‘Limited time’ left for details of post-Brexit regional funding schemes, says IFS
The European regional development funding schemes will soon wind down but the government is yet to confirm details of its proposed replacement.
With less than six months until the UK leaves the EU, the Institute for Fiscal Studies (IFS) has called on the government to reveal its intentions for the Shared Prosperity Fund.
A new report by the think tank finds that Cornwall is likely to lose millions of pounds of funding when the transitional arrangements end. The region currently receives seven times as much per person per year (€144) as Lincolnshire (€20) and South Yorkshire (€18).
EU rules give funding to areas with economic output per person just below 75 per cent of the EU average than to areas just above the threshold. The IFS has concluded that a more “rational” scheme would see Cornwall lose out in the long term unless overall regional development funding is substantially increased.
Alex Davenport, a research economist at the IFS and an author of the report, said: ““New rules and funding formulas will ultimately be needed. And this will mean winners and losers, at least if we want to avoid the new system being an irrational fudge.”
A pledge that Scotland, Wales and Northern Ireland will receive at least as much funding could also perpetuate differences in funding for comparable regions, the IFS said. In particular, Welsh regions could receive more than comparable regions in England.
In its 2019 manifesto, the Conservative Party reiterated its pledge to replace the EU’s Structural Funds with a UK Shared Prosperity Fund.
David Phillips, an associate director at the IFS and an author of the report, said: “With limited time left, one option the government could consider would be to continue with existing EU funding allocations for one more year. This is similar to what it has done for council funding, where big reforms planned for next April have been pushed back until at least 2022.”
In the March 2020 budget, the government committed to setting out further plans at the next spending review. However, this will almost certainly be delayed further due to the coronavirus crisis.
Get the news as it happens by following City A.M. on Twitter.