ERDF and ESF: There is good news hidden in the EU budget for the UK

With the agreement of the EU budget deal by the Council of Ministers last month, and with the likely agreement of the European Parliament (with a few niggles) this opens the way for 7 more years of economic development funding for the UK.

It is clear from figures published by EUACTIV that the budget going to Cohesion funding is down by about 10%. The UK in the current programme was allocated €9.4 bn. So if we assume that the 10% cut is applied to that sum this would mean that the UK would be allocated approximately €8.5bn. Or over £1bn per year over the 7 year life of the programme. This is obviously very welcome news for economic development professionals across the country.

The UK Government has started to think about how it will spend the money and is working on a draft Partnership Agreement (and probably a draft ERDF programme and ESF programme at the same time) which they will be seeking to consult on later this Spring. Whilst it is not certain exactly how these funds will be delivered in England the Government  envisages that the Local Enterprise Partnerships will have a big say in this. They have written to the LEP’s indicating that they will be given an indicative allocation and they should be planning from now how they would intend to spend the resources.  It is highly likely that the programme or programmes will be England wide. This is a significant change from the current programme period where the programmes are regionally based.

The Government is also likely to be willing to consider going further than indicative allocations and giving significant responsibility to a few larger LEPs. This is an area that many of the City Deals sought further power over and it is possible that some of the big cities and big LEPs may be able to established new vehicles called Integrated Territorial Initiatives (ITIs) where the LEPs assume increased responsibilities and draw up plans that integrate ERDF and ESF spending.

This is something that Core Cities and Eurocities have been active in lobbying for in last year or two and will significant enhance the resources available to LEPs.

LEPs across England will need to be starting to think about what their priorities are. The programmes will need to major on Innovation and R and D, Climate change and Business support measures for ERDF, as well as an increased emphasis on social Inclusion and tackling youth unemployment and social innovation for ESF as the EU see these as the major challenges facing Europe.

What might this mean for LEPs …Well there are many decisions to be made before it is clear what the LEPs might be able to steer but if we apply the crude assumption of a 10% cut to say the West Midlands current figures this would mean possibly up to £550m being available for the 6 LEP’s to influence.  (Although the sums are likely to be less as there may be resources held back for national projects).

So what is the next step in England… the Government will consult on its draft Partnership contract later this spring and in this will outline its proposed priorities,  the indicative allocations to the LEPs (or the procedure for allocating) and what areas they might be considering for ITI status. Watch this space.

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