The UK government needs to provide £1.8 billion (€2.1 billion) per year to the poorest regions of the country to mitigate the loss of EU Cohesion funds, as part of a new Shared Prosperity Fund, according to a new report published on Friday (17 January).

The report by the Industrial Communities Alliance states that the UK government will have to replace European Regional Development Fund and European Social Fund cash, worth €10.3 billion and due to be paid to the UK in the 2014-2020 EU budget period, plus funding from the Maritime and Fisheries Fund, Youth Employment Initiative and rural development.

The Alliance (ICA) is a cross-party group of local authorities from UK industrial areas.

Theresa May’s government promised to create a fund back in 2017, and the promise was repeated in the Conservative party’s manifesto at last December’s election. “Nearly everything about the Fund is still to be worked out,” the paper states.

UK ministers say the budget for the new Shared Prosperity Fund will be decided in the autumn, just months before EU funding is set to end. The UK will continue to pay into the EU budget during the eleven-month transition period that ends on 31 December.

Wales has been the main beneficiary in the UK from EU Structural Funds, receiving more than €2.4 billion in the 2014-2020 budget, while Scotland received around €900 million.

However, the report argues that “the menu of activities on which EU funds can be spent has become too restrictive and the creation of the Shared Prosperity Fund allows a fresh start” and could offer “greater flexibility in spending in order to tackle a wider range of regeneration issues than those presently addressed by EU funding”.

EU funding had been primarily focused on projects dealing with R&D, business support, the low-carbon economy and environmental improvement.

The issue has increased in political importance for Prime Minister Boris Johnson following December’s general election in which many of the UK’s industrial heartlands, most of which had voted to leave the EU, voted Conservative for the first time.

“Many voters in older industrial Britain backed Boris Johnson. Now is the time for him to ensure that our communities do not lose out from Brexit and to support our efforts to rebuild the economies of our areas,” said Councillor Russell Imrie, acting national chair of ICA.

“Thanks to European funding over the years, we’ve been able to make progress in replacing the thousands upon thousands of jobs lost from industries such as coal, steel, engineering and textiles but we still have a long way to go to match the prosperity in other parts of the country,” he added.

Cohesion Funding is one of the flagship EU policies that the UK will have to create domestic versions of before the end of 2020.

Earlier this week, the Johnson government unveiled its plans to replace the EU’s Common Agricultural Policy, which will continue to pay for at least seven years farming subsidies at the same rate as the current EU CAP, but will instead pay farmers according to ‘goals’ agreed with regulators, such as ‘public goods’ including clean water, clean air, healthy soils and habitats for wildlife.

New UK farming bill guarantees subsidies for 2020 The UK government has introduced new legislation which ensures that farming subsidies will continue to be paid to UK farmers for 2020, during the transition period that will follow the country’s departure from the EU on 31 January.

[Edited by Zoran Radosavljevic]