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UK’s Brexit replacement for EU regional funding cuts payments by billions

Levelling-up promise broken by government

Jon Stone
Policy Correspondent
Tuesday 01 February 2022 06:39 EST
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Chancellor of the Exchequer Rishi Sunak (PA)
Chancellor of the Exchequer Rishi Sunak (PA) (PA Wire)

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The UK government's replacement for the EU's regional development funding leaves regions billions of pounds worse off, devolved administrations have said.

The Conservatives' 2019 manifesto pledged to "at a minimum" match the £1.5 billion a year EU structural funds doled out by Brussels before Brexit.

But calculations by the Welsh government suggest the UK Shared Prosperity Fund would leave the country “close to £1bn” worse off over the next three years.

Wales will get £750m less in structural funds and £242m less in agricultural support for farmers than it would have in the EU.

Vaughan Gething, the Welsh government's economy minister, told the Financial Times newspaper that the cuts were a "straightforward breach of the manifesto pledge".

Other parts of the UK are also set to lose out from the UK's replacement fund.

A pre-white paper analysis produced by the Northern Powerhouse Partnership found that the government "is planning to spend less on English regional development than previous Conservative governments despite levelling up being a flagship policy".

"The annual spending of Shared Prosperity Fund and Levelling Up Fund in England is expected to be around

£1.5bn per year. This compares with an annual £2.1bn spend under the ERDF, ESF and Local Growth Fund," it says.

According to the partnership's analysis, "most sub-regions of England, except Cornwall, are at risk of seeing their regional development funding cut".

In the Tees Valley, annual funding could be cut from £46m to £21m, while in the Leeds City Region funding will fall from £149m per annum to £72m.

The analysis also warns that "the north of England is at risk of seeing double the per-person per-year reduction than the England average".

Northern Ireland is also expected to see a reduction, the former losing £65 million a year – according to an official presentation to the Stormont budget committee.

As reported by The Independent in October, the funding pot provided by the government will be just £2.6bn over three years, rather than the pledged £4.5bn.

The department for levelling up said in a statement: “We have been clear throughout that UK-wide funding for the UK Shared Prosperity Fund — worth over £2.6bn [over three years] — will ramp up to at least match receipts from EU structural funds, which on average reached around £1.5bn per year."

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