The current method for distributing EU funds must also be reconsidered to “better capture regional inequality”, according to a report out today from the Institute for Public Policy Research.
A UK Shared Prosperity Fund, promised in the Conservatives’ 2017 election manifesto, will replace the European Regional Development Fund and the European Social Fund, which the UK currently receives from the EU. But the detail of the UKSPF is yet to be announced – just 30 days before the Brexit deadline.
Current funding pots the UK receives, worth around £1.2bn a year, will run until 2020 after which the UKSPF will kick in.
The IPPR argued that powers over funding should be devolved to combined authorities – which cover a quarter of the population of England – and residents should have a “direct say” in how funds are spent.
This, the think-tank said, will “strengthen local democracy, reduce bureaucracy and improve spending decisions”.
The IPPR said that the UKSPF should be distributed using a range of economic well-being indicators, including measures such as gross value added per head, disposable income levels and the regional human poverty index.
The current methodology for distribution is based solely on gross value added per head, which reflects economic activity in regions but fails to highlight inequality and poverty, the think-tank said.
“The process for deciding the precise methodology for distributing the funds should involve a range of stakeholders and voices, including consultations with local government, community groups, and the public. It should be periodically reviewed and consulted on to ensure that it is meeting local and regional needs,” the report said.
To give local residents more of a voice in spending decisions the IPPR suggested using tools like Poverty Truth Commissions, which bring together local decision makers and people with direct experience of poverty.
Citizens’ juries, which allow communities to deliberate and decide on local issues, were also proposed as way of giving residents more control over spending. Both of these bodies already exist in some local authorities.
Kate Henry, lead author of the report, said: “Many regions in the UK have relied on European structural funding to boost local economic growth. After Brexit the government’s replacement Shared Prosperity Fund will offer an opportunity to redesign the funding and make it more effective, simplify its administration, and bring it closer to local communities.
“The government should grasp this opportunity to devolve control over the funding to the local level and empower residents to shape how the funds are spent in their own areas.”
The report noted that Brexit risks further exacerbating the UK’s regional inequalities but it was also an opportunity to reshape regional funding formulas.
The Ministry for Housing, Communities and Local Government has been contacted for a response.
Stephen Kinnock has talked to PF about the “tremendous anxiety” councils are experiencing over the lack of detail on the UKSPF.
CIPFA recently warned that councils are facing a “near impossible” task to prepare for Brexit.
