Brexit: What’s next for ESF and local authorities?

Vote resultOn 23 June 2016 the United Kingdom voted to leave the European Union by 51.8% to 48.2%.

One of the many potential impacts that a UK exit from the EU could have is increased pressure on local authorities if, or when, European Social Funds (ESF) to the UK are terminated.

The Referendum Result map opposite shows how different areas of England and Wales voted.

In this blog post we analyse which local authorities are most at risk from ESF cuts and who, in order to maintain current levels of investment into employment, will have to identify alternative sources of funding.

We also look at a programme funded by ESF and give a clear view of the type of replacement investment that would be required.

How much does the UK contribute to the EU? And what does it get back?

One of the hotly debated topics of the referendum campaign was the net economic contribution made by the UK to the EU.

The EU budget, which is calculated in 7 year tranches, is made up of contributions from all 28 member states.

For the last funding period (2007-2013), the UK contributed €77.7 billion to the EU buget, a figure that includes a rebate negotiated by Margaret Thatcher, while €47.5 billion was invested back in a range of measures.

In the UK, these re-investments largely take the form of European Structural and Investment Funds (ESIF), the Horizon 2020 research fund plus a range of more specific programmes such as Erasmus+.

Here, we focus on ESIF, which is made up of the following 5 components:

  1. European Regional Development Fund (ERDF)
  2. European Social Funds (ESF)
  3. Cohesion Funds
  4. European Agricultural Fund for Rural Development (EAFRD)
  5. European Maritime and Fisheries Fund (EMFF)

Specifically, we look at European Social Funds, which were set up under the Treaty of Rome to improve workers’ mobility and employment opportunities in the common market. Today, the ESF objectives can be broadly defined as to:

  • improve employment opportunities in the European Union and help raise standards of living
  • help people to get better skills and better job prospects
  • help equip the workforce with the skills needed by business in a competitive global economy

For 2007-2013, the UK received €4.47 billion of ESF funding which, when matched by national co-funding, brings the total spend on ESF projects to €8.6 billion. €3.5bn in ESF funding, which would likely all be matched by national contributions, has been allocated to the UK for 2014 – 2020 tranche.

How are ESF funds currently distributed within the UK?

LEPsWithin the UK, ESF funds are allocated to Local Enterprise Partnerships (LEPs), geographical sub-divisions which often group together and  /or split traditional local authorities, as shown in the map below.

Successful applications to access the latest tranches of funds came from all 39 existing LEPs across England & Wales. However, following the vote to leave, a significant level of doubt has now been cast on the future availability of this investment.

Based on ESF legislation, the force majeure in the UK exiting the EU would allow ESF to be ‘decommitted’. In other words, for the purposes of this analysis, Policy in Practice assumes that ESF could be cut off mid-tranche and not be maintained through to 2020.

Of course, the ultimate impact of reduced ESF funding depends upon the priorities of the government, the extent to which it focuses investment on social programmes, and the impact of Brexit on the economy overall.

Political negotiations not-with-standing, for policy makers in Britain business will certainly not be as usual. Support to low income areas / households previously channelled via ESF is now at risk of being terminated, and alternative ways of funding may have to be secured by the local authorities most heavily impacted.

To compound the funding risks further, several local authorities in England and Wales are also in receipt of European Regional Development funds – money allocated to the poorest regions in the EU as an effort to achieve a European ‘convergence’.

Whilst ERD funds are focused more on industry, their termination could also ultimately add extra pressure on already beleaguered local authorities. For analysis of wider ESIF funding see JRF’s recent analysis.

Which local authorities in England and Wales are most at risk if ESF is terminated?

As shown in the map below, the geographical impact is very varied, with a notable distinction between the West of England/Wales and the East of England.

It is important to note two things. Firstly, ESF does not constitute direct transfers (as is the case with Agriculture subsidies which are paid straight to farmers), so the potential monetary loss per capita only serves as an indication of how people in each local authority will be affected. ESF invests in projects which in turn help people into work, training, skills etc. The value of this is particularly hard to capture.

Secondly, the figures above correspond to the per capita loss of 2014 – 2020 ESF that had been allocated as of April 2016. Given that just over 21% of the total ESF for 2014 – 2020 has been earmarked, the per capita loss in ESF for the whole period is likely to be a lot higher.

The chart below shows the per capita ESF allocated as of April 2016 from the 2014 – 2020 tranche.

ESF at risk

The main trends are as follows:

  1. Many councils in Wales and West Midlands severely affected

    This trend is particularly pronounced in Wales, where the local authorities making up the West Wales and The Valleys LEP are at risk of losing an average of £101.53 per person. Several local authorities in the West Midlands, Cornwall and Hull will also lose at least £50 per person in ESF.

  2. Local authorities / Boroughs in much of South West, London and the North moderately affected

    Several boroughs in North East greater London would risk losing at least £50 per person, while many LAs in Cornwall, Devon and Somerset would also be significantly affected.

  3. Few local authorities affected in South East / East of England

    Local authorities in the South East are significantly less affected than their Northern counterparts. With the exception of the London Boroughs, all local authorities in the South East will lose less than £25 per person, a figure which is arguably more manageable.

One stark conclusion from our analysis is that the potential loss in ESF funding equates to more per annum than has currently been allocated for the Work and Health programme, the planned successor to the Work Programme, administered by DWP.

What types of projects are at stake from ESF cuts?

Case study: Building Better Opportunities Project, North East England LEP

The North East LEP covers County Durham, Gateshead, Newcastle upon Tyne, North Tyneside, Northumberland, South Tyneside and Sunderland.

This project aims to tackle the root causes of poverty, promote social inclusion and to drive local jobs and economic growth. It has a total budget of £18,500,000, of which £9,500,000 comes from the ESF and £9,000,000 from the Big Lottery Fund.

In the North East, health issues have been identified as a significant barrier to work for many people. The Building Better Opportunities Project funds schemes that tackle this, such as one called ‘Fitness First’. This scheme runs a 12-week physical activity and well-being programme for homeless people in partnership with Northumbria University. The aim is to improve participants’ physical and mental health so that they are in better shape to find employment. They received £9,400.

Another example of a funded scheme is ‘Reaching the Streets’ in Newcastle Upon Tyne, which helps people, mainly aged between 16 and 35, who are affected by homelessness, alcohol and substance abuse, and mental and physical health issues. The scheme offers support on a one to one basis, and improves lives with psychotherapeutic interventions, peer support, recovery support, volunteering and mentoring. As this scheme takes place at such a personal level, the chances of success for people taking part is much greater. Tailored help can be given to each individual.

So, what now?

Ultimately, the referendum result has cast into doubt the European funding that LEPs (and in turn, local authorities) currently receive to improve employment opportunities, equip the workforce with skills needed by businesses and tackle the root causes of poverty.

Policy in Practice advocates that a future government should prioritise properly funded, effective interventions, like the Fitness First scheme mentioned above. This will lend continuity to efforts that tackle the root causes of poverty, and show that the government is ready to support people that are hardest hit, and most in need.

Use the search box in the table below to see how your local authority is likely to be impacted, by the total amount of ESF funding potentially at risk from the 2014 – 2020 tranche.

Local AuthorityLEPTotal Loss
HarlowSouth East£1,002,127
RochfordSouth East£1,004,639
Castle PointSouth East£1,042,976
Suffolk CoastalNew Anglia£1,070,932
HastingsSouth East£1,079,499
BroadlandNew Anglia£1,081,103
RotherSouth East£1,091,788
St EdmundsburyGreater Cambridge/Peterborough£1,099,529
North East DerbyshireSheffield City Region£1,104,449
South NorfolkNew Anglia£1,109,126
BrecklandNew Anglia£1,149,980
Aylesbury ValeSEMLEP£1,150,088
IpswichNew Anglia£1,158,391
ChesterfieldSheffield City Region£1,159,320
NorwichNew Anglia£1,179,900
LewesSouth East£1,187,765
Three RiversHertfordshire£1,188,353
EastbourneSouth East£1,203,384
DartfordSouth East£1,211,525
Brighton and HoveCoast to Capital£1,230,613
GraveshamSouth East£1,247,397
CambridgeGreater Cambridge/Peterborough£1,260,838
BassetlawSheffield City Region£1,268,874
North HertfordshireGreater Cambridge/Peterborough£1,285,670
ShepwaySouth East£1,297,062
South HollandGreater Lincolnshire£1,313,948
West LindseyGreater Lincolnshire£1,333,827
DoverSouth East£1,339,890
Tunbridge WellsSouth East£1,375,904
SevenoaksSouth East£1,396,121
LincolnGreater Lincolnshire£1,397,985
West DevonHeart of South West£1,406,557
Weymouth and PortlandDorset£1,413,108
AshfordSouth East£1,460,991
High PeakD2N2£1,468,762
King's Lynn and West NorfolkGreater Cambridge/Peterborough£1,471,879
Tonbridge and MallingSouth East£1,474,512
RugbyCoventry and Warwickshire£1,483,388
MeltonLeicester and Leicestershire£1,503,697
South CambridgeshireGreater Cambridge/Peterborough£1,503,813
North DorsetDorset£1,522,931
Welwyn HatfieldHertfordshire£1,524,806
Epping ForestSouth East£1,526,074
South DerbyshireD2N2£1,581,454
Telford and WrekinThe Marches£1,593,001
North KestevenGreater Lincolnshire£1,613,694
Milton KeynesSEMLEP£1,615,489
ThanetSouth East£1,640,230
CroydonCoast to Capital£1,646,387
Oadby and WigstonLeicester and Leicestershire£1,649,998
HambletonYork, North Yorkshire & East Riding£1,654,438
TendringSouth East£1,658,077
SwaleSouth East£1,668,979
Central BedfordshireSEMLEP£1,676,751
TorridgeHeart of South West£1,700,985
HuntingdonshireGreater Cambridge/Peterborough£1,703,209
Forest of DeanGloucestershire£1,727,396
Malvern HillsWorcestershire£1,730,092
Stratford-on-AvonCoventry and Warwickshire£1,751,932
Herefordshire, County ofThe Marches£1,759,597
BraintreeSouth East£1,777,399
HarrogateLeeds City Region£1,812,212
Nuneaton and BedworthCoventry and Warwickshire£1,826,001
WealdenSouth East£1,834,069
HaltonLiverpool City Region£1,862,654
CanterburySouth East£1,868,222
PeterboroughGreater Cambridge/Peterborough£1,868,580
East HertfordshireHertfordshire£1,879,604
Newark and SherwoodD2N2£1,893,070
St AlbansHertfordshire£1,903,431
East DorsetDorset£1,917,411
MaidstoneSouth East£1,917,638
ThurrockSouth East£1,934,833
ScarboroughYork, North Yorkshire & East Riding£1,989,238
Amber ValleyD2N2£1,992,484
East LindseyGreater Lincolnshire£1,999,905
South KestevenGreater Lincolnshire£2,005,108
Bath and North East SomersetWest of England£2,017,080
WarwickCoventry and Warwickshire£2,017,350
ChelmsfordSouth East£2,033,939
Ribble ValleyLancashire£2,036,810
Mid DevonHeart of South West£2,053,013
Southend-on-SeaSouth East£2,108,574
ColchesterSouth East£2,138,070
BasildonSouth East£2,139,267
KnowsleyLiverpool City Region£2,158,266
South HamsHeart of South West£2,180,292
West DorsetDorset£2,184,586
North SomersetWest of England£2,306,674
North East LincolnshireGreater Lincolnshire£2,322,234
YorkLeeds City Region£2,355,783
CalderdaleLeeds City Region£2,389,626
North DevonHeart of South West£2,438,248
North LincolnshireGreater Lincolnshire£2,459,458
HarboroughLeicester and Leicestershire£2,596,429
St. HelensLiverpool City Region£2,612,026
BarnsleyLeeds City Region£2,740,702
BlabyLeicester and Leicestershire£2,827,814
North West LeicestershireLeicester and Leicestershire£2,828,729
MendipHeart of South West£2,873,357
RotherhamSheffield City Region£2,891,075
ShropshireThe Marches£2,915,623
Taunton DeaneHeart of South West£2,924,503
HartlepoolTEES Valley£3,001,049
South GloucestershireWest of England£3,009,269
SedgemoorHeart of South West£3,086,259
Hinckley and BosworthLeicester and Leicestershire£3,178,035
ExeterHeart of South West£3,222,897
MedwaySouth East£3,247,219
TeignbridgeHeart of South West£3,301,494
DoncasterSheffield City Region£3,381,481
DarlingtonTEES Valley£3,415,180
TorbayHeart of South West£3,447,282
East DevonHeart of South West£3,535,160
East NorthamptonshireNorthamptonshire£3,608,068
WakefieldLeeds City Region£3,818,533
South RibbleLancashire£3,824,501
South TynesideNorth East£3,859,712
MonmouthshireEast Wales£3,873,056
West LancashireLancashire£3,924,885
SeftonLiverpool City Region£4,032,271
South LakelandCumbria£4,229,144
South SomersetHeart of South West£4,266,046
TamworthGreater Birmingham and Solihull£4,284,037
Redcar and ClevelandTEES Valley£4,377,014
MiddlesbroughTEES Valley£4,509,158
RedditchGreater Birmingham and Solihull£4,692,874
WirralLiverpool City Region£4,730,769
CoventryCoventry and Warwickshire£4,883,286
Staffordshire MoorlandsStoke and Staffordshire£4,893,136
Bristol, City ofWest of England£4,903,309
KirkleesLeeds City Region£4,966,711
CharnwoodLeicester and Leicestershire£5,119,957
Blackburn with DarwenLancashire£5,145,161
GatesheadNorth East£5,202,983
North TynesideNorth East£5,261,083
BromsgroveGreater Birmingham and Solihull£5,304,768
Vale of GlamorganEast Wales£5,355,779
SwindonSwindon and Wiltshire£5,412,262
Kensington and ChelseaCentral London£5,419,793
Cannock ChaseGreater Birmingham and Solihull£5,474,991
Wyre ForestGreater Birmingham and Solihull£5,497,825
South StaffordshireStoke and Staffordshire£5,540,245
PowysEast Wales£5,565,085
LichfieldGreater Birmingham and Solihull£5,671,882
WrexhamEast Wales£5,734,502
Kingston upon ThamesSouth London£5,897,543
Merthyr TydfilWest Wales and the Valleys£5,996,726
BradfordLeeds City Region£6,086,013
NewportEast Wales£6,159,282
Hammersmith and FulhamNorth West London£6,189,266
East Riding of YorkshireYork, North Yorkshire & East Riding£6,208,932
SheffieldSheffield City Region£6,266,931
Stockton-on-TeesTEES Valley£6,291,831
Newcastle-under-LymeStoke and Staffordshire£6,309,029
East StaffordshireGreater Birmingham and Solihull£6,425,777
FlintshireEast Wales£6,451,347
WarringtonCheshire and Warrington£6,558,173
StaffordStoke and Staffordshire£6,618,794
Richmond upon ThamesSouth London£6,717,400
PlymouthHeart of South West£6,779,935
SuttonSouth London£6,875,250
Barking and DagenhamNorth East London£6,880,802
South BucksWest Wales and the Valleys£6,955,857
LiverpoolLiverpool City Region£6,973,829
MertonSouth London£7,061,971
Blaenau GwentWest Wales and the Valleys£7,073,832
Isle of AngleseyWest Wales and the Valleys£7,124,088
SunderlandNorth East£7,185,101
BuryGreater Manchester£7,393,564
Newcastle upon TyneNorth East£7,521,042
CeredigionWest Wales and the Valleys£7,657,717
IslingtonCentral London£7,669,741
WestminsterCentral London£8,095,232
CamdenCentral London£8,149,156
NorthumberlandNorth East£8,199,670
BexleySouth London£8,323,316
RochdaleGreater Manchester£8,398,755
HaveringNorth East London£8,535,298
HarrowNorth West London£8,536,582
TamesideGreater Manchester£8,706,725
LeedsLeeds City Region£8,831,337
OldhamGreater Manchester£9,021,991
HackneyNorth East London£9,131,305
TraffordGreater Manchester£9,167,634
WolverhamptonBlack Country£9,179,385
HounslowNorth West London£9,215,210
HaringeyNorth East London£9,283,673
Waltham ForestNorth East London£9,300,294
TorfaenWest Wales and the Valleys£9,300,840
GreenwichNorth East London£9,323,127
SalfordGreater Manchester£9,545,528
DenbighshireWest Wales and the Valleys£9,623,900
Tower HamletsNorth East London£9,855,321
WalsallBlack Country£9,948,098
LeicesterLeicester and Leicestershire£9,961,502
LewishamCentral London£10,130,075
HillingdonNorth West London£10,156,343
RedbridgeNorth East London£10,169,009
SouthwarkCentral London£10,498,069
Cheshire West and ChesterCheshire and Warrington£10,554,240
WandsworthCentral London£10,831,432
LambethCentral London£11,042,095
BoltonGreater Manchester£11,059,900
BrentNorth West London£11,130,441
BromleySouth London£11,148,347
NewhamNorth East London£11,253,973
EnfieldNorth East London£11,262,718
StockportGreater Manchester£11,308,989
DudleyBlack Country£11,458,457
SandwellBlack Country£11,491,838
SolihullGreater Birmingham and Solihull£11,660,655
ConwyWest Wales and the Valleys£11,806,337
EalingNorth West London£11,871,495
Cheshire EastCheshire and Warrington£11,887,586
WiltshireSwindon and Wiltshire£12,117,278
GwyneddWest Wales and the Valleys£12,414,081
PembrokeshireWest Wales and the Valleys£12,555,509
Stoke-on-TrentStoke and Staffordshire£12,564,153
WiganGreater Manchester£12,658,551
BarnetNorth West London£13,009,551
Kingston upon Hull, City ofHumber£13,111,111
County DurhamNorth East£13,435,894
Neath Port TalbotWest Wales and the Valleys£14,263,609
BridgendWest Wales and the Valleys£14,337,115
CardiffEast Wales£14,860,949
CaerphillyWest Wales and the Valleys£18,268,974
CarmarthenshireWest Wales and the Valleys£18,772,246
ManchesterGreater Manchester£20,516,140
Rhondda Cynon TafWest Wales and the Valleys£24,050,664
SwanseaWest Wales and the Valleys£24,498,299
Cornwall,Isles of ScillyCornwall£31,120,206
BirminghamGreater Birmingham and Solihull£61,187,191
AdurCoast to Capital£276,599
City of LondonCentral London£280,098
Epsom and EwellCoast to Capital£342,894
RutlandGreater Cambridge/Peterborough£373,027
TandridgeCoast to Capital£373,786
Mole ValleyCoast to Capital£377,552
RunnymedeEnterprise M3£428,430
East HampshireSolent£442,128
Surrey HeathEnterprise M3£443,367
Test ValleySolent£449,087
WorthingCoast to Capital£467,870
HartEnterprise M3£472,704
CrawleyCoast to Capital£481,092
RushmoorEnterprise M3£482,687
SpelthorneEnterprise M3£496,920
WokingEnterprise M3£503,606
ChichesterCoast to Capital£505,803
Isle of WightSolent£523,499
ChilternBuckinghamshire Thames Valley£528,183
South NorthamptonshireSEMLEP£549,395
West OxfordshireOxfordshire£576,114
HorshamCoast to Capital£587,374
Forest HeathGreater Cambridge/Peterborough£616,238
WaverleyEnterprise M3£622,303
Reigate and BansteadCoast to Capital£626,497
Mid SussexCoast to Capital£632,115
CravenLeeds City Region£641,794
Vale of White HorseOxfordshire£665,036
ElmbridgeEnterprise M3£672,493
New ForestSolent£673,288
ArunCoast to Capital£676,059
Bracknell ForestThames Valley and Berkshire£686,734
GuildfordEnterprise M3£724,102
South OxfordshireOxfordshire£729,824
MaldonSouth East£743,821
BaberghNew Anglia£762,542
Derbyshire DalesSheffield City Region£792,397
UttlesfordGreater Cambridge/Peterborough£824,522
SloughThames Valley and Berkshire£841,217
Great YarmouthNew Anglia£842,594
East CambridgeshireGreater Cambridge/Peterborough£850,452
Mid SuffolkNew Anglia£850,739
Windsor and MaidenheadThames Valley and Berkshire£857,654
BolsoverSheffield City Region£857,696
Basingstoke and DeaneEnterprise M3£875,610
North NorfolkNew Anglia£882,891
West SomersetHeart of South West£889,713
BrentwoodSouth East£896,432
North WarwickshireCoventry and Warwickshire£904,042
West BerkshireThames Valley and Berkshire£906,134
WokinghamThames Valley and Berkshire£925,713
ReadingThames Valley and Berkshire£935,768
FenlandGreater Cambridge/Peterborough£958,832
BostonGreater Lincolnshire£965,752
RyedaleYork, North Yorkshire & East Riding£969,792
RichmondshireYork, North Yorkshire & East Riding£971,155
WycombeBuckinghamshire Thames Valley£982,928
SelbyLeeds City Region£983,559
WaveneyNew Anglia£994,914

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One Response

  1. Anton Eckersley

    Given the thinness of detail currently available this is a very well written an balanced article. Mercifully, it reflects our own intelligence.

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