Brexit must usher in ‘drastic’ funding formula review, says commission

1 Dec 17

The way public funding is distributed should be overhauled after the UK leaves the EU and made more responsive to need and focused on outcomes, according to CIPFA’s Brexit Advisory Commission.

Analysis published by the commission today showed that UK public services will have received €20.6bn from the EU in investment, research and structural funding for the period 2014 to 2020 – equivalent to €3.4bn each year.

The largest chunk of this is structural funding at €11.2bn, followed by €5.2bn in rural development funding, €3.2bn in research and education-related programmes, €798m in regional cooperation funding, and €229m in peace funding. This EU funding is thought to bring in an additional €11.2bn co-financing from public and private sector sources.

The commission said it was unclear whether this EU funding would be matched by the UK government beyond 2020.

But it called for future funding methods to be “modernised,” rather than simply replicating the formulas of the past. This should include an urgent review of the Barnett Formula, which governs the distribution of funding to Scotland, Wales and Northern Ireland based on population size.

Any replacement for structural funding should be directed to achieving desired outcomes and shaping regional development rather than GDP, the commission said, while local areas should also have greater control over how funding is shaped and spent locally.

Brexit Advisory Commission chair Julia Goldsworthy said money going to public services from the EU was “by no means insignificant”.

“A replacement funding scheme, if used more effectively, could make a real and lasting impact,” she said.

“To achieve this, simply cutting and pasting the existing regime into UK administration simply isn’t ambitious enough. The UK should seize this opportunity to reform any future programme, by basing its approach on need and meeting specific outcomes.”

CIPFA chief executive Rob Whiteman said the issue of how to reformulate EU funding schemes could not be ignored for too long.

“The government needs to have a vision for Brexit Britain which is built on inclusive growth and giving communities a greater sense of empowerment,” he said.

“That won’t be possible without drastically reshaping the current funding formula.”

CIPFA’s Brexit Advisory Commission for Public Services was launched formally earlier this year. Members include Institute for Fiscal Studies director Paul Johnson, economist Vicky Pryce and Claire Kober, chair of London Councils.


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