UK’s Brexit replacement for EU regional funding cuts payments by billions

Levelling-up promise broken by government

Chancellor of the Exchequer Rishi Sunak (PA) (PA Wire)

The UK government's replacement for the EU's regional development funding leaves regions billions of pounds worse off, devolved administrations have said.

The Conservatives' 2019 manifesto pledged to "at a minimum" match the £1.5 billion a year EU structural funds doled out by Brussels before Brexit.

But calculations by the Welsh government suggest the UK Shared Prosperity Fund would leave the country “close to £1bn” worse off over the next three years.

Wales will get £750m less in structural funds and £242m less in agricultural support for farmers than it would have in the EU.

Vaughan Gething, the Welsh government's economy minister, told the Financial Times newspaper that the cuts were a "straightforward breach of the manifesto pledge".

Other parts of the UK are also set to lose out from the UK's replacement fund.

A pre-white paper analysis produced by the Northern Powerhouse Partnership found that the government "is planning to spend less on English regional development than previous Conservative governments despite levelling up being a flagship policy".

"The annual spending of Shared Prosperity Fund and Levelling Up Fund in England is expected to be around

£1.5bn per year. This compares with an annual £2.1bn spend under the ERDF, ESF and Local Growth Fund," it says.

According to the partnership's analysis, "most sub-regions of England, except Cornwall, are at risk of seeing their regional development funding cut".

In the Tees Valley, annual funding could be cut from £46m to £21m, while in the Leeds City Region funding will fall from £149m per annum to £72m.

The analysis also warns that "the north of England is at risk of seeing double the per-person per-year reduction than the England average".

Northern Ireland is also expected to see a reduction, the former losing £65 million a year – according to an official presentation to the Stormont budget committee.

As reported by The Independent in October, the funding pot provided by the government will be just £2.6bn over three years, rather than the pledged £4.5bn.

The department for levelling up said in a statement: “We have been clear throughout that UK-wide funding for the UK Shared Prosperity Fund — worth over £2.6bn [over three years] — will ramp up to at least match receipts from EU structural funds, which on average reached around £1.5bn per year."