Councils ‘need urgent clarity’ on EU structural funds replacement

The government must urgently publish its plans for the Shared Prosperity Fund, the proposed post-Brexit replacement for European Union structural funding, according to MPs.

Local authorities need certainty over the fund in order to effectively plan for project and service delivery in the period after 2020, according to a report on the impact of Brexit on local authorities from the Housing, Communities and Local Government Committee.

The committee said the new fund must be allocated according to local need, be at least as big as the equivalent levels of EU funding provided to local government, and be additional to the recently-announced Stronger Towns Fund.

Committee chairman Clive Betts said it was “absolutely imperative that the government now brings forward its plans for replacing the EU funding that some of the poorest communities across the country currently rely on”.

The government has already announced that it plans to announce allocations under the Shared Prosperity Fund in the Spending Review planned for later this year.

Last month, chancellor Philip Hammond said that he was planning a three-year review, but only if a Brexit deal with Europe is reached soon.

Responding to the recommendation of the committee relating to the Shared Prosperity Fund, Paul Dossett, head of local government at accountancy firm Grant Thornton, said: “Our analysis shows that current EU structural funds do largely correlate with deprivation levels across the UK.

“Councils therefore need assurance that any replacement funding matches, if not increases, the funding currently received by the most deprived areas across the country.”

He said it was important that local leaders are not kept in the dark over the government’s proposals for post-Brexit funding.

Philip Atkins, County Councils Network vice-chairman and leader of Staffordshire County Council, said: “We support the committee’s calls that the new Shared Prosperity Fund matches or exceeds the present levels of funding and that government consults on the new arrangements as soon as possible.”

Last month, reports said that some councillors had been told by Ministry of Housing, Communities & Local Government officials that the fund would  be distributed through local enterprise partnerships (LEPs), rather than councils.

Atkins said: “It is imperative this funding is channelled through elected and accountable local politicians who know their economies intimately, not LEPs.

“The Brexit vote can be explained in part due to a feeling of disenfranchisement from the perceived remoteness of Westminster from communities across England.

“Devolving this funding down to the local authorities that know their communities best would send a positive message to those areas that their voice is being heard.”

Committee report: recommendations for government – short term

– Maintain its existing mechanisms for mutual engagement and information-sharing with local government during and immediately after the UK’s withdrawal from the EU;

– Ensure a comprehensive range of planning, guidance and support is put in place for local authorities in the event of no-deal Brexit;

– Take steps to address potential workforce shortages, particularly in construction and social care;

– Use existing information-sharing networks to determine new burdens on local authorities resulting from the immediate aftermath of Brexit;

– Step up its liaison with local authorities in areas with a port.

Committee report: five key post-Brexit policy actions

– Advance plans for the establishment of the UK Shared Prosperity Fund, and publish the promised consultation on its design and administration within two weeks from 12 April;

– Consider how to replace funds currently provided by European Investment Bank loans at the regional and local level;

– Publish plans for further devolution of powers to councils and consider an English Devolution Bill in first post-Brexit Queen’s Speech;

– Provide clarity its plans for the role of local government in the creation of post-Brexit domestic policy;

– Consult with local authorities as it transfers legislation from the EU back to the UK.