A government fund designed to replace EU grants lost due to Brexit has been criticized as “nothing more than an outrage” that will leave English regions tens of millions of pounds worse off than when Britain was in the EU.
The Conservative’s 2019 manifesto promised “at a minimum” to match the average EU subsidy of about £1.5bn a year to help the most deprived parts of the UK.
But details of the government’s Shared Prosperity Fund show that it will hand out only £2.6bn over the next three years and will not match the previous EU funding level of £1.5bn a year until 2025.
The settlement has been strongly criticized by thinktanks and political leaders including the Welsh government, which said it was due to lose out on more than £1bn in funding over the next three years.
The thinktank IPPR North said the government’s Shared Prosperity Fund was a 43% cut in real terms compared with the average annual EU grants of £1.5bn between 2014 and 2020.
Dan Jarvis, the South Yorkshire mayor, said his region was owed £900m in funding to match what it would have received if the UK had remained in the EU. However, it has received little more than £38m over a three-year period.
He said: “This announcement is nothing more than an outrage; a cynical Conservative con that utterly fails South Yorkshire and drives a coach and horses through the government’s leveling-up agenda.”
The Department for Leveling Up insisted that it was “delivering on the UK government’s commitment to match the average spending of EU structural funds” by matching the EU’s £1.5bn in 2025. It said areas would continue to receive EU funding until the end of 2024 .
However, regional leaders and policy experts accused the government of using “smoke and mirrors” by counting old EU money over the next two years.
The Northern Powerhouse Partnership, which is chaired by the former Conservative chancellor George Osborne, said regions in the north of England would receive up to 37% less funding under the new government fund than they would from the EU.
In north-east England, one of the most deprived regions of the UK, this amounted to a difference of £71.3m over the next three years, it said.
Henri Murison, the director of the Northern Powerhouse Partnership, said: “We were promised that no nation would be worse off post-Brexit but, when you take out the smoke and mirrors, the data doesn’t lie.
“These funds helped young people find work, supported small businesses and backed vital medical research – cutting it will have catastrophic consequences for our economy.”
Neil O’Brien, a leveling up minister, took to Twitter on Thursday to defend the schemeinsisting that the government was “matching in real terms what each place got on average from the [2014-2020] program”.
However, this includes a count of old EU money still being delivered to these areas. IPPR North said the government’s promise to match EU funding was “far from reality” in two out of the next three financial years.
It described the announcement as a “serious blow for leveling up” that would stifle ambitious long-term investment. Whereas EU grants were delivered over seven years, the Shared Prosperity Fund model is for only three years.
Michael Gove, the leveling up secretary, said: “The UK Shared Prosperity Fund will help to unleash the creativity and talent of communities that have for too long been overlooked and undervalued.”