‘Cliff edge’ fear for poor parts of Yorkshire in EU funding row

Politicians, business leaders and council bosses in South Yorkshire fear the county is poised to be hit harder than almost any other part of England by the Government’s controversial re-allocation of European funds, potentially missing out on over £100m to support jobs and growth by the end of the decade.

“The way the formula works is going to skew the funding – and we are going straight over a cliff,” said Sheffield Central MP Paul Blomfield.

With the public spending squeeze set to continue for the foreseeable future, the UK’s allocation of EU “structural funds” – distributed by Brussels to every member state – will be one of the chief sources of regeneration money over the coming years. Britain has been allocated around £8bn between 2014 and 2020.

The Yorkshire Post reported last week how Whitehall has decided to take more than £650m of the £5.6bn share designated for England, and hand it to Scotland, Wales and Northern Ireland as a “top-up” to the money they were expecting to receive.

Ministers say the step was taken to soften the blow of what would otherwise have been far larger cuts to the devolved nations’ funding, following David Cameron’s success in cutting the next EU budget.

But Yorkshire MEPs believe the move was a political one, to boost Scottish support for the UK ahead of next year’s independence referendum.

The region looks certain to lose tens of millions of pounds as a result – despite Scotland enjoying a far more buoyant economy.

It has now emerged that South Yorkshire, which has long been granted special status within the EU as one of the more deprived parts of the continent, is likely to be hit much harder than almost anywhere else in the UK.

John Healey, the MP for Wentworth and Dearne, told a meeting of the All-Party Parliamentary Group for Yorkshire: “Uniquely, South Yorkshire and Merseyside are set to lose perhaps 50 per cent of our European funding compared with the current period – a cliff edge.

“The argument for Scotland, Wales and Northern Ireland’s top-up is to prevent what the Government calls ‘sudden and significant cut-backs’, (limiting their losses to) five per cent maximum. Well, South Yorkshire and Merseyside potentially are looking at 10 times that.”

Number-crunchers in South Yorkshire have calculated that the way the EU funds are ring-fenced means much of the top-up money for Scotland and Wales will have to be taken from the cash allocated specifically for other deprived areas.

That, combined with several other factors including formula changes and the reduced EU budget, has left South Yorkshire looking at a massively reduced allocation compared with the £385m it received during the 2007-13 period.

MPs and council leaders are now desperately lobbying Ministers for South Yorkshire to receive its own top-up ahead of the Government’s imminent announcement of how England’s EU funds will be shared.

“Many of us can see exactly why you would want to protect Scotland, Wales and Northern Ireland from a sudden drop in funding,” Mr Blomfield told the meeting. “What we fail to understand is why that same logic doesn’t apply to areas like South Yorkshire.”

Baroness Hanham, a Minister at the Department for Communities and Local Government, said she “hoped it isn’t the case” that South Yorkshire is in line for such a large funding cut, and promised to investigate with her officials.

However, it is understood that Tory Ministers in charge of allocating the funds are also under pressure from Conservative council leaders in the south of England to give a larger share of the money to the South than Labour did in the last funding round in 2007.

Liberal Democrat and Labour MEPs from Yorkshire have warned that the abolition of regional bodies such as Yorkshire Forward means there is now nobody lobbying on behalf of the region when such crucial decisions are made.

Timothy Kirkhope, the region’s only Conservative MEP, refused to condemn the Government decision to take hundreds of millions of pounds away from the English regions.

While accepting the coalition has “skewed it slightly” by offering “top-up funding to the devolved administrations”, Mr Kirkhope rejected assertions from Labour and Lib Dem MEPs that the money was effectively a bung to Scotland.

“(I’ve seen) my colleagues going on about this, saying that
Scotland’s getting the money that Yorkshire should have,” he told the meeting.

“I don’t think I look at it that way, because at the end of the day these funds are there to help the weaker parts of our economy, and help people to start becoming entrepreneurs and citizens who are investing and doing well.

“The latest figures have suggested out region is growing, in the private sector particularly, at a higher rate than almost any other region. Therefore this money should not be regarded in the wrong way – it’s not a question of the begging bowl, it’s a question of getting what we should have and using it to the best advantage of the economy.”

However, the original EU allocations were based entirely upon economic measures such as GVA (gross value added) and employment, which clearly show Scotland is in a far stronger position than Yorkshire.

Mehboob Kahn, leader of Kirklees Council and chairman of the Local Government Yorkshire and Humber group, said: “The GVA in Yorkshire and North Lincolnshire is £17,000 per head. In Scotland it’s £21,000 per head.

“If we are to lose 784m euros from England, our fear is that those regions that can afford to lose the least are the ones that are going to be hit the greatest.”

Speaking after the meeting, Mr Blomfield accused Mr Kirkhope of “complacently”.

“I think it’s shocking,” the Labour MP said. “I would expect Mr Kirkhope as our MEP to be pushing for the region, not acquiescing with the Government taking money away from us.”

Mr Kirkhope insisted he has “a good track record” of fighting for Yorkshire, but “does not know enough” about the Government’s reasons for boosting Scotland’s funding to comment.