Fears losing European funding could have 'catastrophic consequences' for County Durham

If the UK leaves the European Union, it is expected to lose access to structural funding worth about £2.1 billion per year.

The funding is used for boosting aspects of economic development, including support for businesses, employment and agriculture.

In recent years, the government announced a ‘Shared Prosperity Fund’ to replace EU funding and “reduce inequalities between communities.”

But a consultation on the plans, promised last year, has faced delays prompting criticism from councils who say they’re unable to plan in the long-term.

This week, councillors and business leaders spoke out about the funding shake-up and it’s potential impact on County Durham.

“Businesses just like local authorities and most other sectors, are working against a period of uncertainty,” Coun Rob Crute said.

“Clearly a lot has been done through Business Durham on the back of the European Structural Investment Funds.

“I have huge concerns about what happens beyond Brexit and I’m not flying flags one way or the other here.

“If that funding does end and we don’t get the Shared Prosperity Fund right, it could have catastrophic consequences for Durham.”

Coun Crute was speaking at the council’s Economy and Enterprise Overview and Scrutiny Committee during an update from Business Durham on November 7.

The organisation, described as the ‘economic development arm of Durham County Council’, works to attract and support businesses across the county.

In 2018/19, European funding was used to push forward this agenda including the County Durham Growth Fund which went live in April.

The £6 million capital grants programme aims to support small and medium sized businesses to grow – with around 50 businesses currently interested.

Managing director of Business Durham, Brian Archer, said the organisation was facing “walls of silence” over the future of replacement EU funding.

“One of the things we have been seeking assurances on with the Shared Prosperity Fund, is that it will be equal to or greater than the European money we have previously enjoyed,” he said.

“In this region, we were major beneficiaries of European funding so we would be hit particularly hard.

“On top of that, we have all the challenges with Brexit and the fact we have a huge manufacturing sector in this region.

“We’re constantly pushing to get more information and there’s no news coming out at all, just walls of silence.

“Personally, I’m not confident that the Shared Prosperity Fund will be more funding than we previously enjoyed from Europe.

“I’m particularly concerned about the loss of European social funding and how that would impact on an area like this, particularly on the whole skills agenda.”

Coun John Clare added any formula used to distribute the Shared Prosperity Fund should be based on need.

“We have needs as a deprived authority,” he said.

“What we have been campaigning against is a distribution which is based on competition and economic vibrancy which would slaughter us.

“It would mean that even if the Shared Prosperity Fund had as much money in it, it would go to other places than us.”

Coun Clare added: “The worry would be that the government definition of need differs from our definition of need.”