EU Funding: Northern Ireland

Wednesday 1st February 2023 Westminster Hall

16:30

[Mr Laurence Robertson (in the Chair)]

In a moment, I will call Claire Hanna to move the motion. As is the convention for 30-minute debates, there will not be an opportunity for the hon. Lady to wind up at the end.

[Claire Hanna (Belfast South) (SDLP)]

I beg to move,

That this House has considered replacement of funding from EU programmes in Northern Ireland.

I am grateful to have the opportunity to discuss this issue and, I hope, get clarity for a number of third sector partners and other groups in Northern Ireland and, potentially, areas of opportunity for them. It feels like a very long time ago, but during the EU referendum campaign there were assurances that Northern Ireland would not lose out, doing well, as we did, out of the EU funds, which were based on need. We know that the phrase “take back control” resonated with many people, but it appears to mean taking back control from some of the funds that have traditionally underpinned progress in Northern Ireland and from local decision makers, and handing it directly to London, without any sense of a strategy that local groups can try to support.

In March last year, in the early stages of the community renewal fund, I had a Westminster Hall debate, in which various eyebrow-raising allocations from that scheme were addressed. I am afraid that several of the reservations that people had about process, strategy, co-ordination and transparency have been borne out. It is worth saying that these concerns are not held just by groups that are applying for funding or by my party. The Northern Ireland Executive, as was, adopted the position that the best delivery mechanism for the shared prosperity fund would be via existing structures. Invest Northern Ireland, our economy arm, was very clear that it believed that the funding would be best delivered in conjunction with the programme for government. And the think-tank Pivotal and other respected commentators and business voices made the same point. People are up for change. They understand that it is a reality, and they roll with the punches. But it has to feel transparent, and there has to be a sense of fairness and coherence and that there is more to these allocations than just the whim of Ministers in London.

As I said, Northern Ireland was a net beneficiary in the EU. That is not a secret and is not anything to be ashamed of. Those allocations were made on the basis of need and, in many cases, were a counterweight to the obvious challenges that Northern Ireland faced and to decades of capital underinvestment. That is not just a historical issue: in 2021, the average capital spend per head in Northern Ireland was £1,325, compared with a UK average of £1,407. Of course, all that has contributed to a failure to attract quality investment and foreign direct investment, and decent jobs. That is reflected in our rates of economically inactive people, which are substantially higher than those in other regions.

The founder of our party, John Hume, said many times that the best peace process is a job: the best way to enable people to have hope in their futures and see beyond the things that have divided us in our region is to have meaningful employment—a reason to stay, to get up in the morning and to work together. Those were the opportunities that we saw in European participation, and that is why we continue to work so hard to protect our access to political and economic structures. Funds beyond the block grant, the EU funding as was and the promised successor funds, have been billed and are needed as additional, and they should be an opportunity to realise some of those ambitions, to remove barriers to employment and, in particular at the moment, to allow people to take advantage of the opportunities that the current very tight labour market offers. Unfortunately, that is not what we are getting.

Time is obviously short, so I want to focus on the loss of the European social fund and the European regional development fund and on the replacement, the SPF, and to touch on the levelling-up fund. It is worth clarifying that, as well as those assurances back in 2016, during the referendum campaign, the Conservative party manifesto in 2019 committed to replacing the ESF in its entirety. Northern Ireland got an average of £65 million a year from the ESF and ERDF in the period from 2014 to 2020, with Northern Ireland Departments having the power to manage that in line with UK strategy. That allowed them to align projects that they funded with regional and local strategies, ensuring complementarity and targeted outcomes.

The scenario now is that the UK Government and Northern Ireland Departments are essentially two players on the same pitch, in the same space, delivering the same sorts of projects. That has a built-in inefficiency and means that the results are less than the sum of the parts. That overlapping inevitably applies to monitoring, too. How are we supposed to measure the impact of different interventions in areas like skills if the scheme is only one part of an equation in which all the other Departments are trying to do similar things? It seems that it will be impossible to disaggregate that. The governance is sub-par and the quantum is less, too.

By comparison with the ESF and the ERDF averages, the allocation for the shared prosperity fund in Northern Ireland is £127 million over three years, so we are losing on average £23 million per year from that scheme. That has created this massive gap for funded groups, many of whom just cannot hold on. It is not like in the civil service; people have to be put on protected notice or face closure. Again, there is nothing co-ordinated about any of this. It is not even the survival of the fittest—that the strongest and best organisations will continue—because it is largely the luck of the draw on where organisations are in their funding cycle. Again, this is one more downside of the abandonment of devolution. Engaged and responsive local Ministers could monitor the situation and be flexible and creative with in-year allocation, match funding and bridge funding. They could, in short, protect us from the deficit created by Brexit and this devolution override.

I want to touch on how all this affects specific groups. The NOW Group is a highly regarded project that works across Belfast and further afield, supporting people who are economically inactive because of a disability get into employment. It has 17 years of ESF funding and runs high-profile facilities. If anyone has been in the café in Belfast City Hall, they will have seen NOW Group workers. They help hundreds of people with disabilities into all sorts of sectors, including leading corporates and the knowledge sector. It is a safe bet that any credible funder will keep backing a project like this, but the assurances are just not there. Reserves cannot last forever and, of course, smaller organisations will not have such reserves. In that project, 52 people are at risk of being put on notice and another 800 people with disabilities will be left with no service.

Mencap in south Belfast and far beyond has run ESF projects on social inclusion for decades and was well on track to exceed the target set by ESF of supporting 13,000 people by 2023. It is concerned by how limited the scope of SPF is compared to what they were able to do under ESF. The East Belfast Mission described well what is at stake:

“Our programmes have a long track record of being more successful than government initiatives”.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for bringing the debate forward. I work with the East Belfast Mission regularly in my office, so I understand its work and its success rate from the people it helps in my constituency. The mission tells me, as I told the hon. Lady, that without this funding stream it will not be able to continue to have the success stories it has and that that will hurt individuals and families. Like the hon. Lady, I look to the Minister for some assurance that the funding it has received over the past few years can be continued. With that, we can help more of our people over the long term.

[Claire Hanna]

The mission itself captured that. It talks about its staff being based in local communities with lived experience that helps them understand the specific difficulties people face. It says:

“Many of the people we work with have faced societal and generational barriers to employment, through illness, trauma or other issues. Our projects help break the cycle and raise up our host communities.”

It says that if it loses the fund, it will not be able to provide certainty and will

“lose irreplaceable experience which has been built up over decades.”

This is not just a Belfast issue by any stretch of the imagination. Dozens of projects across Northern Ireland, particularly those supporting younger people, women and minorities, are at risk. First Steps Women’s Centre is a vital part of the community sector in Mid Ulster, working to integrate new and minority ethnic communities, providing crèche facilities to support women back into work and signposting people to other partners who can help them with the multitude of issues they may face.

I want to specifically ask the Minister how the Department ensures that the projects it is funding are aligned with Northern Ireland’s democratically agreed priorities—agreed by the Executive with all five parties—absent a formal role for those Departments. How do the Government propose that groups, such as those I have described, that are facing this essentially bureaucratic gap are supposed to address it? If the gap is not going to be addressed, what are the people who use those services supposed to do instead?

I want to address the widespread concerns about the levelling-up fund. It is a mighty slogan—who does not want to see things levelled up?—but unfortunately, like a lot of slogans of the last few years, it struggles a bit when it comes into contact with implementation. People perceive it as pitting communities against one another, with distant Ministers picking winners seemingly at random. Again, the initiative started badly for us. The initial allocations fell short of the promised 3% of the UK pot. That target was laid out in the strategy document, which seemed to acknowledge the traditional capital shortfall in Northern Ireland but has failed to address it. The fund was initially conceived as a scheme for England with a Barnett consequential, but it has evolved to be more centralised than was promised.

The same paper highlighted the issues that there would be given the fact that local governance structures in Northern Ireland are different from those in Britain, but it has failed to develop a more collaborative approach to mitigate those issues. The same overlap and duplication issues with the SPF pertain here, despite requests from me and others to consider the north-south dimension and co-ordination on this issue. That misses real opportunity to maximise value by co-ordinating with the Irish Government, who have, for example, a £400 million capital fund in the Shared Island unit.

Lessons from the first round of levelling up, which were very well telegraphed, do not appear to have been taken on board for round two. Although the projects that got the nod last week are no doubt good news for the relevant communities, nobody has any clue about what the winning ingredients in those bids were, or how others might have similar success in future applications. We are advised that the Northern Ireland bids were assessed against three of the four criteria set out in the prospectus, namely strategic fit to the economic case and deliverability.

The winning bids are in the public domain, but the other applicants are not. In the interests of transparency, reassurance and learning for future schemes, will the Minister therefore share details of the original Northern Ireland shortlist of projects and their ranking, as presented after the assessors’ moderation meeting? Will she also advise what, if any, additional considerations informed the Minister’s decision? Can she clarify whether the funding decisions were taken by the Minister alone? It has been suggested by some applicants—I have struggled to confirm this—that the gateway pass mark that was used in England, Scotland and Wales was 75%, and that that was dropped, after applications were submitted, to 57%. I hope that the Minister can confirm whether that is the case.

[Jim Shannon]

The hon. Lady is absolutely right. In my constituency of Strangford, an application was put in for the Whitespots park, an environmental scheme at Conlig. It is shovel ready—the boys could start it tomorrow —but we have missed out on two occasions. She is expressing her concerns over what is happening in her constituency; I echo those and support her in what she says.

[Claire Hanna]

That again illustrates the confusion that people have about what was selected. Will the Minister confirm whether any criteria additional to those specified were applied? Were they applied consistently to all projects? Will the transparent list that she will publish include any changes in ranking that occurred as a result of new criteria?

Again—for future learning—it was announced that there will be a round three of levelling-up funding. An enormous amount of work goes into the applications, including, as people will know, many thousands of pounds on proposals and engaging the strategy board. Will the Department therefore develop a reserve list from round two applications? That could prevent some groups from having to run up the same professional fees and pouring in the same time, particularly when they are being left in the dark about the criteria. Further, can the Minister clarify what consultation was held with the Northern Ireland Departments and other funding bodies to address the overlap in applications under levelling up and other schemes? Finally, does the Minister think that the spread of applications in Northern Ireland is appropriate?

A lot of these issues are very technical, but they are vital to achieving the things that we all want to achieve for Northern Ireland and for progress. They are also vital to people having some faith in this progress—that they have not had their eye wiped, essentially, by funds being promised, removed and not adequately replaced. That is not the case at the moment. People see this as a net loss from what we enjoyed before Brexit, and that should concern the Department.

[Mr Laurence Robertson (in the Chair)]

We have until four minutes past 5, but it is not essential to take up all the time.

16:44

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)]

It is a pleasure to serve under your chairmanship today, Mr Robertson. I sincerely thank the hon. Member for Belfast South (Claire Hanna) for securing this important debate, and for the constructive way in which she has engaged with the Department and I on the UK shared prosperity fund. I know that she is and has long been a committed champion for the many voluntary groups, businesses and communities in her constituency that have previously benefited from, if not relied heavily on, EU funding. She has been a keen advocate to ensure that that support continues under the UK shared prosperity fund.

The hon. Member mentioned the NOW Group, and I am pleased that she did. As she knows, the NOW Group has been in receipt of ESF funding, and has also recently accessed the community renewal fund as well. We have worked with Maeve Monaghan, the CEO of the NOW Group, to help to design the UK shared prosperity fund planning as part of that partnership group. Hopefully her feedback there has definitely been helpful, and she feels that it has been taken on board as we have designed the programme.

In my response, I hope I will be able to provide some clarity on the next steps regarding the roll-out of the UKSPF in Northern Ireland; the steps we have taken so far to engage charities and community groups currently in receipt of Government support; and the progress we are making in our ambition to level up communities in Northern Ireland and, indeed, across the whole of the United Kingdom. I will make reference to the levelling-up fund and address as many of the questions she raised as I can. I am not sure my hand was working fast enough to write them all down, but if I have missed any I will follow up in writing following the debate.

As hon. Members will know, we published the prospectus for the UK shared prosperity fund back in April last year. It sets out how the fund and its £2.6 billion of funding will work on the ground. Effectively, it will replace the European regional development fund and the European social fund with a simpler, smoother and less bureaucratic approach to supporting communities right across the UK. We all know that bureaucracy is something that community groups have raised with us, so as a Government we have very much taken that on board.

In that sense, it is fair to say that the UKSPF is a central pillar of the Government’s levelling-up agenda and our ambition to bring transformative investment to places that have gone overlooked by successive Administrations for too long. We want to use the funding to support people in skills, helping the unemployed move into high-skilled, high-wage jobs—I know that is something specifically mentioned by the hon. Member for Belfast South in her speech. We also want to use the funding to help the growth of local business and invest in communities and places to help to build pride in place. We know that having pride in the place that someone lives and has grown up in is a crucial part of the wider levelling-up agenda.

For Northern Ireland, that means £126.8 million of new funding for local investment and local priorities up to March 2025. Crucially, that fulfils the promise we made that the UKSPF would match the funding allocated to Northern Ireland through EU structural funds.

I know we have set out how the approach will work in some detail already, both in the prospectus and previous spending rounds, but I will quickly recap it for everyone here. The UK shared prosperity fund is set to ramp up over the coming years, so that total domestic UK-wide funding of the ERDF, ESF and UKSPF will at least match receipts from EU structural funds. It will reach £1.5 billion per year across the UK in 2024-25, when Northern Ireland will receive £74 million. It is important to note that before that date, when ERDF and ESF funding is still being delivered—albeit in smaller amounts—the UK shared prosperity fund tapers in for Northern Ireland and in England, Scotland and Wales too.

I need to put on the record that the Government fully recognise the need for the funding to be properly tailored to the projects and organisations that add real economic and social value in Northern Ireland. The hon. Member for Belfast South mentioned some of the projects in her own constituency, and I am also grateful to the hon. Member for Strangford (Jim Shannon) for talking about how one of those organisations, the NOW Group, has helped his own constituents. We all know that a good, local charitable organisation can do wonders for our communities, and that is specifically why we are so keen to support them through this funding.

To ensure that we tailored the funding appropriately, we ran a comprehensive programme of workshops and engagement with Northern Ireland partners last year. That included businesses, voluntary and community groups and councils, so that we could collect the widest possible views on the priorities for the fund and how it could best work in concert with other opportunities in Northern Ireland. We also established a partnership group comprised of all the organisations I just mentioned, along with the higher education sector and the Northern Ireland Office, to advise us on how the fund could be best utilised. We have built further on that engagement since then.

Throughout the process, we have offered the Northern Ireland Departments the opportunity to formally participate in shaping the fund, but, sadly, that has not proven possible.

[Claire Hanna]

Does the Minister know why that has not proven possible? It is because under section 75 of the Northern Ireland Act 1998, which is essentially the constitution of Northern Ireland, the Department is not equality-screened—unlike the Northern Ireland Office and His Majesty’s Revenue and Customs. It is not able to legally operate and to run equality impact assessments, which are the law in Northern Ireland. That problem was telegraphed, but the Department has not taken adequate steps to address it. That is why those Departments have not been able to be involved.

[Dehenna Davison]

I will follow up in writing on that point. Having spoken to Sue Gray, one of our super officials, who has been outstanding in her engagement, I know how closely officials have been working with the Northern Ireland Finance, Economy and Communities Departments, maintaining regular contact as our plan has developed. That engagement continues.

Where have we got to? Drawing on insights from the partnership group, and from wider engagement, we published an investment plan just before Christmas last year. That sets out how Northern Ireland’s allocation will be spent and the impact we expect it to have. It supports the leading needs and opportunities in Northern Ireland, addressing high levels of economic inactivity, promoting entrepreneurship and innovation and strengthening pride in place. I am pleased to say that the plan has been given the seal of approval by our partners on the ground and is now being implemented.

Our first competition, for £42 million, which is roughly a third of the total UK SPF allocation, is focused on helping more economically inactive people into work. Many MPs, Assembly Members and other stakeholders have rightly made the case for prioritising this funding and the voluntary and community organisations that deliver it. I am sure the hon. Member for Belfast South welcomes this provision and the benefits it will bring not just to the organisations that receive it and the individuals they will help, but to Northern Ireland’s wider economy.

We are also working with councils in Northern Ireland to bring forward early communities and place projects, as well as a joined-up service for entrepreneurs seeking to start a business and create jobs. Pending further discussion with the Northern Ireland civil service, we may also commission Northern Ireland Executive Departments, or their arm’s length bodies, in the design and delivery of the fund. I am sure hon. Members will join me in encouraging their fullest involvement.

Part of this work is about ensuring that we mitigate issues for organisations as the European programmes we have discussed draw to a close. That issue has been raised with me by organisations not just in Northern Ireland but all around the UK; it is something that our Department and Ministers in other Departments have been incredibly focused on. With that in mind, we have been able to reprofile the SPF by moving funding from 2022-23 to 2023-24, so that it betters reflects funding needs. I know that this is an issue that my predecessors were asked to consider by many partners in Northern Ireland, and I am pleased we have been able make real progress in this area. It demonstrates something crucial, which is that SPF is not a fixed fund; it can and should flex to meet the evolving needs of the people of Northern Ireland—and it has been designed to do so.

It goes without saying that we will continue to engage with partners, including the Northern Ireland Departments and hon. Members on both sides of this House, on the design and operation of the fund, so that it delivers for businesses and communities in Northern Ireland and throughout the Union.

If we take a step back from the UK SPF to talk about other funding, which the hon. Member for Belfast South did with regards to the levelling-up fund, Members will know that Northern Ireland Departments have always provided funding alongside the European regional development fund and the European social fund. While we recognise the challenging budget circumstances Northern Ireland faces, the funding provided by UK SPF is only ever part of the answer. It is right that the Northern Ireland Departments continue to invest in provision that they have previously supported; that is something I think all of us would encourage.

The Government also want to play their part, making sure we are contributing towards building a brighter Northern Ireland. That is why, alongside the UK shared prosperity fund, we have used a wide range of other funds to spur growth, regeneration and investment. Those include: the community renewal fund, which backs 30 locally led, innovative projects to the value of £12 million, and the community ownership fund, which has so far supported six local communities in Northern Ireland to take ownership of assets at risk of loss, with a spend of £1.3 million. There are other important schemes and investments, such as £617 million for city and growth deals covering every part of Northern Ireland, and our new deal for Northern Ireland providing £400 million to help boost economic growth, invest in infrastructure and increase competitiveness. We are also investing £730 million into the Peace Plus programme, ensuring a total budget of almost £1 billion—the biggest peace programme to date. Through that package of investment, we will achieve significant, visible and tangible improvements to the places where people work and live.

[Jim Shannon]

The Minister mentioned £400 million. I do not expect an answer today—it might not be possible—but how much of the new deal money has been used or set aside?

[Dehenna Davison]

I do not have an answer to hand, but I will commit to follow that up and provide that information.

I will touch on the levelling-up fund, because we do not have much time left. Questions were raised about the shortlist, rankings and considerations. Much of the information around the considerations has been set out in the technical note that has been published. That will provide some information, and I am happy to provide a link.

The hon. Member for Belfast South asked about consistent application. Ministers were keen to ensure there was consistent application of the decision-making framework to ensure that they were not cherry-picking the winners. It was designed to reflect the scores and value of the projects that were selected. She also asked whether the decision was made by me alone, as a Minister. She knows that the fund is a joint fund across multiple Departments, ergo that was not the case. Various Departments are involved in the decision-making process.

The hon. Lady asked about round 3 of the levelling-up fund. We have indeed committed to a round 3, but I am not yet able to provide more details about that fund, because the conversations are ongoing and decisions are yet to be made. However, as soon as we have made the decisions and announced how round 3 will work, I will share that information with her.

I want to conclude by saying a huge thank you to the hon. Lady for securing this important debate. I hope this is the start of more constructive engagement between us as we both fight for what is best for the people of Northern Ireland.

[Claire Hanna]

I have been kept right on the Standing Orders, but I thought I would get back in. I appreciate the Minister’s approach and her enthusiasm. As I said, I do not doubt that the projects and other things that are being funded are laudable, but they are not additional to what we had. They are less than what we had, which was less again than what we needed. They are not equality-screened in Northern Ireland’s traditional way, so people do not have confidence in that regard. Ultimately, the fundamental question is: who decides, and on what basis? Frankly, I am none the wiser after this discussion, and that is what is concerning people.

Even if the shortlisting is not published, we all know the 10 projects that got the results. However, there are concerns that the published criteria were not applied in a very direct way overall, as the Minister will be aware. I know these things are not always straightforward, but the metrics are clear—they are in the public domain. I am sure most Members have poked around in the Bloomberg data about different constituencies and how they are performing relative to 2019 and relative to one another, and that will show that, in most cases, Northern Ireland constituencies continue to fall behind, including those that did not receive any levelling-up funding, while constituencies that were ahead are staying ahead. I am none the wiser, and I hope we can have a follow-up meeting, but it is not just a case of me being satisfied about transparency; it is also about those who have applied and invested hours and thousands of pounds in producing good applications. We are no more confident that detached Ministers’ have not decided.

[Dehenna Davison]

I am grateful to the hon. Lady for her intervention. I should have said that, as part of my package on the levelling-up fund, full written feedback will be provided to all applicants, which I hope will provide some guidance on where bids perhaps fell short. There is also the option of follow-up meetings with officials from my Department to go through that in more detail, which I hope will satisfy some of the concerns around the scoring.

I will quickly wrap up now. Again, I thank the hon. Lady for her commitment to helping to improve the prosperity of not only her constituents but the whole of Northern Ireland. As the Minister for Levelling Up, I am committed to that. If all parts of the UK are not firing on all cylinders, the UK as a whole is suffering. Ultimately, we need to make sure that every region and every community is levelled up and can benefit from the maximum opportunities and value of that community for the sake of our entire nation.

Question put and agreed to.