK leaves the ESIF programme.

Local areas have become increasingly reliant on the EU cash, as national funding for regeneration gets depleted, said councillor Kevin Bentley, chair of the LGA’s Brexit task force. “The clock is ticking for the government to set out a firm plan to replace this funding into the next decade and beyond,” he said.

“Brexit cannot leave local areas facing huge financial uncertainty as a result of lost regional aid funding … 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.”

Local areas are “desperate” to get on with job creation, infrastructure building and boosting growth brought about by the funding, he added.

The ESIF programme has come under criticism for overcomplicated bureaucracy and limited local decision-making, so the replacement Shared Prosperity Fund has potential to bring greater value for money, argue the LGA.

“UKSPF should be a fresh opportunity for local areas to align funding to local priorities, increase productivity in their economies and tackle some of the largest inequalities in local communities,” said a spokesperson for the association.

“It is essential that the government immediately work with local areas and councils in the development and design of the successor fund.”

ESIF funds are currently earmarked for job creation, supporting small and medium businesses, delivering skills training, developing rural economies, investing in critical transport and digital infrastructure, and boosting inclusive growth across the country. The investment, which is administered from Whitehall, acts as match funding to get local projects off the ground.

ESIF funds have, for example, enabled superfast and ultrafast broadbands in Cornwall and the Scilly Isles, has funded job creation programmes around the Solent, and employment training in Nottingham.