MULTI-MILLION cuts to regional funding intended to level up the country will have “catastrophic consequences” on the local economy, it has been warned.
The Tees Valley is to receive £46m from the Government through the UK Shared Prosperity Fund (SPF) to help level up the community, more per head than anywhere else in the UK.
The money will be used for schemes such as regenerating run-down high streets to fighting anti-social behaviour.
But the government scheme has faced criticism that it doesn’t match previous EU funding, leaving regions worse off than in the EU. All English regions, except Cornwall, are set to receive £78m less than they would under the EU deal.
When in the EU, the UK received an average of £1.5 billion a year between 2014-2020 to invest in the poorest areas and regions. The Tees Valley received £197m from the EU fund.
Read more: Government reveals details of North East levelling up projects
Henri Murison, director of the Northern Powerhouse Partnership, said Brexit has paved the way for smaller funding allocations.
“We were promised that no nation would be worse off post Brexit but, when you take out the smoke and mirrors, the data doesn’t lie,” he said.
“If the SPF was to equal EU and associated funding, then over three years we would have expected £73.3m for the Tees Valley while the government has announced just £46.4m – a cut of over a third.
“These funds helped young people find work, supported small businesses and backed vital medical research - cutting it will have catastrophic consequences for our economy.”
Yet the 2019 Conservative Party manifesto said it would as “a minimum match the size of those funds in each nation”, with Wednesday’s announcement adding that it “will be much more flexible and locally led, freeing communities from the bureaucratic, rigid and complex processes of the EU Structural Funds”.
Secretary of State for Levelling Up, Michael Gove said the funds “will help spread opportunity and level up” and would “match” the EU funds it has replaced.
Funding for the UK Shared Prosperity Fund will be £2.6bn between 2022 and 2025, with the figure reaching £1.5bn per year by March 2025, what the government says is delivering on its commitment to match the average spending of EU structural funds over the previous programme.
It said previous EU programmes “ramped up and down”, and areas will continue to receive EU funding until the end of 2024. It added that the UK Shared Prosperity Fund will be increased from £400m in 2022/23 to £1.5bn in 2024/25, at which point it will match the EU funds it has replaced.
Elsewhere, County Durham will receive £33m for both the core UK Shared Prosperity Fund (UKSPF) and for the adult numeracy programme, Multiply.
The North of Tyne combined authority, which covers Newcastle, Northumberland and North Tyneside, will receive £51m while North Yorkshire will bag £19.5m, Gateshead, Sunderland and South Tyneside also benefited from funding.
Labour’s Lisa Nandy, shadow levelling up secretary, said the funding was “another broken promise” by the government.
She added: “Big promises to ‘level up’ don’t mean much when you’re cutting money from our most disadvantaged communities.”
Other critics of the funding include the Institute for Fiscal Studies, who branded it “bad policy” and a “real missed opportunity” due to unbalanced funding allocations.
However, Tees Valley Mayor Ben Houchen praised the government’s fondness of financing the region.
“This news puts paid to all those who were predicting that Teesside, Darlington and Hartlepool would miss out by tens of millions of pounds if we left the EU,” he said.
“Giving taxpayers’ money to the EU and then getting some of it back with strings attached was not the best way to help grow our region.”
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