Shocking Truth Revealed: Post-Brexit Subsidies Drowning in Bureaucracy and Chaos, Local Leaders Sound the Alarm!

When the UK government launched its replacement for EU development grants last year, ministers vowed to “cut” red tape and give spending decisions back to communities.

But economic development experts and local leaders have warned that the UK Shared Prosperity Fund – the three-year £2.6bn pot awarded to regional economies that replaced Brussels subsidies – is mired in bureaucracy and uncertainty.

Research shows some advice they had spent less than 5% of their 2022-23 allocations by the end of March after Whitehall did not approve their investment proposals until last December, eight months into the financial year.

Now they are waiting for more government permission to “renew” their assignment to this year.

Local authorities also say they have no idea how the fund will work after March 2025, when the current public spending cycle ends. Previously, EU grants were disbursed over a seven-year cycle, allowing for longer-term planning.

Steve Rotheram, Labor mayor of the Liverpool city region, called the situation a “chaos”. Uncertainty about the regime has made it difficult to provide “continuity” of projects, he said, such as programs designed to help the long-term unemployed.

“Some programs have an initial period, so they don’t immediately start leaving because there is a need to build capacity and train people. We don’t know if the next time we need funding, it will be available.”

The SPF was launched in April 2022 as a three-year replacement for grants from the EU Social Development Fund and the European Regional Development Fund.

Local authorities and combined authorities – groups of councils overseen by a mayor – were asked to submit their bids for the allotments by early last August.

However, delays in Whitehall it meant deals were signed just before Christmas, leaving local leaders a short window in which to spend their first year’s money.

Local government researcher Jack Shaw found that some had spent as little as 1% of that money by the end of March. Shaw made Freedom of Information requests to all authorities awarded more than £1m and of the 23 out of 24 who responded, he found that £34.6m out of £101.1m – 34% – was been spent in total.

“What is clear is that the government has been too slow in allocating the fund and as a result the authorities have not been able to get the money out the door and into the communities,” he said.

Martin Gannon, Labor leader of Gateshead council in the north-east – which had used just 1% of its first-year allocation by the end of March – said once funding was announced, authorities still had to “go through due diligence and Procurement”. That made it difficult to spend the money on time, he added.

In acknowledgment of the issue, the Department of Levelling, Housing and Communities said municipalities could “roll over” the money to 2023, if they come forward with “credible” plans.

Gannon called that process “frustrating,” however, adding that the authority is “still waiting” for a verdict on its renewal plan.

A senior Whitehall member said it was unclear why the government, having set up a relatively light process for clearing bids, then added another layer of red tape to roll over funding in the next financial year. “No one is sure why they create these weird processes,” the insider added.

The Industrial Communities Alliance, a campaign network of former industrial estates across the UK, has lobbied the government to provide all funds for long-term regional development, arguing that the government’s short funding windows make funds less effective.

In a document presented to the government earlier this month, the alliance advocated a “pragmatic compromise” that strikes a balance between the need for Treasury control over annual spending and the effectiveness of local investment programs.

He said the current three-year cycle has presented a “barrier to long-term projects, including those of a transformative nature” that need more time to resolve and take effect.

Alliance director Professor Steve Fothergill said spending delays to date underline the ‘need for commitments to longer-term funding’.

“EU funds, by contrast, were allocated in seven-year spending rounds with the option to roll over spending on projects committed for another three years at the end.”

Despite the delays, some councils said they were “moving forward” with their plans pending the official green light from Whitehall.

Louis Gardner, the cabinet member for the economy on Conservative-controlled Cornwall council – which had spent just 5 per cent of its first-year budget by the end of March – admitted the first round of the fund had presented “a series of challenges”.

But while the council was still awaiting formal notification that it could roll over the £15.7m that had been delivered for 2022-2023, it said it would not allow red tape to delay the implementation and procurement of the projects.

“We’ve had positive conversations with the government, who seem to be quite relaxed about it in terms of getting that money out the door.

“They accept that the program is delayed to start and while we are still waiting for a formal notice it is holding nothing back. We are moving forward.

A DLUHC spokesman described the fund as a “central pillar” of the government’s “levelling” agenda to narrow regional economic gaps.

The funds have “enabled those who know their areas best to realize local priorities and help reverse this country’s regional inequalities,” she said, adding that “100% of the money can be transferred provided there is a credible plan on how to spend it.”