On Tuesday, marathon talks between Europe’s political leaders finally concluded with a deal reached on the EU’s recovery plan. Days and nights of negotiations saw the original Commission proposals for an ambitious EU plan of massive investment to address the Covid19 economic crisis and direct investment into Europe’s Green Deal whittled down by ‘frugal’ governments. Despite this, the EU recovery plan and multiannual financial framework for 2021-27 (i.e. the EU budget) represent a financial fire-power of €1.8 trillion of investment – 30% of which is earmarked for climate action. The deal reached between governments will now pass to the European Parliament, where MEPs from six of the political groups (more than a necessary majority) have withheld their agreement until some of the ambition is returned to the package. Despite the claims of prominent Brexiteers, the EU has neither failed to reach a budget agreement without the UK, nor are these decisions taken by technocrats but by elected politicians representing the 27 member states.
On the same day, it was revealed in the UK press that the government’s Towns Fund is being used as a political campaigning slush fund for Tory key seats and marginals. The Towns Fund was officially set up in 2019 to help regenerate towns that had suffered from the decline of the UK high street and those that had been ‘left behind’ but unofficially was seen as a sweetener to encourage Labour MPs to vote for the Tories’ Brexit deal. The revelations this week that these funds are not targeting the most deprived areas of the country exposed another of the Brexit promises made by the Leave campaign that rather than sending the infamous £350m a week ‘to Brussels’ we would be able to spend it ourselves – cutting out the middle man. Unfortunately, it seems that the so-called ‘middle man’ was a guarantor that the funds went to the places that needed them the most rather than the places that the Tories needed the most.
The bitter irony for the North East is that had we still been inside the EU, we would likely have been net recipients in the new EU budget framework. It is worth remembering that EU funds are allocated on the basis of need (GDP per capita) and not political bias. Tragically after years of austerity, the North East would be eligible for more than in the last budget period. In January this year, the Conference of Peripheral Maritime Regions (CPMR) presented an analysis on the Cohesion Policy Funds that the UK regions would be entitled to, if it were not for Brexit. According to CPMR analysis, if the UK remained in the European Union, it would be entitled to well over €13 billion of regional development funding under Cohesion Policy for the 2021-2027 period. This estimate represents a significant increase compared to the UK allocation for the current period 2014-2020 (€10.6bn).
With less than six months before the end of the transition period, it remains unclear what the UK government will propose as a replacement for EU regional structural and investment funds. Previous manifestos promised a Shared Prosperity Fund, but little detail has emerged on its form, size or eligibility criteria. The experience of the Towns Fund is cautionary. Moreover, in the context of the economic crisis sparked by the Covid19 pandemic, these regional investment funds will be a lifeline for our local communities and businesses. Just as Cornwall County Council has threatened to sue the government for lost EU funding – isn’t time that the politicians of the North East followed suit?