No guarantees on £800m EU funding for the north east, says government

Around £800m of EU funding earmarked for the north east of England is now in the balance following the Brexit vote, according to local MPs who are lobbying the government to re-think the north east devolution deal in the light of the UK’s decision to quit the EU.

So far the government has rejected MPs’ pleas to re-think the devolution deal despite admitting that the region could lose hundreds of millions of pounds because of the decision to leave the European Union.

Treasury Minister David Gauke has admitted that the government couldn’t currently guarantee that the £800m would be provided but he said that ministers would explain “in the not too distant future” what would happen to the cash.

The new North East Combined Authority was due to take control of EU funding as part of the devolution deal between local council leaders and the government which included the creation of a directly-elected regional mayor, to be elected in May next year.

According to the devolution deal, the new North East Combined Authority will be able to select projects for investment to improve performance and maximise economic impact. Bishop Auckland MP Helen Goodman said that the loss of EU funding would “push a coach and horses through that deal”. Meanwhile South Shields MP Emma Lewell-Buck has called on ministers to draw up a new devolution deal, but the government has rejected this.

Speaking in parliament, local government secretary Sajid Javid said: “There is no need to reconsider any of the deals. These are good deals that have been reached by local leaders and central government, and they will all, in turn, help to boost local growth.”

In questions to Treasury ministers, when Goodman asked whether the government could guarantee that the EU funding would be forthcoming, David Gauke, chief secretary to the Treasury, refused to make any guarantees. “We recognise the need to bring any uncertainty to an end as soon as we possibly can,” said Gauke. 

“In the circumstances it is right that we take a moment before making any guarantees. But let me absolutely clear, as a government we remain committed to doing everything we can do to strengthen the Northern Powerhouse, to ensure that the north of England fulfils its full potential. We will be making an announcement in the not too distant future.”

There are many buildings and projects in the North East which have benefitted directly from EU grants in the past. EU funding has been a key part of the regeneration story of the region and continuing uncertainty over funding will not be welcomed by local politicians or those working in the infrastructure sector.

With George Osborne’s departure from the government, the region has lost the architect and leading promoter of the Northern Powerhouse. As part of Theresa May’s new government team, Andrew Percy has taken over from James Wharton as the man in charge of the north east’s devolution. Already dubbed as the Northern Powerhouse minister, Percy, the MP for Brigg and Goole, has promised to champion the north.

“I hope having served ten years as a local councillor before becoming an MP, I also have something to contribute on the local government front. I’ve always championed our area as a backbencher and now I get to champion the north within government,” Percy said on his appointment.

Meeting earlier this month the North East Combined Authority, which covers County Durham, Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside and Sunderland, decided to put the region’s devolution on hold. Council leaders in the seven authorities have suspended discussions over devolution for the north east while they seek further assurances over funding following the EU referendum result.

Uncertainty, it seems, is set to continue for some time yet.