Tory spending plans will strip billions from poorest areas after Brexit and give cash to richest regions, study finds

Wales, the southwest and northeast of England will be biggest losers, it calculates – with funds diverted to wealthy London and the southeast

The poorest areas of Britain will lose billions of pounds in public spending after Brexit under government plans, a study is warning – while the richest areas gain.

Wales, the southwest and northeast of England will be the biggest losers, with cash diverted to wealthy London and the southeast, it has calculated.

The authors, a coalition of community leaders and charities, raised the alarm over “a historic disaster” – urging all the Conservative leadership contenders to back a change of course.

“It will be like handing every Londoner a cheque for over £200 and taking £700 from every Welsh person,” said Tony Armstrong of Locality, one of the groups involved.

And Anna McMorrin, a Labour supporter of the People’s Vote campaign, said: “These jaw-dropping figures are a stark warning about the future facing Wales and the poorest parts of the UK after Brexit.”

The study examined what would happen to economic development spending when the UK loses billions of so-called EU “structural funds” after Brexit.

EU structural funds aim to rebalance regional social and economic disparities. They have paid for the redevelopment of town centres, including in Llanelli and Pontypridd in Wales, and have also paid for major road works and university research centres.

The funds are also aimed at improving employment prospects.

Theresa May has promised a “shared prosperity fund” to replace them, but no details have been released and a promised consultation has yet to even start.

The coalition that wrote the report, called Communities in Charge, said “uncertainty is mounting”, with the contest to find a new prime minister now in full swing.

It warned that economic development funding was set to “follow the regional pattern of existing UK programmes and end up increasing regional inequalities rather than reducing them”.

That would see Wales stripped of £2.3bn over the six years from 2021, with other big losses in the southwest (£1bn), the northeast (£480m), Northern Ireland (£230m) and the West Midlands (£225m).

In stark contrast, London would gain a staggering £19bn over six years, with the southeast (£1.2bn), Scotland (£795m) and the east of England (£583m) also set to benefit.

The figures are a consequence of the government withdrawing almost all domestic economic development funds for the regions since 2010 – while capital spending is earmarked towards the south.

Mr Armstrong called for a commitment to devolution, to ensure funds are more equitably distributed and to give local people the power to spend them.

“The shared prosperity fund is a once in a generation chance to empower people all over the country so they can prosper on their own terms. But there’s a real risk that chance will be missed,” he said.

“We are calling for all political parties, and candidates to be our next prime minister to urgently commit to a new settlement that puts communities in charge.”

Ms McMorrin added: “Wales is one of the biggest beneficiaries of EU structural funds and I’ve seen firsthand the difference that money can make. Losing it would be a bitter blow to communities that are already struggling.”

The government claimed, in January, that it was making “great progress” on the design of the fund and that a consultation would be unveiled “shortly”.