Brexit could blow £8.4bn hole in vital funding for swathes of UK, councils say

EU money used to create jobs and boost local growth will run out in December 2020

Local areas across the UK are set to lose access to as much as £8.4bn in funding in 18 months’ time unless the government acts fast to replace the European Union cash used to create jobs, support small businesses and invest in infrastructure.

England alone will miss out on £5.3bn once Britain leaves the EU, the Local Government Association (LGA), representing councils in England and Wales, has warned. The government announced a year ago that it would set up a UK replacement pot for European structural and investment funding.

According to the LGA, to have UK funding in place by December 2020 when the EU cash runs out, a consultation with local areas should have been completed by the autumn of 2018 as a first step but even this has not happened yet. “Time is running out to design a replacement programme,” the association said on Friday. “[EU] funding is a lifeline for local areas to make the investments that really make a difference to people and communities.”

Kevin Bentley, chair of the LGA’s Brexit taskforce, added: “Brexit cannot leave local areas facing huge financial uncertainty as a result of lost regional aid funding… With national funding for regeneration increasingly being depleted, all local areas have become increasingly reliant on EU money.”

A programme in Nottingham part-financed by the EU provides grants and advice to local employers and job seekers. In its first four years, the city’s employment rate rose substantially faster than the rate in England. Another scheme, in Portsmouth and Southampton, supports the long-term unemployed, the disabled and people with health conditions. The LGA said that for every £1 spent on the project, £1.70 was saved by the government through lower demand for welfare benefits, and health and social care.

Yet another EU-funded programme helped more than 3,000 youngsters in Essex complete apprenticeships in more than 100 disciplines. EU member states receive the bloc’s structural and investment funding every seven years. The money is targeted at five areas: regional development, employment and training, transport and environment, rural development, and fishing and coastal economies. Britain’s allocation for the 2014-2020 period amounts to £8.4bn.