How the new fund leaves universities feeling short-changed

One of the repeated promises of the Brexit campaign was that no region of the UK that was in receipt of EU development funding would be worse off as a result of quitting the EU.

As I’ve reported in the news pages over the past year, that pledge has not been met, despite repeated declarations from the Levelling Up department that the £2.6bn UK Shared Prosperity Fund (UKSPF) matches the EU funds. It doesn’t. 

England outside Cornwall is nearly £80mn worse off in absolute terms, but when you take into account UK areas that would now qualify for extra support had we remained in the EU and accessed subsequent funding rounds, that figure would arguably be far higher. 

Wales gets £585mn over three years in the UKSPF scheme, but reckons that it will be £1bn worse off than if the UK had stayed in the EU. The Scottish government says its allocation of £212mn leaves it £151mn short in 2023 compared with EU membership, when taking into account all EU funding streams.

I don’t want to waste an entire bulletin running through the row about the quantum of cash (wonks can see the arguments and detail here), because there is a more interesting and pressing story to report about the way the UKSPF money is being spent and administered.

The first thing to say is that the UKSPF, even if it did match the value of EU funding, is not a continuity fund, both administratively and in terms of its intention and outlook. It’s a new departure. 

As the name suggests, the European Structural and Investment Fund (ESIF) was “structural” in nature, and was administered by a centralised and bureaucratic process which, while often criticised as exhausting, did deliver big, strategic cross-regional projects over a six-year period.

The UKSPF is, quite deliberately, a far more atomised affair in which the money available over a three-year period is divided up and parcelled out to local authorities for stakeholders — business groups, parish councils, universities, charities — to bid for often quite small projects. This is justified in the name of “place-making” and empowering local democracy. 

As such, the UKSPF in its prospectus is an explicit part of the levelling up agenda which, for all its highfalutin ambitions, in practical terms often comes down to sprinkling goodies across constituencies so MPs can have something to put on their leaflets come election day. That certainly seems to be how MPs regard it.

Which brings us to the continuity question. What happens to those long-term projects that were in receipt of EU structural funding which is, only now, finally starting to run out? 

(Only now, because while the last six-year EU funding round concluded in 2020, it keeps paying until previously agreed projects are completed. Most will therefore finish drawing down funds in the middle of this year. One of the UK government’s tricks was to count this as ‘UK’ money when it was arguing the funds were equal. Everyone else counted it as EU money, but we digress.)

EU-era projects that are now pondering a bleak future include over 150 schemes run by UK universities. They stimulate innovation and do outreach into small businesses in less well-off areas to drive skills and investment. 

Last October Universities UK and GuildHE, which represent higher and further education, wrote to the government to warn that lots of these projects, many of which had been built up over years, were at risk of shutting down if they weren’t allocated UKSPF funds or money from other agencies like UK Research and Innovation (UKRI).

They listed impacted projects all over the country including Gloucester, Cardiff, Swansea, Manchester and Sheffield and warned that unless the transition from EU funding was better supported the UK risked losing “hundreds of jobs, huge talent, and local innovation and skills capability”.

But since then, no solution has been found. This week the vice-chancellor of Swansea university Paul Boyle warned that 60 large-scale research projects in Wales are at imminent risk, including 240 jobs at the university.

Although in theory the university can bid into the local authorities for UKSPF funds, in practice, Boyle wrote, “the mechanism for distributing these funds locally makes securing funding for large-scale collaboration at cross-regional and pan-Wales scale almost impossible”.

Dave Worsley, the head of materials and science engineering at Swansea, has been heavily involved in several EU-funded projects in Wales designed to drive decarbonisation in industries like steel; he says the potential waste after so much investment seems completely baffling.

“You think you’ve built a strategic army to deliver just transition to net zero and they’re all marching in the same direction, but now suddenly the mission is entirely different and the teams could disperse,” he tells me. “At which point all momentum is lost just at the moment when we have the potential to accelerate change.” 

Chris Husbands, vice-chancellor at Sheffield Hallam University which leads the Sheffield Innovation Programme (SIP) to stimulate innovation in small businesses, says there isn’t yet a comprehensive solution to the problem.

Part of the problem is one of Whitehall territoriality. Innovation and business development is run by the Business department (BEIS), while UKSPF is managed by the Levelling Up (DLUHC) department which doesn’t necessarily share BEIS’s agenda.

Husbands estimates there is £2mn of funding at risk for Sheffield and says the university is trying to see what can be done with local and mayoral authorities, but, as yet, there is no solution. He adds that universities did suggest to the government in Westminster that they should be included as budget holders, like local councils, but it became clear that this didn’t fit the new post-Brexit agenda. 

On one level, that’s fine. Brexit means Brexit and the newly sovereign government is free to spend its money as it sees fit — but it still begs the question about what happens to the programmes which play a role in many other key agendas, including innovation, productivity and net zero?

Universities UK is asking for “bridging funding” so that other plans could be made. It estimates that ringfencing £170mn, or 6 per cent of the UKSPF, would fund the continuation of the 166 university-led research and innovation projects until the end of the current round of the UKSPF fund which concludes in 2024-5.

But for now, the government seems unmoved. I asked the Levelling Up department about the Swansea situation and was given the usual line that the “UK Shared Prosperity Fund will match EU funding” (as I said, it won’t) but beyond that was referred back to the local authorities.

A department spokesperson added: “Wales will receive £585mn in funding from the UKSPF and councils are responsible for deciding what projects to fund through the UKSPF in consultation with local stakeholders.”

So unless something changes, I think that roughly translates from the Whitehallese as ‘there’s no more money, you’ll have to scrap for it, along with everyone else’.

Brexit in numbers

Today’s chart comes via the Eurostar and Eurotunnel operator Getlink, which published its results today. They show that while operations have bounced back from the pandemic years of 2020 and 2021, passenger and truck numbers are still below 2019 levels.

That was the year before the pandemic struck (obviously curtailing leisure and business travel) and before Brexit brought an end to free movement of people. Passengers now require time-consuming stamps to be applied to their passports.

As the Eurostar boss Gwendoline Cazenave spelt out in an interview with my colleague Philip Georgiadis this week, the extra delays mean that she’s been forced to run trains more than a third empty at peak times to accommodate the extra processing times at the border. 

“Customers [came] back overnight, but the system does not work anymore,” said Cazenave, who took over at Eurostar in October.

More trouble is coming down the tracks in the shape of the EU’s repeatedly delayed EU Entry/Exit system that will require biometric data to be submitted at the border. 

Eurostar says that the right technology will be essential if it wants to keep building back to full capacity and it is working with all sides to devise a system that works. Anyone who has travelled on the Eurostar of late will wish them godspeed.