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01/12/2017

Commission calls for fundamental shake-up of regional funding

Words: Huw Morris
Brown envelope with money

Funding for public services across the UK must be radically reformed post-Brexit to reflect regional need when replacing the €20.6 billion the country currently receives from the EU.

The call, by the Brexit Advisory Commission for Public Services, accompanies its analysis which estimates that between 2014 and 2020 UK public services receive €3.4 billion a year in investment, research and structural funding from the EU. 

The most significant proportion is structural funding, which in Wales equates to €111.10 per person per year, in Northern Ireland €40.70, in Scotland €25.40 and in England €18.70. This is allocated based on GDP relative to other EU member states, which will no longer be relevant after Brexit.

The commission, backed by the Chartered Institute of Public Finance and Accountancy, said it remains unclear whether EU public service funding will be matched by the government beyond 2020. Current distribution methods must be reviewed and not simply replicated, to ensure that funding goes to areas in need and towards meeting specific outcomes. 

The commission’s recommendations include:

  • Reviewing the Barnett Formula - the Treasury’s mechanism for allocating public spending - to reflect need, not population 
  • Any replacement of structural funding should go towards desired outcomes and support regional development
  • Devolution must be increased and regions given a genuine role, with funding administered at the lowest level possible.

Commission chair Julia Goldsworthy said EU money for UK public services is “by no means insignificant”.

“Simply cutting and pasting the existing regime into UK administration simply isn’t ambitious enough. The UK should seize this opportunity to reform any future programme, by basing its approach on need and meeting specific outcomes. This means directly facing up to the limitations of applying the Barnett Formula in this case.

“A new approach should also be used to give localities and regions greater control over how future funds are shaped and spent. They are best placed to understand how their local economies work and how resources can be most effectively targeted in their area.”

Image credit | istock

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