Chancellor makes EU funding commitments but councils remain unconvinced

The Chancellor the Exchequer, Philip Hammond, has this week sought to end uncertainty over EU funding, insisting that key projects would be given the green light.

However, the Local Government Association has warned that the guarantees fell “well short”.

The Treasury has confirmed that all structural and investment fund projects, including agri-environment schemes, signed before the Autumn Statement would be fully funded, “even when these projects continue beyond the UK’s departure from the EU”.

The Treasury is to put in place arrangements for assessing whether to guarantee funding for specific structural and investment fund projects that might be signed after the Autumn Statement, but while the UK remains a member of the EU. Further details are to be provided ahead of the Autumn Statement.

In addition, where UK organisations bid directly to the European Commission on a competitive basis for EU funding projects while the UK is still a member of the EU, for example universities participating in Horizon 2020, the Treasury is to underwrite the payments of such awards, “even when specific projects continue beyond the UK’s departure from the EU”.

The Chief Secretary to the Treasury, David Gauke, has also written to each devolved administration to confirm the same level of assurances offered to UK government departments in relation to programmes they administer but for which they are expected to rely on EU funding.

The Chancellor said: “We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving funding, want reassurance about the flow of funding they will receive.

“That is why I am confirming that structural and investment funds projects signed before the Autumn Statement and Horizon research funding granted before we leave the EU will be guaranteed by the Treasury after we leave. The government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community, which play a vital role in our country.

“We are determined to ensure that people have stability and certainty in the period leading up to our departure from the EU and that we use the opportunities that departure presents to determine our own priorities.”

Local Government Secretary, Sajid Javid said: “Local Enterprise Partnerships are a vital part of our efforts to rebalance the economy, and have helped create thousands of jobs over the past five years.

“Guaranteeing EU funding will further support this work by enabling them to plan ahead with certainty so businesses, universities and local authorities across the country can enable economic growth.

“This will be crucial as we work together to take advantage of the opportunities presented by the UK’s decision to leave the European Union.”

Lord Porter, Chairman of the Local Government Association, said that the Government’s commitment to honour existing agreed projects reliant on EU money and those signed-off by the Autumn Statement would help get some vital growth-boosting schemes off the ground.

"However, as welcome as this commitment is, it falls well short of the full guarantee we are urging the Government to make,” he said.

“Local areas need certainty around the future of all of the £5.3bn in EU regeneration funding promised to them by 2020. The continued uncertainty risks damaging local regeneration plans and stalling flagship infrastructure projects, employment and skills schemes and local growth.”

Lord Porter claimed that the vast majority of EU regeneration funding remained tied up in thousands of proposals which were yet to receive government approval. He pointed out that Cornwall and the North East had both only received 20% of their EU funding allocations so far and Birmingham had only received 25%.

“Between now and the Autumn Statement, the Government must pull out all the stops in working with local areas to get the hundreds of projects currently in development and at the cusp of funding agreements over the finishing line,” Lord Porter said.

“The Government must also use the Autumn Statement to guarantee that local areas will receive every penny of EU funding they are expecting by the end of the decade, as well as honouring commitments to match fund EU monies with domestic funding.”

Lord Porter argued that this guarantee needed to be made regardless of whether the money came from the EU or was replacement funding “and even if decisions over which projects it should be spent on have been made or not”.

The LGA chairman also called for local areas to be given a formal and decisive role over how to spend vital EU regeneration funding.