Commission calls for new public service funding formula post Brexit

01-12-2017

Post Brexit, the government must modernise the way it distributes funding to ensure that any replacement of the €20.6bn UK public services and programmes receive from the EU is allocated on a needs basis, the Brexit Advisory Commission Advisory Commission for Public Services claims today (1 December 2017).

New analysis from the Brexit Commission estimates that, between 2014 and 2020, UK public services will receive €20.6bn in investment, research and structural funding from the EU. This equates to approximately €3.4bn each year.

The most significant proportion is structural funding, which in Wales equates to €111.10 per person per year, in Northern Ireland €40.70, in Scotland €25.40 and in England €18.70. This is allocated based on GDP relative to other EU member states, which will no longer be relevant outside of the EU.

Although it remains unclear whether EU public service funding will be matched by the UK government beyond 2020, the Brexit Commission claims current distribution methods must be reviewed, and not simply replicated, to ensure that funding is given to areas where there is need and directed towards meeting specific outcomes. 

The Commission’s recommendations include the following:

  • The use of the Barnett Formula, which was introduced in the 1970s as a short-term measure, must be urgently reviewed. This is because the formula allocates funding based on population size and not need.
  • Any replacement of structural funding should no longer be allocated based on GDP, instead funding should be directed towards achieving desired outcomes and supporting regional development.
  • The scale of devolution must be increased and regions given a genuine role, and so funding should be administered at the lowest local and place-based level possible.
  • National funding streams should be simplified where possible.

Julia Goldsworthy, Chair of the Brexit Commission, commented:

“The data released by the Brexit Commission today shows that the money that enters public services from the EU is by no means insignificant, and so a replacement funding scheme, if used more effectively, could make a real and lasting impact.

“To achieve this, simply cutting and pasting the existing regime into UK administration simply isn’t ambitious enough. The UK should seize this opportunity to reform any future programme, by basing its approach on need and meeting specific outcomes. This means directly facing up to the limitations of applying the Barnett Formula in this case.

“A new approach should also be used to give localities and regions greater control over how future funds are shaped and spent. They are best place to understand how their local economies work and how resource can be most effectively targeted in their area.”

Rob Whiteman, Chief Executive of CIPFA, which facilitates the Commission, said:

“Although the UK government has many pressing Brexit negotiation priorities to focus on, the issue of how best to reformulate EU funding schemes is one that cannot be neglected for too long.

“The government needs to have a vision for Brexit Britain which is built on inclusive growth and giving communities a greater sense of empowerment. That won’t be possible without drastically reshaping the current funding formula.”

ENDS

For further information please contact Saskia Black on T: 020 7543 5830 or email E: saskia.black@cipfa.org.

Notes to editors

A copy of the Brexit Advisory Commission for Public Services observation EU funding in UK public services is available online.

More statistics from the Brexit Advisory Commission for Public Services Fiscal and Funding Observation

  • Between 2014 and 2020, UK public services and programmes will receive a total of €20.6bn in funding.
  • This is made up of: €11.2bn in structural funding, €5.2bn in rural development funding, €798m in regional cooperation funding, £229m in peace funding, €3.2bn in research and educational related programmes.
  • The main proportion of EU funding is structural and investment funding. Per person per year Wales receives €111.10, Northern Ireland €40.70, Scotland €25.40 and England €18.70.
  • This kind of EU funding levers in an additional €11.2bn in co-financing from both public and private sector sources: €6.3bn in England, €1.8bn in Scotland, €1.8bn in Wales, €0.8bn in Northern Ireland and €0.4bn towards national programmes.
  • The UK is also able to bid for an additional €6bn of EU funding for competition and employment infrastructure programmes.

About the Brexit Advisory Commission for Public Services

The Brexit Advisory Commission is comprised of public sector leaders, experts and economists.

Former MP and Treasury Special Advisor in the Coalition, Julia Goldsworthy, who is now Director of Strategy for West Midlands Combined Authority, chairs the Commission.

Members include:

  • Rob Whiteman, Chief Executive, CIPFA
  • Vicky Pryce, Economist, CEBR
  • Marina Wheeler QC
  • Paul Johnson, Director, IFS
  • Niall Dickson, CEO, NHS Confederation
  • Andrew Carter, Deputy Director, Centre for Cities
  • Anna Randle, Head of Public Services, Collaborate CIC
  • Cllr Claire Kober, Chair, London Councils
  • Professor David Bell, Professor of Economics, University of Stirling
  • Gill Payne, Director of Policy and External Affairs, National Housing Federation
  • Julian McCrae, Deputy Director, IFG
  • Kate Kennally, CEO, Cornwall Council
  • Warwick Lightfoot, Director of Research, Policy Exchange.