Brexit: EU funding must be replaced

LEP chairman, Mark Duddridge, speaks out about the future of EU funding in light of Brexit


The referendum leave vote has thrown a spotlight on whether Cornwall and the Isles of Scilly will retain the £458 million of EU funding that we have been allocated between 2014 and 2020.

This is regeneration funding to support the progress of the Cornish economy and our people as we close the economic gap with other regions in the UK and Europe.

Our allocation is the second highest after London of the 39 LEP areas in England, which in total are earmarked for £5.3 billion of EU funds to 2020.

There are of course other funding streams open to LEPs. We have a Growth Deal worth almost £200 million and in common with all LEPs we are about to bid for a share of £1.8 billion of local growth funds from Government. But the real bedrock of our investment programme, and to which these other sources of funding add value, comes from the EU.

So our view is unambiguous. The UK Government must guarantee that we receive our full allocation of EU investment, even if that money is no longer provided by the EU post-exit.

And we are not alone. Other LEPs and local authorities the length and breadth of England are making a similar argument. So is the devolved administration in Wales, and the Local Government Association. It represents 349 English councils and says the money must be guaranteed “to avoid essential growth-boosting projects stalling and local economies across England being stifled”.

We share that view. The loss of this support would severely impede the growth of one of the UK and Europe’s poorest regions at a time when it is critical to maintain investment and business confidence.

We and Cornwall Council have been criticised in some quarters for trying to safeguard our allocation of funding. Cornwall did, after all, vote to leave the EU by 56.5% to 43.5%, a majority of some 42,000 people. We’ve bitten the hand that feeds us, critics say. We can’t have our cake and eat it.

But we make no apology for fighting our corner.

It has long been accepted that Cornwall and the Isles of Scilly have a weak economy when compared to the rest of Europe and should therefore receive extra support. That’s why we have qualified for EU funding programmes since 1999 because Brussels and successive UK Governments have recognised our very real economic needs.

We are still trying to put right the legacy of decades of underinvestment and it’s a job that must continue – not just in Cornwall and the Isles of Scilly but in other economically challenged parts of the UK from the Yorkshire Dales to the Welsh Valleys.

Our allocation of £458 million from 2014 to 2020 is a critical component our of growth ambitions. And we have a very clear plan of how to spend it, on creating jobs, growing our businesses and upskilling our people.

In the short term the good news is that the signals we are receiving from both the EU and Government is that it is ‘business as usual’ for our EU programme – for the time being.

When pressed on the status of regional EU funds in the Commons this week, the Prime Minister said: “On money that different areas of the country get, until we leave the EU none of those arrangements change; so what has been set out in the Budget, and payments and the rest of it, all continue.”

This means that EU-funded projects which are already contracted will continue as normal. In our case this includes things like the Growth Hub business advisory service and other business support activity, including some investment funds. For projects in the pipeline we have been told that applications will continue to be appraised as they are received.

Where we are seeking urgent clarity however is what happens after we leave the EU. The exit process is expected to take around two years, after which it will be up to the next UK Government to decide how to redistribute those monies that used to be sent to Brussels.

The Prime Minister told the Commons: “As the negotiation begins properly for leaving, the next Government will want to set out what arrangements they will put in place for farmers, for local authorities and for regions of our country.”

In the closing weeks of the Leave campaign, an open letter was published by 13 Ministers and senior Conservatives. It stated: “If the public votes to leave on 23 June, we will continue to fund EU programmes in the UK until 2020, or up to the date when the EU is due to conclude individual programmes if that is earlier than 2020.”

The letter was signed by leading Brexit campaigners including Boris Johnson, Michael Gove, Iain Duncan Smith and Cornish MP and Minister, George Eustice. Iain Duncan Smith reiterated the pledge at the weekend when he was asked specifically about Cornwall’s funding.

People have pointed out that as a backbencher he has no authority to make such a promise, and nor did the Leave campaign in the run up to the referendum. It remains to be seen of course what influence Leave supporters will have in the post-Cameron Government, and on public policy.

But there will be a great number of people in regions up and down the UK who will remind them of that pledge in the months ahead. And if it is not honoured in full, those people might well feel they voted on a false prospectus.

From the LEP’s point of view, our position is clear and is one we share with Cornwall Council and LEPs across England: UK regions should not be shortchanged as a result of the exit vote. National Government must honour the billions earmarked for jobs and growth, regardless of whether our next Prime Minister comes from the Remain or Leave camp.

We will be pressing for our full investment programme to be honoured not just to 2020 but to 2023, which is the end date set by the EU for spending our allocation. In other words, as long as we’ve contracted how we want to invest the money by 2020, we have another three years to actually spend it. We want a guarantee the money will be there.

But there is even more at stake. For areas of acute economic need like Cornwall, we could have expected to receive around two thirds of our current EU allocation, around £330 million, as transitional funding between 2021 and 2027.

We’ve already been planning how to use that investment as part of a detailed economic plan that stretches to 2030. This is an issue that isn’t going away.

About the author: Mark Duddridge is chair of the Cornwall and Isles of Scilly Local Enterprise Partnership.