Frontbench Tory MP warned communities face funding crisis after Brexit

Aerial view of the mouth of the River Wear in Sunderland. Photograph: Owen Humphreys/PA. - Credit: PA Archive/PA Images

The government has been warned that communities face a funding shortfall after Brexit as a result of the loss of key EU regional funds.

Labour and the Liberal Democrats warned communities minister Lord Greenhalgh that time was ‘running out’ for communities that rely on EU cash after it emerged that government plans for a UK-wide fund had been put on hold.

Lib Dem peer Lord Teverson told the minister it was ‘urgent’ the government establish the fund before the UK leaves the Brexit transition period, especially given the coronavirus pandemic.

‘It’s a government manifesto commitment to launch this fund… we need this funding to bring up regions post Covid-19.’

Lord Greenhalgh told peers during a virtual House of Lords sitting that the government had postponed a spending review aimed at pooling money for a new UK-wide prosperity fund because of the coronavirus.

‘I can give him the assurance that the amount of funding will be at least, at minimum, the same level as all the European structural funds that it replaces,’ he replied.

‘I can’t say any more about the timing.’

When pressed for a clear time line by Baroness Mallalieu, the Tory minister said his government was working ‘as fast as possible’.

EU funding will end at the end of this year. UK communities currently benefit from the European Regional Development Fund (ERDF) and European Social Fund (ESF) which are worth more than €2.1 billion (£1.9 billion).

The ERDF supports research and innovation, small businesses and the creation of a low carbon and energy efficient economy, whereas the ESF focuses on improving employment opportunities and promoting social inclusion.

Lord Greenhalgh also assured peers that recipients of the cash would know where it came from.

‘Can he assure us that all projects that are supported by the shared prosperity fund will be appropriately branded to acknowledge the role of the UK government in order to underline the importance of our Union?’ Tory peer Lord Caine asked.

‘I give him that specific assurance,’ Lord Greenhalgh replied.