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Replacing EU structural funding post-Brexit

The consequences of Brexit are hard to grasp in many areas. But there are at least some things we can be fairly certain of – the end of European structural and investment funds being one. Tom Frostick at University Alliance suggests a way forward.
This article is more than 6 years old

Tom Frostick is Policy & Programmes Manager at University Alliance, with responsibility for research, innovation and international policy.

In their 2017 manifesto, the Conservatives promised to introduce a UK Shared Prosperity Fund using “the structural fund money that comes back to the UK” from Brexit. They have subsequently instructed a team of officials to work on the detail. Labour meanwhile assured voters there would be “no drop in EU Structural Funding”, promising a “Brexit deal that delivers for all regions and nations of the UK”.

A rare moment of consensus then which leads to the question of what exactly a successor to structural funding should look like? How from a university perspective can our regional anchor role be exploited?

Writing for Wonkhe last year, I made the case for replacing structural and investment funding after we leave the EU. Not a lot was being said on the subject at the time (the blog was published in the weeks after the referendum when universities were concerned with more immediate impacts on students, staff and research consortia). But given the strong likelihood of Britain relinquishing access to these funds – which go to member states only – it seemed a good moment to raise the flag.

In the months since, government interest in rebalancing the UK economy through ‘place-based’ investment, a goal not dissimilar to that of EU regional policy, has been ramped up via the industrial strategy, and the situation on replacing structural funding has become a lot clearer. 

No cliff edge, please

It is clear from conversations with members of University Alliance, as well as colleagues at Universities UK and GuildHE, that a smooth passage between structural funding and the programme brought in to replace it is critical. A transition fund should be the priority while we sort out the details of the latter. This will ensure continuity and prevent the abandonment of projects that are approved or committed while Britain remains in the EU.

As for the successor programme itself, we have an opportunity to replicate the strengths of structural funding while removing the less popular aspects. The current Structural and Investment Fund (ESIF) Growth Programme – which includes the European Regional Development Fund (ERDF) and European Social Fund (ESF) – inevitably has both pros and cons.

On the plus side, it has been effective in supporting employment, innovation and skills across the UK. Whereas domestic funding is concentrated in places with high R&D intensity and business growth, structural funds are disproportionately allocated to regions that are lagging behind in these areas – helping to build their capacity. Structural funding also supports activities such as small business interactions with universities which are not always captured by other sources.

On the downside, burdensome regulations and reporting requirements can make it difficult to run projects efficiently. And although the current programme allows for different geographies to collaborate, a lack of cross-region working among Local Enterprise Partnerships (LEPs) – which distribute the funding in England – has acted against knowledge transfer. If the successor programme can tackle these problems, and retain the positives, it will be on the right track.

Responsible metrics

As with the current programme, funding should continue to be allocated to regions according to need using appropriate indicators. Together with these new metrics, a National Framework could then be introduced which informs not just the volume of funding that the government allocates to each region but also the balance of resource afforded to skills development, business support, R&D and so on. The Framework would replace objectives set at a European level and could be subject to oversight from an independent ‘Shared Prosperity Commission’.

How projects are implemented on the ground needs careful consideration but it would seem sensible to determine this through the UK’s devolved structures. In England, for example, city regions which have a combined authority or city deal in place could act as the managing authority for the region with minimal involvement from central government. Resource for carrying out this function would be devolved accordingly.

In each region, the managing authority in conjunction with the distributors of the funding (e.g. LEPs, combined authorities) and prospective delivery partners such as universities would be responsible for translating the National Framework into a regional programme, allowing for the collaboration across regions and borders which is currently lacking.

Universities as anchors

As anchor institutions, universities are principal enablers of structural fund-supported projects in their region, often providing large amounts of cash for match funding, waiving overheads, and achieving demonstrable impact along the way.

The Innovation Futures project at Sheffield Hallam, for example, used ERDF to work with over 200 SMEs, bringing an increase in GVA of more than £17 million to the city region. In the West of England, the iNet Innovation Networks led by UWE Bristol have supported 1,650 SMEs, launching over 500 products and adding £28 million in GVA to the region’s output in microelectronics, environmental industries, aerospace and advanced engineering and biotechnology.

At a national level, universities received programme income of more than £96 million from ERDF and ESF in 2014/15, representing (a not insignificant) 47% of the total regeneration and development income that flowed through the sector. Our institutions not only have the scale, experience and convening power to run projects effectively but also the expertise and facilities to integrate skills development, business engagement and R&D. For these reasons, we should be considered central to both programme design and delivery.

So there you have it: a blueprint for a replacement to structural funding which retains the good stuff and gets rid of the bad, continues to reach regions in need, and incorporates all that universities have to offer. With the clock ticking on Brexit, a detailed statement of intent from government would be a welcome addition to next month’s Budget.

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