Brexit and UK Shared Prosperity Fund: Impact on extreme poverty and human rights

On the 7th November I met with Philip Alston, the UN special rapporteur on extreme poverty and human rights who was visiting the UK to seek evidence on poverty, inequality and the effect of austerity on local government funding.  Alongside our meeting, Philip Alston also met with civil society groups, academics, public authorities and people living in poverty and dealing with the consequences of austerity.

Read more about the official UN visit and why the North East was chosen in The Conversation article by Koldo Casla of Just Fair and related coverage from the BBC and The Guardian.

I spoke to Philip and his team about the likely impacts of Brexit on the region’s people and places and what we need to see in the UK Shared Prosperity Fund (UK SPF, the successor programme to European Funding) to address the needs of ‘left behind’ places and under-represented groups.

Here is what I covered:

The referendum result is believed by many to be in part an expression of a powerlessness, dissatisfaction and a lack of control.  The strongest support for Leave was registered in places outside of the UK’s major cities that have struggled to adjust to economic change in recent decades.  There was a direct correlation between the vote to Leave and those places who have been ‘left behind’ economically, where communities face higher levels of unemployment, low wages and insecure employment.

Whatever the Brexit deal outcome, research is indicating that there will be significant economic consequences across the UK, with different regions being impacted at different levels[1].  As a general trend, the very areas of the UK which voted Leave in June 2016 are likely to be the ones hardest hit by Brexit and the North East region is likely to be the worst affected due to higher levels of trading and exporting to the EU than other areas.  In a No Deal scenario one government study[2] suggests that the North East would face a potential 16% decrease in regional GVA which could mean the loss of 250,000 jobs in the region.

For a region that already experiences high levels of poverty, unemployment, lower skills levels and greater levels of insecure and low paid employment, it is highly likely that Brexit will have a significant negative impact on people and communities already facing high levels of hardship.  In addition, Brexit will follow 10 years of austerity and welfare reform in the UK, with the North East having been disproportionately affected by public sector funding cuts[3].  With higher levels of existing deprivation, worsened by 10 years of austerity; the multiple impacts of Brexit including rising unemployment, rising living costs and reducing wage levels are likely to increase poverty amongst already very vulnerable people. 

The reaction amongst those communities who voted to ‘take back control’ in the hope of seeing tangible improvements to their prospects and places, who in fact are likely to be left worse off and further behind because of Brexit, is a real concern.  Levels of resentment, dissatisfaction and distrust of government and politicians are likely to rise amongst these communities.  Therefore there is an urgent and pressing need for domestic policy development to address the economic decline of such places and communities and ensure that organisations are adequately resourced to support individuals and communities facing the sharp end of the impacts of Brexit.  In addition, enabling these communities to have a voice and greater control of what happens in and for their neighbourhoods, would address their desire to ‘take back control’.

Therefore the development of the UK Shared Prosperity Fund to replace current EU Structural Funds and UK local growth funding is a key opportunity to address those places and people, and under-represented groups who are already ‘left behind’ by the economic growth experienced elsewhere in the UK and are likely to be most affected by Brexit, in whatever shape it takes.

The Government committed to the UK Shared Prosperity Fund in its election manifesto of 2017 and again in the Industrial Strategy as part of its commitment to inclusive growth. The UKSPF could be an opportunity to tackle injustice and the barriers that prevent disadvantaged and under-represented groups from reaching their potential and limit productivity and growth.

However, as the Equality & Diversity Forum[4] have suggested this opportunity can only be achieved if:

  • there is an explicit, strategic focus on equality and social inclusion at a national level, in each of the devolved nations, and in local industrial strategies; and
  • the SPF provides the same level of investment in education, training and employment support for disadvantaged individuals and groups as under the European Social Fund (ESF).  You could argue that in light of the likely impacts of Brexit, more investment is needed.

There is a clear business case for greater inclusivity in the workforce which would support economic growth and increased productivity and address equality and human rights issues currently facing many under-represented groups including those with disabilities or long-term health conditions, BAME and women (especially those with caring responsibilities).

Current EU funding programmes have a strong focus on equality and diversity with mandatory requirements ensuring inclusion of those groups facing discrimination and disadvantage along with cross cutting themes on equality and gender mainstreaming, fund specific priorities and specific targets for under-represented groups.  The UK Shared Prosperity Fund must retain the same level of strategic focus on, and investment in equality as the funds it is replacing.

The Joseph Rowntree Foundation (JRF) have recently published research[5] making the case for the UK Shared Prosperity Fund to focus its support in ‘left behind’ and ‘less prosperous’ places.  The research sets out that LEP area allocations based on GVA, doesn’t create a fine grain indicator of more local level areas such as towns and rural districts that are less prosperous.  Currently the North East and Tees Valley LEP areas receive the highest per head investment from ERDF and ESF funds after Cornwall, but within those LEP areas are the most disadvantaged places being targeted?  JRF suggest a new methodology based on average earnings and levels of employment, as these two indicators are what really matter for the living standards of low income households.  Using these two indicators at a local authority, rather than LEP level enables a much more meaningful and targeted approach, with six of the 12 local authorities in the North East region appearing in the bottom 40 local authorities across the UK. 

As we leave the EU, the UK Shared Prosperity Fund must be designed to deliver a new deal for people living in left-behind places and those groups most excluded from economic activity, enabling them access to skills provision, employment and higher earnings.  To enable the VCSE sector, who are best placed to support those communities, to access the fund we must also strive to simplify bureaucracy and remove other barriers by ensuring a wide range of funding mechanisms. 

Finally, in order to truly meet the needs of local places, the involvement of local partners including the VCSE sector, is key alongside a single fund that combines economic and social policy interventions, and enables flexibility and innovation to ensure that all places and all people benefit from it.

I hope that the short time I spent with Philip and his team highlighted the potentially severe impacts that Brexit might have on people and communities already facing high levels of disadvantage and dissatisfaction.  I also hope that they went away understanding the importance of getting the design of the UK Shared Prosperity Fund right in order to address the economic imbalances amongst places and groups of people. 

The level of financial resource needs to adequately replace the EU Structural Funds that the UKSPF is replacing but that needs to go alongside the commitment to equality and social inclusion that runs through EU funding programmes in order to address the growing divides that we see in the UK.