Councils issue warning on EU funding uncertainty

29 Jul 16

Growing uncertainty over the future of European funding for infrastructure and regeneration projects across England will hit economic growth unless there is clarity from government soon, councils have warned today.

In the strongest warning yet on the potential loss of regeneration funding following the vote to leave the European Union, the Local Government Association called for government action to prevent vital developments being lost.

The group said the majority of EU regeneration funding pledged to the UK in the 2014-2020 funding round remains tied up in thousands of growth-boosting proposals submitted to government. As these had not yet been approved, around £5.3bn of funding could potentially be at risk, particularly following the Brexit vote, LGA chair Lord Porter said.

“Communities and local economies have become increasingly reliant on what EU funds can achieve for them. Councils have used EU funds to help new businesses start up, create thousands of new jobs, roll out broadband and build new roads and bridges,” he stated.

“Losing any of this vital money over the next few years would be a real blow for local economic growth and communities. It is important for the government to end the current uncertainty and guarantee that local areas will receive all of the EU funding they have been allocated by 2020, regardless of whether decisions over which projects it should be spent on have been made or not.”

In order to benefit from European funds, local areas are required to submit proposals, for example to create jobs or build new infrastructure, with government then deciding which projects the money can be spent on. Although the current period started in 2014, the LGA estimates that billions of this EU funding has yet to be released to local areas. For example, Cornwall and the north-east have both only received 20% of their EU funding allocations so far and Birmingham has only received 25%.

If these funds are not released soon, councils are concerned that Whitehall could hold onto this cash amid the uncertainty caused by the vote to leave the EU.

Projects that could be hit include the rollout of superfast broadband in Cornwall, which is part funded by the EU, as well as investments around Birmingham as part of the Midlands Engine devolution drive.

In addition, programmes in Greater Manchester supporting people into work, such as its flagship Working Well pilot programme that has so far engaged 4,000 residents on Employment and Support Allowance, are underpinned by European money. The initiative is being expanded to help a further 15,000 people who are on out-of-work benefits or in low-paid work. The expansion will run until March 2020 but is reliant on £12m of EU cash it is expecting to receive.

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