Despite benefitting the poorest parts of the UK, the days of EU-derived structural funding could be numbered. Whilst much of the sector’s attention has being directed towards securing or recovering earmarked research funding such as Horizon 2020, many universities are also major beneficiaries from European Structural and Investment Funds. What should happen next?
In all likelihood, European structural funding will be a casualty of Britain’s withdrawal from the EU. The government will then have to choose whether to replace or call time on programmes like the European Regional Development Fund and European Social Fund, which have done much to support regeneration in deprived regions.
The decision won’t be easy if public finances are weakened by Brexit. But the case for replacing structural funds with a UK equivalent deserves a fair hearing.
First, evidence suggests that structural funding has a beneficial effect on regional growth, with poorer areas in wealthier, well-governed member states like Britain seeing the greatest gains. Second, the loss of structural funding would disproportionately affect people in those poorer regions who receive the most cash from the EU. Third, the government has an opportunity to design a flexible programme with UK – not EU – branding. This could be an important distinction for those sceptical about investment from Brussels.
Britain is a significant net contributor to the current programme. Although we received £1.672 billion in ERDF and ESF income in 2014/15, this represented just 3.2% of the total sum distributed across Europe, and only 29% of what the UK paid in. Therefore it is possible to maintain structural spending at current UK levels and use the dividend from Brexit to extent it to other priority areas. A British Structural Fund could continue to operate on a devolved basis through Local Enterprise Partnerships or city region structures. It would be weighted and distributed according to each region’s need but without direction from the EU.
The role of universities
Under current arrangements, any legally constituted body can apply to run ERDF and ESF programmes, and there is no reason that should not remain the case under a successor scheme. There are nevertheless good reasons to consider universities as a vital delivery partner. Many institutions see the prosperity and vibrancy of their surrounding region as central to their mission and are often the best place for businesses to seek advice, guidance and support. University-led regeneration also yields greater value than basic infrastructure investment. The economic benefits of road-building, for example, are less well proven than those derived from research, innovation and knowledge exchange.
As it stands, the higher education sector receives around £100 million of structural funding every year. Nottingham Trent University, for instance, manages a £10 million EU grant to give businesses access to dedicated technical hubs. At Sheffield Hallam, the ERDF-backed Innovation Futures project has helped hundreds of firms solve technical problems and develop new ideas, bringing a gross value added increase of £17 million to the Sheffield region. The iNet Innovation Networks led by UWE Bristol and partners have supported 1,650 small and medium-sized enterprises, launching more than 500 products and adding £28 million in GVA to the region’s output in microelectronics, environmental industries, aerospace and advanced engineering and biotechnology – all made possible by ERDF.
Without external funds to support these sorts of schemes, universities would be forced to scale-back their regional activity. The business case for cross subsidies would fall flat because it would involve redirecting cash such as tuition fee income.
Continuing structural funding could help to address concerns over the closure of the Manufacturing Advisory Service and the Growth Accelerator programme. It would send a message that the new Cabinet intends to back business and communities in parts of Britain hit hardest by Brexit. The government should make it a priority.