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The Community Renewal Fund: for better or worse?

03 December 2021

The Government has announced that nearly 500 projects will benefit from grants of between £7,000 and £2.5m from the new Community Renewal Fund. In this article, we discuss some of the obligations which come with a Community Renewal Fund grant and assess whether the Fund actually achieves its aim of moving the country "smoothly away from the EU structural fund programme".  

The £220 million Community Renewal Fund is one of the Government's flagship post-Brexit regeneration funds and therefore news that 477 projects have been chosen to receive grants was, quite rightly, met with excitement and celebration.  

The fund has a bold core objective of helping the UK "move smoothly away from the EU structural fund programme" and contributing to the Government's Levelling Up agenda.  It has also been promoted as a means to evaluate "pilot programmes and test new approaches to support local economic growth" ahead of the launch of the UK Shared Prosperity Fund in April 2022. 

Winners from across the UK

The Secretary of State for Levelling Up, Michael Gove, announced the list of successful projects stating that the UK Government is "levelling up in every corner of the United Kingdom, backing locally-led projects that will make a real difference to communities and help to deliver [on the] net zero commitment".

The lead organisations set to benefit from the Fund are all from the public sector, including Mayoral Combined Authorities, County Councils, Unitary Authorities and Greater London Authorities.  The Fund will be administered and overseen by officials from the Department for Levelling Up, Housing and Communities (the "DLUHC").

Winners are located across the UK.  In all, 477 "locally led projects [are] set to benefit" from the Fund with the majority of the funding being allocated to projects in England (£125.6 million) followed by Wales (£46.9 million), Scotland (£18.4 million) and Northern Ireland (£12.4 million).

More flexible and efficient than EU Funds? 

Does the Community Renewal Fund achieve its objective of helping the UK move smoothly away from EU funds after Brexit? At first glance it is difficult to make this case. The value of the Community Renewal Fund is only £220m, far lower than the allocation under EU Structural and Investment Funds (even noting the Government argument that other funds should be considered as also helping address this loss of funding).  Also the distribution of Community Renewal Fund winners suggests areas which previously had large allocations under the EU regime have fared badly in the selection process.  

Of course that is not the only measure and this is only a first tranche of funding not the complete replacement of EU funds of itself.  The Community Renewal Fund offers the chance to do things differently.  In particular the EU Structural and Investment Funds were notoriously compliance heavy, resulting in significant delay during the application process and holding projects to multiple audits.  The application process for the Community Renewal Fund has been comparatively quick and, although announcements were initially delayed, they were announced weeks later.  Therefore in this regard, the Community Renewal Fund has arguably improved upon the EU model. 

A strong focus on compliance

The Community Renewal Fund grant funding agreement places a sharp focus on compliance, with the public bodies chosen for funding having to actively "ensure that delivery of the Funded Activities does not breach the UK’s international obligations in respect of Subsidies".  Given the light touch approach taken to this issue in the application form, it is perhaps unsurprising that there is an obligation for public bodies awarded funding to ensure that an "independent assessment of the compatibility of each project with the Subsidy Control rules" has been undertaken. 

The 41 page template agreement also holds the public bodies and non-contracting authorities to the same high standards around procurement seen in the European Regional Development Fund and European Social Fund projects.  Again we anticipate that many public bodies will seek legal advice to ensure that their approach abides by the DLUHC rules. 

That said, the monitoring approach is slightly lighter with external auditors checking compliance, rather than the multiple levels of checks in the EU system (Article 127 audits, Commission Audits and the European Court of Auditors).  This should help provide comfort that the funding is perhaps less likely to be subject to clawback many years later.  However, this will only be clear once the funds are spent and audits undertaken, hence the best advice will remain to be vigilant for procurement compliance, both to the spirit and the letter of the relevant requirements imposed.  

Looking ahead to the UK Shared Prosperity Fund

The UK Shared Prosperity Fund is the Government's flagship regeneration fund of the 2020s, replacing EU Funds as the major capital and revenue programme for large scale regeneration projects. The UK Government's "long-term vision is for the Shared Prosperity Fund to help level up and create opportunity across the UK for people and places [which] will at least match EU receipts…reaching [on average] £1.5 billion a year."

The Shared Prosperity Fund is therefore anticipated to replace the outgoing EU structural fund programme from April 2022 and will include:

  • "a place-based portion which will target places most in need across the UK, such as ex-industrial areas, deprived towns and rural and coastal communities"; and
  • "a second portion [for] people most in need through bespoke employment and skills programmes that are tailored to local need[s], thereby [improving] employment outcomes for those in and out of work…who face labour market barriers."

Conclusion 

The nearly 500 projects that have benefited from the £220m Community Renewal Fund have good reason to celebrate.  The funding will in many instances make a meaningful difference to the chosen communities.  That said, the replacement funds do not yet match the amount available from EU Structural and Investment Funds and until such funding (hopefully via the UK Shared Prosperity Fund) is available there is a valid argument that certain regions are disadvantaged by Brexit.  We do however note that there is an excellent opportunity to cherry pick the elements which worked well under the EU Structural and Investment Funds and discard those which did not. Whilst we welcome the lighter touch audit requirements, we would hope further improvements are made ahead of the launch of the successor programme, the UK Shared Prosperity Fund.  

DWF is the leading Public Sector Advisory law firm.  Members of our Public Sector team having worked within the Central Government, Local Government, the European Commission and with private sector bodies on high profile public funding initiatives. This means that we are a safe pair of hands when it comes to managing issues for the public sector and for businesses dealing with the public sector. Feel free to get in touch, if it would be helpful to discuss any of the issues raised in this article or other matters related to public funding.

Further Reading