Westminster needs to prioritise replacing EU funding

One of the biggest concerns about Brexit was the possible loss of EU structural funding.

Structural funding includes major spending programmes like the European Regional Development Fund and European Social Fund, and has been very helpful tackling social problems and gaps in infrastructure across the UK.

It represents over a quarter of the entire EU budget, with the general aims to develop economies across Europe and reduce inequalities between different areas.

The current seven-year funding period – from 2014 to 2020 – saw €10.6bn allocated to the UK from the EU, with the total funding pot increasing to €19.7bn via various match funding models.

Moreover, under the same terms the UK now would be eligible for more money – with the initial funding set around €13bn - because the number of “less developed regions” has increased from two to five (as GDP per person has decreased in a number of regions across the UK relative to the EU average). In general, less well of areas get more support.

NICVA and its partner organisations in Scotland and Wales last week called for the replacement to structural funds to be a devolved matter - and set out high-level principles that should guide the fund (see below).

Chancellor Rishi Sunak is due to outline a spending review tomorrow. Indications are that details about a replacement for structural funds will follow.

Structural funding has helped Northern Ireland in many ways. Big ticket beneficiaries include the Giant’s Causeway and the thriving local film industry. However, the meat and potatoes are probably the many vital on-the-ground programmes that have been supported.

Indeed, last week Scope noted that the Independent Reporting Commission is keen to realise some of the replacement structural funding (note that this is not entirely straightforward but there may well be some overlap in eligibility, as this support is about economic development and reducing inequalities).

Priorities for the NI European Social Fund Programme 2014-2020 include promoting sustainable and quality employment and supporting labour mobility; promoting social inclusion and combating poverty and any discrimination; and investing in education, training and vocational training for skills and life-long learning.

Many third sector organisations and other groups interested in civic society rely on structural cash to support important work.

Losing this money without any replacement would be catastrophic – and this is beginning to look like a possibility.

That would be a huge blow to Northern Ireland (and the whole UK). Moreover, the loss of funding would not be spread equally. For instance, NI’s employability sector is massively reliant on European Social Fund support.

Replacement

In 2017, the year after the referendum, then Prime Minister Theresa May’s government announced the UK Shared Prosperity Fund (UKSPF), designed to be the vehicle by which lost EU funds are replaced.

The 2019 Conservative Party general election manifesto says: “Vitally, leaving the EU also means that we can take back control of the money that was being channelled via its Structural Funds.

“We have already announced a UK Shared Prosperity Fund, to ensure that the people of the UK do not lose out from the withdrawal of EU funding (which was, of course, only a small part of the billions of pounds we were contributing), and to replace the EU programme with one that is fairer and better tailored to our economy.

“And we will ensure that £500 million of the UK Shared Prosperity Fund is used to give disadvantaged people the skills they need to make a success of life…

“The UK Shared Prosperity Fund will be used to bind together the whole of the United Kingdom, tackling inequality and deprivation in each of our for nations.

“It will replace the overly bureaucratic EU Structural Funds – and not only be better targeted at the UK’s specific needs, but at a minimum match the size of those funds in each nation.”

This all sounds great. The commitments could hardly be clearer. Unfortunately, these commitments have not been matched with progress.

Even before that manifesto was published, there were complaints about a lack of progress on the development of the UKSPF.

A consultation on the UKSPF was promised in November 2018 – over a year before the 2019 election and now, almost a year after the election, it still has not taken place.

Proactive consultation

Last week, NICVA released a statement along with its sister organisations in Scotland (SCVO) and Wales (WCVA), calling for the Shared Prosperity Fund to be a devolved spending pot, and to operate on five key principles:

• Each nations’ share of the replacement fund should be at least at the level of the funding currently allocated, whilst allowing for inflationary increases. The formula to determine this allocation should be transparent, rules-based and driven by need.
• The main aim of the replacement fund should be to address and reduce disparities in social and economic wellbeing within and between places and people.
• There should be compulsory integration of equality and sustainable development drivers to improve the quality of all activity and legacy of the investment.
• A partnership principle to make it compulsory for voluntary and community sector partners to have equal involvement at all stages of programme design, development and implementation.
• The replacement fund should be accessible and incorporate equitable, proportional and consistent rules and delivered by appropriate partners and mechanisms.

The organisations state: “The UK Government’s Internal Market Bill has multiple implications for the devolved nations and marks a significant move towards the recentralisation of power.

“It gives UK Government new authority to spend in devolved areas, including administering the replacement for EU funding, with no requirement for engagement with the devolved governments.

“We collectively believe that our respective nations’ share of the replacement fund should be devolved. Currently, the European programmes are negotiated between each administration and the European Commission.

“Maintaining the funds at devolved level will enable each nation to shape the direction and management of spend. This will ensure the funding received is used to design and deliver programmes that address the individual disparities in social and economic wellbeing specific to Northern Ireland, Scotland and Wales.

“Taking better account of local need, devolved policy and legislation, and being closer to local communities, will lead to a better fund, and greater success at reducing social and economic disparity across the UK.”

What now?

This represents a sensible vision for the UKSPF. It also reads a bit like a de facto summary response to a UKSPF consultation – in the absence thus far of any actual consultation.

This absence is important. Complaints about a lack of consultation were valid in 2018. Now, they are urgent. Although the UK left the EU at the start of this year, it continued to receive structural funding during the transition period.

That ends on January 1^st and, while the tap will not be turned off immediately – financial support is set to continue until 2023 – it will mean a huge funding stream has vanished when its replacement has nothing more than a name.

The position of NICVA, SCVO and WCVA has common ground with some devolved politicians.

In 2017, when he was Cabinet Secretary for Finance, Mark Drakeford MS – now the First Minister of Wales - said: “We will work constructively with the UK Government on aspects of economic delivery but we will firmly oppose any attempt to centralise regional development policy in London. The UK Government’s “Shared Prosperity Fund” approach, if applied on a UK basis and directed from London, would be an attack on devolution, and would risk reducing needs based funding to our poorest communities.”

Scottish Trade Minister Ivan McKee this month called for the UKSPF to be devolved – at the same time as Holyrood announced its own Scottish Shared Prosperity Fund, adding: “As I write this, less than 2 months from the end of the Structural Funds in Scotland, the Scottish Government and our colleagues in the other devolved nations still have no idea what type of programme the UK Government is planning. We do not know the quantum of support that may be available to us. We do not know which funds will be replaced. We have no idea what conditions may be placed on the funding. We do not know how long the fund will be for or when it might start. We do not know if we will be entrusted with the budget or the freedom to deliver on the plans in this paper. And we do not know whether it will respect the long-standing principle of partnership.”

Government

So, whither Westminster?

Last year, Jake Berry, Minister for the Northern Powerhouse and Local Growth, said “clarity about the quantum and the form of the UK Shared Prosperity Fund will become clear at the comprehensive spending review” which was due to take place this year.

That comprehensive spending review has since been abandoned – blame Covid-19 – and replaced by a single-year review that the Chancellor Rishi Sunak is due to proceed with on Wednesday.

In its wake, details about the Shared Prosperity Fund are essential.

There should be significant fears in civic society that the ambition of the fund will be much smaller than was previously the case. The Chancellor has indicated that difficult decisions on public finances will need to be made, due to the pandemic.

Until any announcement, what exists now is uncertainty and nothing else. Organisations providing key services need to plan ahead. The lack of information is not good enough.

Equally, any choice to gut or reduce the UKSPF in comparison with previous promises would also be a governmental failure.

Look again at the priorities for the NI European Social Fund Programme: promoting sustainable and quality employment and supporting labour mobility; promoting social inclusion and combating poverty and any discrimination; and investing in education, training and vocational training for skills and life-long learning.

The aims and activities supported by the EU structural funds will only become more vital post-Covid.

Fully replacing this lost support must be a priority for government.