Scheme to replace EU funding will target 'left-behind places', Chancellor set to reveal

The Chancellor will set out at the Spending Review next week the terms for the UK Shared Prosperity Fund, which is due to replace EU structural funding now that the UK has left the EU.

Sheffield City Region mayor Dan Jarvis has called for the fund to be tripled to £15bn a year for 20 years – a total of £200bn of new funding - following recommendations from the UK2070 Commission, an independent inquiry into regional inequalities in the UK chaired by former head of the civil service Lord Kerslake.

The Treasury said on Friday night the scheme would “target funding at left-behind places and people in need, including towns, coastal communities and former industrial heartlands”, and would include £220m next year for areas to pilot programmes before investment from EU Structural Funds starts to fall away.

As a member of the European Union, the UK received structural funding worth about £2.1bn per year.

But Mr Jarvis said: “News that the Chancellor will reveal details of the new Shared Prosperity Fund in next week’s Spending Review is welcome, but long overdue. Towns and cities across the UK have had to wait more than two years to know the plans for funds that are absolutely critical to their future.

“Let’s be clear, the Shared Prosperity Fund cannot and should not be seen just as a replacement for funding pots such as the Local Growth Fund - its ambition must be much greater than that.

“Even if it fills the gap left by EU development funds as well, we will only be standing still. If the Government are serious about levelling up, then they need to add billions more to shift the dial on the massive backlog of investment which has held the whole of the North back for far too long.”

Research from the Sheffield Political Economy Research Institute (SPERI) previously found Yorkshire and Humber received £747m in funding from the EU between 2007 and 2013.

But the Government has faced calls to increase that to achieve its levelling up ambitions.

Mr Sunak, who will deliver the Spending Review on Wednesday, said: “We are absolutely committed to levelling-up opportunities so those living in all corners of the UK get their fair share of our future prosperity.

“All nations and regions of the UK have benefited from our unprecedented £200bn Covid support package. And after a difficult year for this country, this Spending Review will help us build back better by investing over £600bn across the UK during the next five years.”

It comes after Exchequer Secretary Kemi Badenoch confirmed that an update to her department's Green Book - the guidance issued by the Treasury on how to appraise policies, programmes and projects - would be published in the Spending Review.

Those across the political spectrum see an overhaul of the Green Book as key to bringing about improvements to the North as they say the guidance currently favours short-term projects concentrated in areas of existing economic growth, high productivity, and high house prices such as London and the South-East.

Mr Sunak is also due to set out the National Infrastructure Strategy, which will kickstart a number of flagship infrastructure programmes, including fibre broadband, flood defences and key transport schemes.

Henri Murison, Director of Northern Powerhouse Partnership, said: “We welcome Green Book reform and the publication of the National Infrastructure Strategy, both of which are crucial to rebalancing the economy. We now need to create a Shared Prosperity Fund to boost productivity, which remains the central barrier to overcoming the North-South divide.

"Subject to the confirmation of the Northern transport schemes, such as the Northern Powerhouse Rail network including the new line from Leeds to Bradford, onto Manchester and beyond, we're confident the Chancellor can prove his personal commitment to decentralising power away from Whitehall.

"He has renewed the case for devolution, alongside addressing educational inequalities here in the North - which has yet not seen sustained focus from the Department for Education, despite the significant divide between disadvantaged pupils here and their counterparts in London."