North Loses OutAs Government Replaces EU ‘Shared Prosperity Fund’
Sam Bright and Tom Robinson calculate the reductions in UK regional development spending, compared to the equivalent EU scheme
A UK Government fund designed to replace EU regional development grants will leave the north of England tens of millions of pounds worse off while maintaining or even increasing funding to wealthier southern areas, the Byline Intelligence Team can reveal.
Oxfordshire will receive a 12% funding boost, funding for Hampshire and west Surrey will remain the same, while Berkshire faces a cut of just 4%. Meanwhile, Leeds will see a funding cut of 43%, Manchester 35%, Liverpool 34%, and the north-east of England 37% overall.
Cornwall and the Isles of Scilly, the largest per-person recipient of EU funding in England, also face a cut of 38%, from £214.4 million during the last three years of the EU fund to the £132 million planned for the next three years of the UK Government scheme.
The Shared Prosperity Fund, part of the Government’s ‘levelling up’ agenda – intended to reduce the disparities between different parts of the UK – will hand out £2.6 billion over the next three years, falling significantly short of the £1.5 billion per year the UK received from the EU to help its most deprived areas.
The 2019 Conservative manifesto promised “at a minimum” to match EU funding post-Brexit.
Under EU rules, funds were allocated according to an area’s deprivation in relation to the EU average. The new rules attempt to replicate this model, but also guarantee a minimum of £1 million for every borough and/or district in England.
The fund’s spending allocation has also ignited a row between the UK’s devolved nations and Westminster.
The Scottish Government has claimed that it will receive £337 million less over three years than it would have under the EU. The Welsh Government, meanwhile, has claimed that it is “facing a loss of more than £1 billion in un-replaced funding over the next three years”.
In a written statement, Welsh Minister for the Economy, Vaughan Gething, said: “The Welsh Government proposed an alternative formula which would distribute funding more fairly across Wales according to economic need, but this was rejected by the UK Government.”
Levelling Up Secretary Michael Gove has stated that the UK fund would only match EU funding in 2024/25 – once remaining EU funds had been distributed – noting that previous EU grants had “ramped up and down”.
However, the Financial Times has reported that English regions will receive £78 million less in real terms than under the EU deal, even when the UK Government scheme ramps up in 2024/25.
Levelling up is one of the key policy planks of Boris Johnson’s Government, linked to the UK’s departure from the EU.
Brexit has been viewed as a rebellion among former industrial areas in the north of England, the midlands and north Wales – protesting against their relative deprivation compared to more affluent areas of the country, in particular London and other metropolitan hubs.
However, two-and-a-half years after Johnson won the 2019 General Election, there appears to have been little movement on the agenda.
The Government launched its levelling up white paper in February, sketching out the scope of its ambitions. Yet, ministers were criticised at the time for failing to match their grand rhetoric with funding commitments. In a recent report, the Institute for Government think tank concluded that the Government’s 12 levelling up missions – stipulated in the white paper – will not have a positive impact on regional inequality.
The Institute said that “only four of the 12 missions are clear, ambitious and have appropriate metrics – outcomes the Government will measure to demonstrate progress towards its 2030 target”.
Meanwhile, the Conservative Party has been accused of distributing levelling up funds to further political ends.
Hollow MonumentsThe Reality of Johnson’s Levelling Up PlanSam Bright
Analysing the Government’s four existing levelling up schemes, the Guardian found imbalances and irregularities – not least that Mid Bedfordshire, an area partly represented by Culture Secretary Nadine Dorries, has received £26.7 million in funds despite being one of the fifth most affluent areas of the country.
Likewise, the constituency represented by Health and Social Care Secretary Sajid Javid will receive £15 million despite being one of the wealthiest areas in England.
This situation appears to have been replicated in the case of the Shared Prosperity Fund, with some Conservative-dominated areas escaping the worst of the Government’s cutbacks. Indeed, Oxfordshire – set to receive a levelling up funding boost – has six parliamentary constituencies, four of which are represented by Conservative MPs.
Raw funding has also been lacking, with Johnson planning to spend less on English regional development than either of his immediate predecessors, Theresa May and David Cameron, according to the Northern Powerhouse Partnership.
The Byline Intelligence Team recently revealed how the Conservative Government has been encouraging repressive regimes – including Saudi Arabia – to invest in regional development projects in the UK, as a means of furthering the levelling up agenda, and potentially as a way of avoiding central government spending.
“Levelling up is about addressing deep structural challenges over the long-term and the white paper sets out a clear blueprint on how we will reduce regional inequalities,” the Government said, in response to the Institute for Government’s levelling up report.