EU Structural Funds: Least Developed Regions — [Siobhain McDonagh in the Chair]

– in Westminster Hall at 11:22 am on 26th June 2019.

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[Siobhain McDonagh in the Chair]

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union) 2:30 pm, 26th June 2019

I beg to move,

That this House
has considered replacement of EU structural funds for least developed regions.

It is a pleasure to see you in the Chair, Ms McDonagh. I am grateful that this issue has been selected for debate. I thank colleagues across parties and regions for supporting the application, particularly Sarah Newton, my right hon. Friend Ann Clwyd, who is not currently in her place, and my hon. Friend Anna Turley.

The application for this debate followed a report by the Conference of Peripheral Maritime Regions that crystallised concern that our regions should not lose out as a result of the decision made in the 2016 referendum. I intend to speak relatively briefly because I want to give plenty of opportunity to colleagues from across the regions to make their points. I have only one question for the Minister, but I will come to it at the end.

The CPMR report estimated that if the UK had remained in the European Union, we would have been entitled to €13 billion, or £11 billion, of support from EU structural funds—primarily the European regional development fund and the European social fund—during the next period, from 2021 to 2027. However, five regions would be set to receive a bigger share of that funding based on our position as having some of the poorest areas in Europe. Those areas are defined as “least developed regions” because our GDP falls below 75% of the European average. Clearly, that is not something that we should be proud of and it needs to be addressed.

Cornwall and the Isles of Scilly, and west Wales and the valleys both already receive funding for that category.

Photo of Sheryll Murray Sheryll Murray Conservative, South East Cornwall

Does the hon. Gentleman accept that we have already contributed that money to the European Union and are getting it back?

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

I agree. The European Union has demonstrated itself to be a very effective redistributive mechanism, taking from richer areas and redistributing to poorer ones. In my area of South Yorkshire, I imagine that we are a net beneficiary of that, although the UK as a whole is net contributor.

Cornwall and the Isles of Scilly and west Wales and the valleys are already recipients of funding for that category, but have been joined by Tees Valley and Durham, Lincolnshire and my own region of South Yorkshire, because those three regions have now sunk below the 75% threshold, too.

In preparing for the debate, I consulted the House of Commons Library, which, as ever, provided excellent independent assessment and support—I commend those in the Library for the work that they always do for us—and confirmed the CPMR analysis. The Library said that, if anything, the CPMR report underestimated the position because it had not taken account of southern Scotland, which would have been eligible, and added that

“the ‘Outer London – East and North East’ region is also on the borderline” for classification for support. The amount of funding for which UK regions could have been eligible may have been even higher than in the CPMR analysis.

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I will raise a point about the CPMR analysis that I was going to make during my speech, because it is hugely important to the hon. Gentleman’s argument. I saw a copy of the House of Commons Library briefing, which confirmed that the analysis said that some areas could see funding rise by 22%, but, as I am sure he knows, the European Union has said that it does not want funding to go up by more than 8% in relevant areas. I do not think that the Library covered that. That would be worth expanding on as the hon. Gentleman develops his argument.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

I will mention the 22% increase specifically as I proceed.

I am delighted that Members from across the regions that would have benefited are in the Chamber. Everybody will want to focus on the impact in their own areas but, as the Minister indicated, the projections indicate that the UK would be entitled to an increase of 22% in funding. I am sure that if we were a participating member, we would be arguing strongly to ensure that that assessment was matched in reality and that the funding came through.

The funding estimate is up from the €l0.6 billion that we received from 2014 to 2020 to approximately €13 billion. Part of the reason that the CPMR estimates that increase is that we would now have five less developed regions, compared with two during the current funding period. The analysis states:

“All five of these regions would stand to receive EU support in excess of 500 euros per capita for the seven-year period.”

On current figures, that would result in £605 million for South Yorkshire to support economic growth.

There is a sense of déjà vu, because South Yorkshire has been here before. When the Thatcher Government decimated our coal and steel industries, and our whole economic base with them, we became one of the poorest regions in Europe. The EU stepped in with funding that was critical to rebuilding our economy, funding projects decided by local politicians and delivered by local bodies.

We received £820 million of objective 1 funding—levering in matched funding—which was channelled into more than 250 organisations and 650 projects. That encouraged investment, stimulated the development of new growth and high-technology sectors, helped businesses to modernise and become more competitive, supported innovation, helped with the commercialisation of research, developed skills and provided infrastructure in the region. We saw real transformation in a variety of ways.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

I congratulate the hon. Gentleman on securing the debate. In his calculations, has he taken into account any potential and likely changes towards the end of the seven-year period? With yet more additions to the EU of companies that would be net beneficiaries, the funding structure would change for the UK and other countries that happened to be part of the EU at the time.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

I thank the hon. Gentleman for his intervention, but that is not part of the CPMR analysis, nor has the House of Commons Library suggested that it is a factor that should be taken into account.

In South Yorkshire, we saw real transformation. The advanced manufacturing park at Waverley—a partnership led by University of Sheffield with Boeing and Rolls-Royce—was held up by the Government as a flagship of growth through innovation. It was dependent on that funding and would not have got off the ground without it. That is just one example of the work in developing clusters, alongside advanced manufacturing and metals, investment in bioscience, creative and digital industries and environmental and energy technologies.

The funding was involved in the remodelling of the primary gateway to Sheffield in my constituency, by developing the station and the main pedestrian route into the heart of the city, and played a key role in making the city a more attractive place in which to invest. There was improved access to finance for small and medium-sized enterprises, which supported start-ups, scale-ups and incubator units such as the Quadrant Business Centre. Community projects in my constituency, such as Matrec and Zest, were funded for programmes to build the skills needed in a changing work environment.

Across South Yorkshire, there was investment in new roads and transport infrastructure.

Photo of Nick Smith Nick Smith Opposition Whip (Commons)

In Blaenau Gwent, the structural funds have made a big difference, particularly for transport, with the dualling of the heads of the valleys road. However, there is still bags to do, such as improving the Ebbw Vale train line to get more services to Cardiff. Does my hon. Friend agree that the Minister needs to confirm how much funding will be available and by when, particularly in advance of the spending review, so that we can get not only better trains from Ebbw Vale to Cardiff, but a boost to the local economies of our regions?

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

My hon. Friend is absolutely right, in particular about investment in transport infrastructure. Without that, the wider area of my hon. Friend Dan Jarvis would have seen none of the road network in the Dearne valley that facilitated growth, with a whole series of new companies and the new jobs to go with them. My hon. Friend Nick Smith is also right—he pre-empted my final question—to say that we need exactly that assurance from the Minister.

In South Yorkshire, the objective 1 funding worked: our economy grew by 8.5%. However, regional inequality has soared again since 2010. We are back in the same situation, qualifying as a least developed region and eligible for the highest level of EU funding had we been continuing as a member.

I know that the regional disparities concern both sides of the Chamber. Inner London is, unsurprisingly, our richest region, with GDP at 614% of the EU average—though I recognise that in London, too, there are pockets of deep poverty—but that figure falls to 69% for Cornwall and the Isles of Scilly. London is obviously represented overwhelmingly by colleagues from my party, but Cornwall and the Isles of Scilly by the Conservative party—this debate is about a fair deal for all our regions and about rebalancing our economy.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I congratulate my hon. Friend on securing this important debate. Given those regional imbalances and the question of how funding should be spent, is it not completely outrageous and unacceptable that we were promised a consultation on the shape of the shared prosperity fund, which should have started in late 2018, but have still not had one? My colleagues and I on the all-party parliamentary group for post-Brexit funding for nations, regions and local areas are sensing that there will not be a consultation before the comprehensive spending review. Does he share my view that that is completely unacceptable? Will he ask the Minister to confirm that he too thinks it is completely unacceptable?

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

My hon. Friend is absolutely right. A feature of the wider debate on Brexit is that so many critical issues that will shape the outcome—structural funds, immigration and others—are just being kicked down the road. I hope that the Minister will respond directly to my hon. Friend’s point.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

In Wales, our wages are 70% of the UK average and we receive something like £440 per person in structural funding. Is my hon. Friend aware that with a new plan, we will lose some of that, and that in the case of a new deal, we will have no money at all? Only today, I was talking to representatives of the Swansea universities who said that they were shedding hundreds of jobs. The background to that is the doubling in size of Swansea University thanks to EU money. We are in a critical place in Wales, with closures at Bridgend, Tata and Airbus because of Brexit, so the structural funding is imperative.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

My hon. Friend is right to highlight the impact on all our areas if there is not adequate investment in economic development.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

On the shared prosperity fund, a recent report by the Housing, Communities and Local Government Committee called for consultations to begin before the end of April. The Government response simply stated that

“the Government will consult widely on the Fund and final decisions are due to be made following the Spending Review”, and that

“the Government continues to review our approach to consulting on the Fund accordingly.”

That is not very definite. At some point, we will also need to ask the Minister what, if there were no spending review—which there probably will not be, or at least not a four-year one—that would do to consultations on sorting out the shared prosperity fund.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

That intervention clearly comes with the great knowledge and experience that my hon. Friend brings as Chair of the Select Committee. I hope that the Minister will pay attention to his concerns in the closing remarks.

I do not necessarily have a lot of confidence in that. I wrote to the Secretary of State for Housing, Communities and Local Government back in February, bringing the CPMR report to his attention and reminding him of the Government’s commitment that regions should not lose out as a result of Brexit. I called on him to commit to providing the equivalent funding to what we would have received had we remained members of the EU. The Minister responded on the Secretary of State’s behalf, but did not make that commitment. I asked the Minister that same question again in May during the Westminster Hall debate on the shared prosperity fund led by my hon. Friend the Member for Barnsley Central. The Minister again did not make that commitment.

Our experience is that where the Government have the opportunity, they shift funding from areas in need to other parts of the country. We have seen that markedly with local government. I therefore simply do not have the confidence that the Government will do the right thing by areas such as ours. In conclusion, I will ask the Minister that again, the simple and central question of the entire debate. We were told that there would be no losers as a result of leaving the European Union. Indeed, I pressed that with David Cameron at Prime Minister’s questions in the week after the referendum result. Had we remained a member, South Yorkshire would have received £605 million between 2021 and 2027; other regions would have received comparable amounts. Therefore, will the Government commit to providing, from whatever source, regional development funding at least equivalent to the money that we would have received from the European Union?

Several hon. Members:

rose—

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Order. All Members can see that there is an awful lot of interest in the debate. I understand that it is important to lots of Members’ constituencies, so I ask you to work with me, and I apologise for imposing a limit of four minutes on each speech so that we ensure that everyone may speak on behalf of their constituents.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee 2:46 pm, 26th June 2019

I will refer to the Select Committee report which looked at a number of issues to do with local government and Brexit. I have a particular constituency interest as well, as highlighted by my hon. Friend Paul Blomfield, with the advanced manufacturing park and research centre, which has done so much reinvigorate and stimulate high-tech engineering and steel in the Sheffield city region. Yes, that is down to the University of Sheffield, Professor Keith Ridgway and my former colleague Richard Caborn, but it would not have happened without EU funding. We need to be conscious of that.

The Select Committee report was clear. It said to the Government that we need to get on and to consult now about the shared prosperity fund, what it should look like and how the money might be distributed. I understand that the Chancellor may not want to commit to an absolute total of money until after the spending review, or what passes for it—I am sure that the Minister, when he responds, will update us on whether we are to have a spending review—but why can we not have a consultation on the fund details? What is holding the Government up?

The Government have known about this for a long time, and they promised a consultation before the end of last year. A simple matter of at least talking to local government about how the fund will be distributed and what the criteria will be would be a start. People might then have some understanding and a conviction that the fund would happen. Why can that not be done? Why do we have to wait until later? The Government response to the Committee’s report includes no real explanation but simply states that they “will consult widely” on the shared prosperity fund and that “final decisions” will be made “following the Spending Review”, as I quoted earlier.

Why can the consultation not begin now? It is not sufficient for the Government to say that they are reviewing their approach on consulting. Why have we only got that far? It is in no way sufficient. Ministers should tell us what is holding the consultation up. We know that the Department has a big tray of things to do—the social care Green Paper, the social housing Green Paper, fracking, and the devolution framework which we have not yet seen—so Ministers are obviously busy thinking about doing things in the future, but why can we not get on and at least start to do something? That consultation would be an extremely good start. That is an important point, which needed to be made.

Another important issue we need further clarity on sometimes gets overlooked: we will no longer be a member of the European Investment Bank, which has provided funding for many important infrastructure projects. Again, the Government say that they want to explore options for future relationships with the EIB and for the arrangements to be put in place for local authority funding of future infrastructure projects. Why can those discussions with local authorities not begin now? Why do we have to wait? That is a simple ask. It may seem a long way away, but local authorities that are looking to start long-term infrastructure projects in 2021 need to start planning now. That is why the Government need to start consulting about how those projects will be funded.

Photo of Derek Thomas Derek Thomas Conservative, St Ives 2:50 pm, 26th June 2019

I am glad to have the opportunity to speak in this interesting and important debate. The six Cornish MPs went to the Treasury some time ago to set out why it was so important to address the issue properly. It is absolutely right that when we get the consultation, we use the expertise available to make sure it is done correctly.

I want to be clear that in Cornwall and on Scilly we are looking not for a handout, but for a hand up. The aim of European funding is to reduce inequalities between communities and reduce disparities in regional levels of development, with particular regard to those that have increased deprivation, rural and island areas, areas affected by industrial transition and regions that suffer from severe and permanent natural or demographic handicaps. Cornwall and the Isles of Scilly fit perfectly with those aims. There is no reason not to see ourselves as benefiting from funding.

The seven least developed areas have set some priorities. The most sensible one, I think, is for an ambitious regional policy for England and Wales that recognises the need for a specific mechanism for the regions that are furthest behind. We want a protected allocation of funds to such regions that will allow a genuine rebalancing of the UK economy. I have heard nothing from the Treasury or the Minister to suggest that is not their intention.

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth

My hon. Friend is making a powerful point. The modern industrial strategy clearly commits to making sure that regions can play their full part, so no region is left behind. The allocated funding would not only improve the lives of people in Cornwall and the Isles of Scilly, but enable the region to contribute to national well-being.

Photo of Derek Thomas Derek Thomas Conservative, St Ives

My hon. Friend is absolutely right. As I say, we have heard nothing yet to suggest that the economy in Cornwall and on Scilly could not thrive. It is really important to MPs in Cornwall that we are part of the solution, not the problem. In July last year I set up a group that works with local business, Cornwall Council and people who already work with the most deprived and left behind in our communities. The group looks at the skills that a shared prosperity fund should deliver to enable people to get the well-paid, skilled jobs they want. The Chief Secretary to the Treasury, my right hon. Friend Elizabeth Truss, attended the first meeting and set out a Government commitment and invitation for us to engage in the process and help them to understand what was needed.

Outside this building today there are thousands of people demanding that we take urgent action on climate change, clean up our air and make our society healthier and fairer. Through the shared prosperity fund we can achieve exactly that, particularly in places such as Cornwall. The Committee on Climate Change recommendations set out the need for massive upskilling to give people the skills needed for research and innovation, so that we can decarbonise our environment and our economy and ensure that people are healthier, live in healthier homes and have better opportunities. Now is the right time to have this debate and create a vibrant, low-carbon economy with better health, better skills and better pay.

In our jobs and growth group we have looked at skills. Even with European funding, the real problem in Cornwall is that many communities and young people never feel they have the opportunity or the learning that they need.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

The hon. Gentleman has talked about young people, and I am sure he will share my anxiety about the future of the youth employment initiative, which is EU-funded. It help to provide opportunities to young people who are not in employment, education or training. The Tees valley is one area that benefits from it at the moment. Does he share my anxiety about the fact that there is no clarity from the Government about the future of that funding?

Photo of Derek Thomas Derek Thomas Conservative, St Ives

I welcome that intervention, but I will continue with my point about the real problem for us in west Cornwall. Quite often, there are two options in Cornwall. One is to go away to university, which is much easier now because we have a university in Cornwall, in the constituency of my hon. Friend Sarah Newton. However, the vast majority of our young people leave Cornwall, in what we describe as a brain drain. The opportunities for those who are left behind are very limited. There is a real need to look at apprenticeships and how further education can be properly funded for the skills and jobs that we need for the future. I believe that Cornwall has a real opportunity to share in that, exploit it and thrive, and I believe that shared prosperity is the solution.

Our group has looked at the role of high streets, and Cornwall Council is running an inquiry into how to make high streets work. They are no longer just about shops; they are about an experience, and where people live. They are places to get support and advice, and they even include workplaces other than shops. Lots of work is being done in communities in all our constituencies in Cornwall on understanding high streets. That is not just so that we can say, “Government, give us money so we can spend it,” but because we want support to make local economies low carbon. We have great talent; now, we need great opportunity.

Photo of Anna Turley Anna Turley Labour/Co-operative, Redcar 2:56 pm, 26th June 2019

It is a pleasure, as always, to serve under your chairmanship, Ms McDonagh. I congratulate my hon. Friend Paul Blomfield on securing this important and timely debate on the future of regional development spending.

I speak on behalf of my region, the Tees valley, which has been a net beneficiary of Britain’s EU membership. In fact, it has often been the case that EU regional development funding has better supported my region than our own Governments have done. In the current spending period, 2014 to 2020, the Tees Valley has been allocated £198.1 million of EU regional funding. Those funds have provided vital investment, including in research and development and innovation, boosting small and medium-sized businesses, helping to retrain and upskill the local workforce, and supporting our area’s transition to a low-carbon economy.

There has been funding for the youth employment initiative to help to tackle our youth unemployment, which is two and a half times the national average. However, that investment has simply not been enough to offset the damage wrought by the UK Government’s austerity agenda. According to analysis by Institute for Public Policy Research, £6.3 billion of public spending has been taken from the north under austerity, while the south has gained £3.2 billion. That austerity has caused the public sector workforce in the north-east to fall by almost a quarter, with a huge knock-on effect to local economies.

We still have pacer trains running on yet-to-be electrified lines, despite the promise of better upgrades, while billions of pounds are poured into London’s Crossrail. Many communities are no longer served by bus routes, as subsidies have been slashed. Meanwhile, the crisis at British Steel threatens to put another great British industry, deeply rooted in the north, out of action because Whitehall has failed to create the level playing field that the steel industry so desperately needs.

Our region would now be classed as a lesser developed region. The Conference of Peripheral Maritime Regions estimates that the region of Tees valley and Durham would be classified as a less developed region by the EU post 2020, putting us among the poorest regions in Europe and therefore entitling us to more money. That is absolutely shocking and demonstrates how regional inequality has skyrocketed under this Government.

At this crucial time when we need a greater share of regional development funding to give our area a boost, we do not yet know how the Government intend to allocate regional funding when EU policy no longer applies. The UK Government’s proposed UK shared prosperity fund is very light on detail. If their record is anything to go by—allocating money to the areas with the highest economic return, which typically are the areas that are already the wealthiest—my area could massively lose out again. If we were to remain EU members, the CPMR estimates that, based on current population numbers, the Tees valley would be entitled to more than £270 million between 2021 and 2027. That is money that we desperately need. That share of the pot reflects the huge regional inequalities across our country, and it would make a massive difference to growth in my region.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

The SSI site in my hon. Friend’s constituency is yet to see any real progress in development. That is all the more reason why we need a commitment to greater funding if we are to create jobs for people there and in my constituency, which is just across the Tees valley.

Photo of Anna Turley Anna Turley Labour/Co-operative, Redcar

I thank my hon. Friend and neighbour for that important intervention. He is right; there has still not been a single new job created at the SSI site in my constituency, which lost 3,000 jobs overnight in 2015. We have a plan for 20,000 jobs, but we need every bit of support and encouragement we can get to achieve that. It is not going to happen without looking more widely afield. My concern is that it will be local people that end up paying the cost of cleaning up that site.

Our share of the pot reflects the huge regional inequalities across our country and would make a massive difference to growth in my region. Ministers have indicated that regions should not lose out from the decision to leave the EU but, if current policy is anything to go by, yet again the Tees valley will be deprived of vital support

Recently we saw the launch of the Power Up The North campaign, led by our regional media and supported by politicians, businesses and people across our communities. I congratulate them on this great campaign. It is extremely powerful and is pushing back against the old idea that success in London and the City will automatically lead to a wave of wealth, spreading out across the country, and lift up areas like Teesside on a rising tide. We know that is not the case.

We have just had the fifth anniversary of the northern powerhouse, which was launched to great fanfare. I hoped it might be a turning point in relations and inequality in this country, but five years on it is clear that the concept has been a damp squib, achieving more as a political campaign rather than delivering real power to our region.

On Teesside we have proved that when we are given power and control we can do great things, such as supporting our people to retrain after the SSI closure through our local taskforce, and developing a local industrial masterplan for the South Tees Development Corporation. We have big ambitions for carbon capture, hydrogen power, and other clean industries, but the reality is that too often we are reliant on going cap in hand to the Government for funding. Now we are at risk of being in an even worse situation. Without better investment in the EU, the northern powerhouse will only ever be a soundbite that failed to deliver.

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth 3:01 pm, 26th June 2019

I congratulate Paul Blomfield on securing this debate, which builds on the excellent debate about the shared prosperity fund led by Dan Jarvis.

All of us here would like to be evidence-based policy makers. There is inconclusive data about how successful the European funding programmes have been; the London School of Economics study and the excellent House of Commons studies all show that. It is important that we learn the lessons about how that money has been invested. From my own constituency, and Cornwall more widely, I can see that this money has been absolutely essential, but we need to draw the right conclusions from previous programmes so that the Government’s commitment to regional growth funding is done right and builds on the success we have seen.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

How does the hon. Lady propose that the lessons be learned and things be improved if there is no consultation exercise?

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth

I will come to that in a moment. At the last debate, the Minister invited us to put forward our suggestions. We do not need to wait for a formal consultation; my hon. Friend Derek Thomas has demonstrated that. There have been consultation meetings with local enterprise partnerships and with the business community all over the country. It is up to us; we are leaders in our own communities. We should be making the most of these opportunities—today is one opportunity—so I will make some suggestions to the Minister, as he has invited suggestions about how we should go about allocating the funding.

First, we want to have designated funding for our regions. The EU funding that has been used so successfully is seldom the only source of funding. As other Members mentioned, it is often an opportunity to leverage additional funding. I want to get across the message that the huge investment in rail and buses in my constituency, where we have two universities, was enabled by European funding, but it was brought about by leveraging and working in partnership.

The way that the Treasury allocates funding and looks at gross added value often disadvantages areas with populations that are dispersed over large geographical areas. In the last five years, investment in cities and city regions has been successful, but those of us without cities—or even towns that meet the Government’s criteria of a population of 135,000—are disadvantaged. That geographical designation is really important for us to meet the opportunities of our local economy to grow, through the regional industrial strategies that feed into the national industrial strategies.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

Because of the processes that the Government and the EU structural fund have followed, Northern Ireland has been able to access the fund. The simple reason is that we have lower wages and higher energy costs, and therefore a higher cost of living. It has proven to be the case that Northern Ireland needs the structural fund, and it has been a success. If the Government were able to ensure that something happens in the future along the same lines, it would be positive.

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth

I agree that it is important that the Government honour their commitment to provide regions with the same sort of money as they would have got had we remained in the European Union. That was a clear commitment made by our party at the last general election. We will be working hard to make sure that whoever leads our party honours that commitment.

We should have opportunities to make decisions about how that money is spent, and I want those decisions to be made locally. The great city regions—I know the hon. Member for Barnsley Central is doing a good job as the Mayor of the Sheffield city region—must work in partnership. When I was a Minister at the Department for Work and Pensions, I saw the opportunity for central Government Departments to work in partnership with the metro mayors to innovate in their regions; that is something Government should be proud of and advancing.

It is not only regions or metropolitan areas with mayors that can work with Government in that way. Single-tier authorities, such as Cornwall Council and the Council of the Isles of Scilly, in partnership with our local enterprise partnership, can work on greater devolution and have far more say about how the money should be spent in our region.

In my remaining time, I want to touch on the European social fund. Debates are usually about roads, bricks and mortar rather than about the ESF’s work helping people who have been out of work, and far from the labour market, into work. There has been a huge amount of innovation under this Government, particularly led by the Department for Work and Pensions, working with metro mayors. The hon. Member for Barnsley Central has been pivotal to that work, and there has been great deal of learning.

I would like the big, national work programmes contracted by the DWP to stop at the end of this round, and I would like that money to be spent by devolving it into partnerships in regions. We have an excellent local enterprise partnership in Cornwall, with a good skills committee, which is addressing the issues that my hon. Friend the Member for St Ives articulated so well: the need to develop skills and get people into work for the economy of the future. The best approach would be to enable regions to commission employment services that meet the needs of their communities.

Obviously, we have to be mindful of the market. We have to have a thriving market in people who provide those services, but that could be done at the same time as enabling greater local partnership. Then we would see the real progress in our economy that we want to see, in Cornwall and in every part of our community, and closing the unacceptable gaps in people’s life chances.

Photo of Gill Furniss Gill Furniss Shadow Minister (Business, Energy and Industrial Strategy) (Steel, Postal Affairs and Consumer Protection) 3:08 pm, 26th June 2019

It is a pleasure to speak under your chairpersonship, Ms McDonagh. I thank my hon. Friend Paul Blomfield for securing the debate.

It has been three years and three days since the EU referendum. During that time, the Government have failed to negotiate a decent Brexit deal, and that has resulted in uncertainty in our economy, for my constituents and throughout the country. My constituents voted to leave the European Union but they did not vote for their rights to be watered down, for their jobs to be at risk or for a less prosperous future for their children.

South Yorkshire has had its challenges and its triumphs. I am proud of our region’s strong manufacturing base, which has remained resilient despite the devastation of the 1980s under the Thatcher Government. European structural funds, particularly from the European regional development fund—the ERDF—for infrastructure and the European social fund for employment, have been important elements in rebuilding our regional economy since those days. I have seen how the funds have had huge impacts in my constituency of Sheffield, Brightside and Hillsborough. We have fantastic facilities such as SOAR Works, which is a managed workspace at Parson Cross funded through the ERDF, and Building Better Opportunities—a great scheme to get disabled people in Sheffield into employment that has received £2 million from the European social fund.

Sadly, the Government’s record on supporting the north has been a travesty and has held back the economy in our area. Everyone in Sheffield remembers that one of the very first actions of the coalition Government was to cancel a crucial £80 million loan to Sheffield Forgemasters—a clear sign that investing in the north was not a priority. The Government still talk of a northern powerhouse in slogans, but warm words will not cut it. The north needs investment to turbocharge our economy and to give communities the jobs, skills and opportunities that they deserve.

Under the EU system we would be entitled to a higher level of investment. As the report notes, South Yorkshire would be entitled to more than €500 a head in the next six-year period, which could amount to around £30 million for my constituency alone: a massive amount of money. We have seen food bank use rocket, particularly after the roll-out of universal credit. If the Government fail to invest in areas such as South Yorkshire, we will see more people struggle and rely on food banks to survive.

The 2017 Conservative manifesto stated:

“We will use the structural fund money that comes back to the UK following Brexit to create a United Kingdom Shared Prosperity Fund”.

The fund is to be targeted, flexible and devolved, and it is intended to promote inclusive growth. But although they constantly refer to it as the means by which they will

“tackle inequalities between communities...especially in those parts of our country whose economies are furthest behind”, the Government have yet to offer any clarity on how it will work or the mechanisms by which it will be distributed.

As we know, the Government said they would consult on the proposals, but here we are in June 2019 and the consultation is still not forthcoming. Will the Minister take this opportunity to assure my constituents in Brightside and Hillsborough that the Government will cover any shortfall that results from leaving the EU? Furthermore, the Minister will be aware that the framework for distribution of the ERDF in the period from 2021 to 2027 has the funding of low-carbon schemes at its heart. Will the Minister commit to a similar focus in the shared prosperity fund in response to the climate emergency?

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

I am sorry, but Members must go down to three-minute speeches, so will everybody be circumspect about making interventions?

Photo of Sheryll Murray Sheryll Murray Conservative, South East Cornwall 3:12 pm, 26th June 2019

It is an absolute pleasure to serve under your chairmanship, Ms McDonagh. I congratulate Paul Blomfield on securing this debate, which is important to my constituency of South East Cornwall as we prepare to leave the EU and seize the growth and trade opportunities that Brexit offers. I am grateful for the opportunity to make a brief contribution and am pleased to see that my hon. Friend the Minister will respond.

Cornwall may be a beautiful county of beaches, moorland and communities, but it lags behind the UK on many economic indicators. Its rurality is a blessing, but it puts a brake on growth and prosperity. We are closing the gap with other regions and nations, but we need to maintain that progress. European structural and investment funds have undoubtedly helped to boost the Cornish economy, creating jobs and boosting skills, higher education and inclusion. Better connectivity has also been a benefit. Just over 90% of my constituency now has access to superfast broadband, which is excellent news, but there is still work to be done for the remaining 10%. Local transport links, such as the A38, about which I had an Adjournment debate last week, need to be prioritised. Cornwall’s economic future is a positive one, from the development of the space sector to the growth of creative industries, tourism and high quality food and drink production. I want to maintain the momentum after we leave the EU.

Brexit provides us with an opportunity to reassess how money is allocated and to make sure it is spent wisely and without the red tape of EU bureaucracy. Will my hon. Friend the Minister give an indication as to when we can expect the consultation on the shared prosperity fund? It has been promised and it would be good to know when it will happen. A refreshed approach to regional policy that is strategic and devolved will help to ensure that funding is targeted in the right areas, better reflecting the needs of my constituents. All hon. Members are fully aware that we contribute more to the EU budget than we get back each year. I ask the Minister to ensure that we receive a fair share of the Brexit dividend that reflects Cornwall’s unique economic and social challenges.

Photo of Dan Jarvis Dan Jarvis Labour, Barnsley Central 3:15 pm, 26th June 2019

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate my hon. Friend Paul Blomfield on securing this important debate. I am pleased to see Members here from all parties and from every corner of the United Kingdom, especially from communities in our least developed regions, such as those in South Yorkshire, where I am proud to serve as Mayor and MP. Such communities are among the hardest-hit by austerity, by stalled economic growth, and by the failure of successive Governments to address widening regional inequalities.

The stark truth is that, from 2020 onwards, funding allocated to regions by the EU will come to an end, and 2021 marks the end of the Government’s local growth fund programme. Taken together, those funds have been the glue holding together many of our communities. What replaces those funds must replace them on the basis of what would have been received had the referendum result been different. The creation of a shared prosperity fund provides a vital opportunity to do things differently. To heal the divisions in our country and to turn the dial in those least developed regions, we must think and do differently.

The UK has one of the most centralised political systems in the world, with the inevitable consequence that some of the decisions taken by Westminster and Whitehall, however well-intentioned, do not reflect the needs or opportunities of local areas. Those living in the UK’s least developed regions are feeling the impact of the equality gap, which grows ever wider. I am hugely positive about our collective ability in the north of England to make real progress, provided that we have the right powers underpinned by the right resources. My hon. Friend Anna Turley mentioned the Power Up The North campaign, and increasingly there seems to be a growing recognition that the answers to the many challenges that we face do not lie in Westminster or Whitehall.

In the final minute that I have available to me, I will rattle through the four principles that I have set out for the shared prosperity fund.

Photo of Dan Jarvis Dan Jarvis Labour, Barnsley Central

I will not; I have very little time.

First, the annual budget for the shared prosperity fund should be no less in real terms than both the EU and local growth funding streams that it replaces. Secondly, there should be no competitive bidding element. Thirdly, the fund must be fully devolved to the areas that have in place robust, democratically accountable governance models. Finally, the funding must be stretched over multiple years, beyond the vagaries of spending reviews and parliamentary cycles.

If we want to create a country that works for everybody, let us take the opportunity to be bold, and let us make sure that the shared prosperity fund does what it says on the tin and enables all of our communities to share and prosper in our country’s economic growth.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs) 3:18 pm, 26th June 2019

The lack of clarity and detail over the potential loss of funding three years after Brexit is a cause for general alarm. Those critical funds are extremely important in my constituency of North Ayrshire and Arran, where they fund employability initiatives and measures to tackle poverty and the promotion of social inclusion. Three years later, we still have no idea how much cash the replacement shared prosperity fund will have to distribute. We do not know what charities and voluntary organisations will be eligible for funding. We do not know how the funding will be administered and which programmes that currently benefit from the fund will be left staring a black hole in the face. I urge the Minister to give much-needed and much sought after clarification on this issue. Will we have equivalent like for like replacement funding post-Brexit, and can he guarantee it whether or not the UK leaves the EU with or without a deal? A yes or no would be interesting.

We need answers, we need honesty and of course we need an unequivocal commitment from the Government that the communities who need the fund and who benefit from it will not be sacrificed, abandoned and forgotten as the Government drag us off the Brexit cliff-edge. I remind the Minister that the Government must respect the devolution settlement, and that it is imperative that the UK Government work with all the devolved Administrations to reach agreement on future funding arrangements that make sense for all parts of the UK. I look forward to hearing what he has to say about that. My constituency and country must not be short-changed.

Photo of Justin Madders Justin Madders Labour, Ellesmere Port and Neston 3:20 pm, 26th June 2019

It is good to see you in the Chair, Ms McDonagh. I congratulate my hon. Friend Paul Blomfield on securing the debate. If we have learned anything from the past few years, it is that people feel ignored by politicians and powerless to influence decisions about the most important things in their lives, such as whether a local hospital is kept open, whether their child’s education is properly funded, whether bus services continue so that they can get to work, or even whether they can afford to buy or rent a decent home to live in. They are told that the economy is growing, but everywhere they look services are being cut. Nowhere is that more true than in the north of England. The north has a population of 15 million people, which is roughly twice that of London. It has five major cities, 265 towns—including mine—and more than 1,000 villages and small communities. Our economy is more than twice the size of Scotland’s, and if the north were a country it would be the ninth largest in the EU. We have eight major ports, 29 universities and four national parks. We produce a third of the UK’s renewable energy and are leaders in the manufacturing, scientific and high-tech sectors. That is a pretty impressive CV.

Despite that, however, and despite the introduction of the northern powerhouse five years ago, regional inequality has grown since 2010. The north has borne the brunt of the Government’s austerity drive with a £3.6 billion cut in public spending, whereas the south-east and the south-west had £4.7 billion extra in real terms. There are now 200,000 more children living in poverty in the north than there were five years ago. That is a scandal. The economy has been growing consistently throughout those five years. If such a huge number of additional children have been growing up in poverty during that period, it is ample evidence that the economy does not now work for everyone.

Why, in 2019, does London still hold all the power and the resources? The sooner we realise that business as usual is not going to cut it and that further Westminster handouts on Westminster terms will not be enough, the better. We do not need more crumbs from the table. It has been clear for a long time that people are fed up to their back teeth with the current approach. Is it any wonder, when the system clearly does not work for them, that they feel ignored, isolated and held back?

Our country will be undergoing massive changes in the next 10 or 20 years. People feel they need to see a change. The central aim of the shared prosperity fund is to reduce inequality and enable all our communities to share in the country’s economic growth. So let us really enable our communities to do that. Let us give them the responsibility, power and resources to shape their future, in line with local priorities and local need, using a bottom-up model in which decision making and accountability are at local government level, and which delivers real change whose benefits they can see.

I hope the Minister will be able to provide more detail about how the fund will be designed, and how it will work and be administered. I hope that he will also provide the guarantee that we all seek, that communities will be left no worse off. Finally, I urge him to get on and publish the consultation, so that we can address the systemic inequalities between our regions and ensure that all our communities share in the prosperity of one of the most prosperous nations in the world.

Photo of Luke Pollard Luke Pollard Shadow Minister (Environment, Food and Rural Affairs) (Fisheries, Flooding and Water) 3:23 pm, 26th June 2019

I thank my hon. Friend Paul Blomfield for introducing the debate so well. Colleagues representing Cornwall constituencies have made a good case for the argument that the far south-west does not get its fair share, and they are right—we do not. We have not had our fair share under the Governments of the past nine years, and we risk getting an even worse deal if we do not get post-Brexit funding right. I worry that we are getting it wrong politically in Parliament at the moment, and that the Government are getting it wrong through their lack of planning for what would replace EU funding for the region after no deal.

Whatever our views on the European Union, and whether we voted remain or leave in the south-west, there is no doubt that the EU funded us fairly, and Westminster continues to fund us at below-average levels. That is despite the fact that Cornwall is one of the poorest counties in the entire country, and despite huge levels of deprivation in Plymouth, with below-average spend across the county. When we get lumped together as part of the south it annoys me, because some of the poorest communities in the country are in Plymouth and Cornwall. Our peripherality has made things harder, but that is not recognised by Westminster in the funding formulas, although the European Union has recognised it in the way it has distributed funding. One need only look at towns funding to see that in action. Out of a £1 billion fund there was only £30 million for the entire south-west region. It was supposed to be allocated on the basis of need, and that episode has not built confidence in the way any future Government will allocate funding after Brexit.

There is an important rationale for funding based on a clear distinction, so that wherever someone lives—in Plymouth, Devon, Cornwall, or anywhere else in the country—they should be funded fairly and given the same opportunities as people have anywhere else. That is what must happen. I worry because there is the risk of no deal on 31 October and the new system is not in place. People do not know what will happen to the funding streams that they currently enjoy. They do not know what forms they will have to fill in, what deadlines they will have to meet, or what happens to existing funded programmes. I worry that that is causing concern.

I remember Boris Johnson, now a Tory leadership contender, starting the referendum campaign in Cornwall —in the constituency, I believe, of the hon. Member for Truro and Falmouth—and grasping a pasty. I think he called it the pasty of independence. We now know that the geographical indicators that protect Cornish pasties might not be there with a no-deal Brexit. In fact, it looks as if they probably will not. So we need to make sure in the far south-west that we protect not only our funding streams, but our fantastic products. That is really at the heart of the issue. We need to make sure that whatever system replaces the European funding if Brexit does happen, distribution will be fair. I worry at the moment that the poor deal for the south-west will continue unless there is a consultation that clearly brings about change, to give such regions a better deal.

Photo of Gerald Jones Gerald Jones Shadow Minister (Defence) 3:26 pm, 26th June 2019

It is a pleasure to see you in the Chair, Ms McDonagh. I congratulate my hon. Friend Paul Blomfield on securing the debate and on the case that he outlined.

For the past 20 years or so, Wales has been a net beneficiary of the European regional development fund and that funding has allowed the transformation of towns and villages across south Wales. There has been hugely significant investment in Merthyr Tydfil town centre, which has helped to regenerate the whole town centre—a new college development, and the creation of a new square that has become the focal point for a calendar of cultural events. The A465, which my hon. Friend Nick Smith mentioned, and which has had a history of collisions over many years, has vastly improved because of a continuing project to create a dual carriageway. There is one more phase to complete, linking my constituency to west Wales and, to the east, through to the M50, M5 and midlands. That has all been possible with the support of regional development funding from the EU.

In communities across my constituency, such as New Tredegar, Treharris, Bedlinog and Rhymney, there have been transport schemes, flood alleviation works and town and village centre regeneration, all supported through regional development funding, which has proved essential in beginning the process of regenerating communities across the south Wales valleys.

As we heard from my hon. Friend the Member for Sheffield Central, the Thatcher Government ripped the heart out of our communities, threw countless people’s jobs on the scrapheap and decimated towns and villages across south Wales, without having any plan to replace the jobs that were lost. The economic decline of the ’80s and ’90s can still be felt today, despite the investment that the valleys have had, which stemmed from the work of the Labour Government. I have tried to outline the history of the communities that I represent, and to highlight why economic deprivation exists. We benefited from regional development funding quite simply because we needed it, which is why it is essential that we now have clarity from the Government about the future for the shared prosperity fund. The Government have not been clear about their proposal for the fund. We were promised, as we have heard, that consultation would take place before the end of 2018, and we are now halfway through 2019. There is no sign of the consultation. As my hon. Friend Stephen Kinnock has said, that is completely unacceptable.

A few weeks ago in Welsh questions I asked the Secretary of State to provide clarity on the fund and how it would work, what areas of the country would benefit, and how much the fund would be—and there was no answer from the Secretary of State. I hope that today the Minister will provide some of the clarity that is needed. The people of Wales, and people across the UK, were told by the leave campaign that we would not lose a penny if we left the EU. As things stand, we are due to leave the EU later this year and we are still unclear about the many millions of pounds that Wales currently receives as part of the EU, and how that money will be replaced by the Government. There is a need for certainty, so I have two questions for the Minister. Will the new fund be based on need, and will the Government respect devolution in their allocation of the new funding?

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy) 3:29 pm, 26th June 2019

It is a pleasure to serve under your chairmanship, Ms McDonagh, and I congratulate Paul Blomfield on securing this debate on an issue that is close to my heart, given the effect of European funding on the highlands and islands over the years. He cited CPMR figures of €13 billion and £11 billion, and as he rightly said, those numbers have been backed up by the House of Commons Library, and may even be an underestimate of the funding available had we remained in the EU. Indeed, if the Government had decided to take a sensible approach, we would still be beneficiaries of that funding.

The hon. Gentleman spoke about the least developed regions, which get a bigger share of that money because they have greater need, and about the EU stepping in where Westminster had not. My constituency contains some big, iconic signals of that. Predating devolution, the Kessock bridge crosses from Inverness to Ross-shire, and it would not have been delivered without intervention from the EU. It has been transformational. Similarly, the University of the Highlands and Islands is now a physical entity, and it has helped hugely with some of the issues described by Members today. There is no town, village or community in the highlands and islands that does not show a wee EU sign to explain how it has benefited from that funding over the years. The hon. Gentleman went on to talk about a range of positive and social economic benefits of European funding, and we share that view.

Mr Betts asked a question that many of us have asked: why is there no consultation? What is holding up the Government? He raised the important point that we will no longer be a member of the European Investment Bank, and the deficit that that holds. Derek Thomas said that people are looking not for a handout but for a hand up, and he listed the criteria. That is where the EU has stepped in in the past. He spoke about a protected allocation of funds, and said there is no reason to believe that that is not what is intended. Let us see the evidence for that; let us see the delivery. There is no detail and, as we have heard, not even a consultation.

Anna Turley spoke about investment and innovation, business and work skills, youth employment in the Tees valley, and about how essential those things are given this UK Government, and the times of Tory austerity we have been living through. She said that people have no knowledge about what is coming, and with her customary niceness she said that plans are “very light on detail”—I would have used stronger terms, but she is absolutely right. Sarah Newton said that the way the Treasury looks at funding overlooks rural areas, and that she will be working hard to ensure her party honours that commitment. We need to hear the Minister say that the funding will be fully replaced, and whether it will be included in the spending review.

Gill Furniss talked about the three years of uncertainty that the communities and recipients of that spending have lived through, and she wondered where we will go next. Importantly, she mentioned the positive impact of the funding on disabled people, because often the best of it goes to those who are left behind in the thoughts of Westminster. She spoke about there being slogans from the Tory Government rather than investment, and today the Minister has an opportunity to put some meat on the bones and give the guarantees that everybody is asking for.

The hon. Lady also mentioned the importance of such funding in the shadow of universal credit, and as an MP for a constituency that has seen UC over six years, from pilot to full roll-out, I know that money from the EU is vital to address some of the deficits caused by that programme. Indeed, we share a rise in food bank reliance as a result. She said that funding should be targeted, focused and devolved, but we are still waiting for a consultation.

Justin Madders talked about how regional equality has dropped, and there are now extra children living in poverty. He asked why in 2019—I agree with this—Westminster still holds all the power. He said that people are fed up to the back teeth with Westminster’s approach, and that we need bottom-up decision making. Luke Pollard spoke about below-average spending from Westminster. He said that EU funds are fairer, and that there is a better recognition of the issues by the EU. He rightly spoke about the risks of a no-deal scenario.

In the short time that she took to make her speech, my hon. Friend Patricia Gibson spoke succinctly, and rightly, about the real living alarm over the lack of detail about what is coming. Who will be eligible? How will it work? What will it be worth? Will there be—this has been mooted but not explained in any detail—like-for-like funding? Will that guarantee be yes or no, regardless of a deal or the catastrophe of a no-deal hard Brexit? She pointed out, as have nearly all the contributors today, that the funding formula must respect the devolution settlement, and she said that neither she, her constituency, nor her country should be short-changed. We call on the Minister to give those guarantees.

I am grateful to the all-party group for post-Brexit funding for nations, regions and local areas for its reports. It backed up a lot of the comments made around this room. It had lots of submissions, including from the Welsh Government, the Convention of Scottish Local Authorities, EHRC, and many educational and voluntary bodies, which all said that budget funding should be

“no less in real terms than the EU and UK funding streams it replaces.”

It pointed out that shares for the devolved nations should not be reduced, and that as we have heard, it should be a devolved matter.

Mrs Murray rightly asked when we will see action, even just the consultation—that is a pro-Brexit Member asking for that guarantee. Dan Jarvis spoke about the failure of successive UK Governments to address regional disparity, and he mentioned the most centralised political system in the world here at Westminster. I think his four principles are absolutely right: the budget should be no less that it currently is, there should be no competitive bidding, it should be fully devolved, and it must be beyond spending reviews and political cycles.

We have had a promise from the Tory Government, but then delay after delay in getting any information. Evidence from the House of Commons Library shows that we are approaching nearly 300 parliamentary questions, without an answer on any detail of this funding.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

The hon. Gentleman makes a point about European funding being replaced by UK funding. If funding does come from the UK rather than the EU in future, will he commit to all projects being branded as co-Scottish Government and UK Government?

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

It would be much easier to respond to that kind of comment if the UK Government had given any details about how this will go forward. While the hon. Gentleman worries about slogans and branding, I worry about getting the detail to explain what communities across our constituencies, including my own, will get from this programme in future. When will we know the detail about what will be spent, who will be eligible, and whether it will be fully devolved? Once the Minister has answered those questions, we can go back to talking about flags and slogans.

Communities and charities have waited years to find out what will be available post-Brexit. The devolution settlement must be respected. As we have said, since Brexit is distracting the UK Government from doing anything worthwhile at the moment, let us revoke article 50 and get on with doing things properly, which would clear things up right away. Brexit will cost Scottish communities millions, and this particular issue must not add to that burden.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing, Communities & Local Government) (Planning) 3:38 pm, 26th June 2019

What a pleasure it is to serve under your chairmanship again, Ms McDonagh, and I thank my hon. Friend Paul Blomfield for securing this debate, and for all the work he has undertaken in Parliament to champion the issue of EU replacement funding and what to do about those regions in greatest need.

This debate has shown Parliament at its best. We have colleagues from Scotland, Wales, Northern Ireland, the north-east, and Cornwall, but I think the star must go to Yorkshire, which is out in force this afternoon. There has been near unanimity across the Chamber, and we heard a number of powerful, well-argued speeches on the need for more information about the prosperity fund, to find out when it will be sorted out and how it will be disbursed, and what the Government will do about the regions in greatest need. I hope the Minister takes on board that it is a cross-party argument and that he listens, rather than simply chuntering from a sedentary position.

This is a timely debate. I am not sure we could be in a more uncertain time on Brexit, and the whole issue of how the prosperity fund will operate and replace EU funding has not been resolved, which is creating uncertainty for many regions. Even at this late stage, we are not entirely sure what the prosperity fund will cover. Will the Minister confirm that it will include all the European structural investment funds—the regional development fund, the social fund, the cohesion fund, the maritime and fisheries fund and the agricultural fund for rural development—as well as funding for youth unemployment and European territorial co-operation? It would be helpful to know exactly what it will encompass and how much money will be attached to it.

The second issue, which is at the crux of the debate, is what the Government will do about the recent research from the Conference of Peripheral Maritime Regions that shows that regional allocations from the EU would increase in the period from 2021-27 and affect positively at least five regions—Tees Valley and Durham; South Yorkshire; Lincolnshire; west Wales and the valleys; and Cornwall and the Isles of Scilly—and indeed up to seven regions. Over that period, it is estimated they would receive an additional €13 billion in funding, up 22%. We need to hear whether the Minister accepts that research and what the Government will do about it.

We have heard from hon. Members that such an increase is necessary because of a worsening of the relative position of the UK regions, with many areas falling behind the EU average for regional prosperity. Research cited in the House of Commons Library document as well as Eurostat data show that regional inequalities in the UK are growing. That is a terrible indictment of the Government’s policies; we need to know what they will do about it.

The Minister will know that the UK’s less developed regions have called for an ambitious new UK regional policy to recognise and address that need. My own council in County Durham got together with leaders from the other affected regions to ask the Minister for a long-term, urgent approach to tackle widening regional inequalities. They argue that particular attention must be paid to the regions furthest behind in terms of economic activity, areas with increased deprivation, rural and island areas, areas affected by industrial transition, and regions that suffer from severe and permanent natural or demographic challenges.

The leaders wrote to the Minister asking the Government to make five commitments: an ambitious regional policy for the UK that recognises the need for a specific mechanism for those regions furthest behind; the UK shared prosperity fund should be adequately funded and at least match the €13 billion that UK regions would have received under the next EU programme, which is in addition to existing national local growth funding that under current EU programmes is often used as match funding; the UK SPF should be appropriately devolved; the UK SPF should reduce the administrative burden for applicants; and a guarantee that UK regions will not be worse off in funding available for regional development beyond 2020 because of our leaving the EU. In fact, they are asking the Government to make some of the commitments about Brexit we heard before, during and—not so often but sometimes—since the referendum.

I must say that the Minister’s response to the council leaders was very weak; he said what we already know. They were asking about those five points, wanting lots of commitment and detail from the Government, because they are anxious and want to know what will happen about future funding in their areas, which is so important. They got a letter back saying basically that we have an extension until 31 October before we leave the EU—this was in May, by the way—and that the Government are considering all options and will consult on how to carry forward the prosperity fund.

We are all saying to the Minister that that really is not good enough. We need, at this very late point, some detail from him about how the fund will operate and under what criteria. What sort of money are we talking about? Will it be disbursed in the same way as it has been under the EU? Will the Government take need into account and focus in particular on the regions with the greatest need?

Like all hon. Members in the Chamber, I feel strongly about this issue because our constituencies are in regions that need to be supported to reach their full potential. This is not just pleading and bleating. These are amazing regions with huge skills and talents among the population, and they all need development in digital and higher level skills. They need to use our universities and colleges to drive up skills development. There is need for investment in renewable energy in the north-east, and in pharmaceuticals. We also need to upgrade the transport system and ensure that everyone in those regions can reach their potential and contribute to the future prosperity we all want to see. I hope the Minister will tell us something about how we can ensure that prosperity can be achieved by everyone.

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 3:47 pm, 26th June 2019

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate Paul Blomfield on proposing and securing the debate. I put him on notice that I intend to finish early to give him the customary ability to say that he disagrees with most of what I say. I will let him think about that while I am talking—he may surprise himself.

Many hon. Members have spoken in the debate, and I was most encouraged by the heartfelt speeches by the Opposition spokespeople, the hon. Members for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and for City of Durham (Dr Blackman-Woods), about the importance of this issue. It really demonstrated to me the passion there is across England, Wales, Scotland and Northern Ireland to achieve and drive a local community. As a proud Unionist, I was reminded of the awesome foursome of our United Kingdom, which we should hold preciously in our hearts. When the UK shared prosperity fund comes forward, I hope it will demonstrate our commitment to create growth in every single part of the UK, wherever it may be.

We have had a wide-ranging debate. As well as talking about the shared prosperity fund, the hon. Member for Sheffield Central, the proposer of the debate, took the opportunity to make his fundamental point that the Government have not supported the regions. I fundamentally disagree. This is the Government who created the northern powerhouse, and we are investing hundreds of millions—in fact, billions—of pounds directly into the northern economy. We did not see that under the last Labour Government. If the hon. Gentleman wants proof that the northern powerhouse is real, he has only to look to Dan Jarvis, the proud Mayor of the Sheffield city region, who is sitting a few seats down from him, and to his four mayoral colleagues across the north of England.

We heard from many hon. Members about our being such a centralised country. For the first time in a generation in England, this Government have taken power, money and influence away from London and returned it to our regions. Surely that is a good thing. I am sure it is widely supported by Members across the Chamber. Those of us who want to see all areas of our country thrive should welcome that decentralisation and return of powers to mayors and regions.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

I am sure the Minister agrees that this is not just about Government actions but the impact of those actions. Will he confirm that, despite what the Government have done, or think they have done, since 2010, the difference in gross value added between the south-east and the north has not changed?

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The hon. Gentleman will have to send me the figures he refers to. Across the north of England, unemployment is lower than it has been for a generation. Picking up on the comments of Anna Turley, £450 million has been committed to a devolution deal for the Tees valley and £120 million has been invested in the SSI site.

Frankly, if the Labour local authorities in the Sheffield city region could get their act together and agree what powers they should hand to the Mayor of South Yorkshire—I know he is already doing an excellent job, but I want him to be given those powers so he can continue to drive the hopes and dreams of the people of South Yorkshire—the Sheffield city region could receive nearly £1 billion as part of its devolution deal. It is shameful that Labour councils are blocking this Government’s giving nearly £1 billion to the Sheffield city region. The councils should hang their heads in shame. We are debating European structural funds, but all this is connected; we cannot consider Europe on its own.

Let me set out some truths. There was reference to a report that mentioned growth of up to 22% in money for less developed areas. That report does not take into account the points made by Jim Shannon, who is no longer in his place, about European countries that may join the European Union during the spending period; it does not take into account the cap that the European Union itself has said it would like to see on spending increases; and it is an estimate. That estimate would go into the European Union and be negotiated.

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I will in a moment. I will develop this point first.

Once the negotiation had taken place in Europe, the British Government would bring that figure into the comprehensive spending review and negotiate how it was distributed—which parts should go to European structural funds, to the Department for Work and Pensions and to the Department for Environment, Food and Rural Affairs. Only after that would any of the bodies have certainty about how much they were going to receive.

In fact, if we accept that the quantum of the UK shared prosperity fund should be negotiated through the comprehensive spending review, people will find themselves with exactly the same certainty under that fund as they would have had if we had continued with European structural funds. There is of course certainty until January 2021, when the current spending period ends, and the Government have been clear that the UK shared prosperity fund will start in 2021, so there will be no gap.

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I have to give way first to the hon. Member for Sheffield Central, who opened the debate.

People talked about crashing out of the European Union with no deal. Frankly, I do not expect that to happen. Nor do I accept that, even if it did happen, it would look like a crash out of the European Union. However, even if we accepted that analysis—I do not—the Treasury has given a guarantee about the current spending period for European structural funds, which means people who are in receipt of them or want to apply for them should carry on as normal, regardless of Brexit.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

The Minister knows we are not talking about the current period of structural funds. We are talking about the next period of structural finds, and about what we would have expected to receive had we remained a member of the European Union. We should receive no less than that. I know the European Commission has said since the publication of the CPMR report that, in part because of the impact on the EU budget as a result of Brexit, it may be that regions can expect to receive not 22% but 8% more, but that is not the circumstance we are debating. We are debating what we would have got had we remained in the European Union. Even if I accepted the Minister’s premise, that would mean £536 million for South Yorkshire. Will he guarantee that?

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The hon. Gentleman needs to make a decision. It is all well and good debating what we would get if we remained in the European Union, but we will not remain in the European Union. He has to decide whose side he is on. There are 17.4 million people who voted for Brexit. Is he on their side, or is he on the side of the cabal of politicians in this House who have sought repeatedly to block Brexit? I know whose side I am on. I am on the side of the hundreds, thousands and millions of people across the north of England who voted for Brexit. They gave this Parliament a clear instruction. To debate what life would be like if we remained in the EU is, frankly, an irrelevance.

I hope I can now move on to address some of the other points—

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

I came to this debate to ask for clarity. If I heard the Minister correctly, it appears we now have clarity. Although he has not told us what will happen to this money in a no-deal situation, he has, if I have understood him correctly, clarified that the Government are giving no guarantees to the projects that currently benefit from structural funds about the next funding period. Is that correct?

Photo of Jake Berry Jake Berry Parliamentary Under-Secretary (Housing, Communities and Local Government), Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I hope the hon. Lady goes back and reads the Hansard report of my opening statement. I have limited time, but she will find that I answered both those questions. Many people—including the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey, who is chuntering and chuckling to himself—have said that the problem is that places do not have certainty. I was simply pointing out that even if we remained in Europe—I sincerely hope we do not—they still would not have the certainty they seek in any event.

I want to mention briefly the comments of the Chair of the Housing, Communities and Local Government Committee, Mr Betts, who said we should start some form of consultation. Although, clearly, the consultation has been delayed, I know he is aware, because it has been said in the House when he has been present, that more than 500 people have already been involved in a consultation with the Government—what we might call a pre-consultation consultation. I have consulted widely with the metro Mayors both about this subject and more widely about the impact of Brexit in places such as South Yorkshire, where the hon. Member for Barnsley Central is the Mayor. We are already involved in detailed discussions with officials in the devolved Administrations about the form and function of the UK shared prosperity fund, of which I am sure the SNP spokesman is aware.

I wish I had time to talk in more detail about the brilliant speeches that were made by many others, but I will move directly to address some of the points made by the Opposition spokesman, the hon. Member for City of Durham, and I am sure many others. The Government have been absolutely clear that we will respect the devolution settlement when it comes to the UK shared prosperity fund. That has not changed, and it will not change. We have been clear that we will consult widely in order to get right the UK shared prosperity fund, which is designed to tackle inequality.

I know that, in many cases, the people who spoke about the benefit of European funds know they are not perfect. The SNP spokesman said he sees a wee European flag on many projects. One of my jobs in Government is to take back the money from projects that forgot to put that wee European flag on them, because it is one of the requirements of the hugely complicated and bureaucratic EU structural funds that if someone does not put that wee European flag on their project, the money, in many cases, has to be recovered. We are consulting on a UK shared prosperity fund to ensure that funding is simplified. We will be consulting shortly, and the quantum of the fund will be set during the comprehensive spending review, in the same way that EU structural funds would have been.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union) 3:59 pm, 26th June 2019

I am sorry that the Minister deliberately misrepresented my intervention. That was a comfortable way of dodging the question before us, which is: will our regions lose out as a result of our departing the European Union? As the hon. Member for Truro and Falmouth highlighted, the Government have given a commitment that they should not. As Derek Thomas highlighted, we are asking not for a handout but for a hand up—strategic investment in our economies—to ensure that we do not lose out. At the third time of asking, in debates and correspondence, the Minister has not answered the question. We will keep pressing.

Motion lapsed (Standing Order No. 10(6)).