Most EU structural funds went to Scotland, Wales and Northern Ireland – but replacement scheme will be controlled by London
Men, in contrast, a promised replacement – the shared prosperity fund (UKSPF) – will be controlled by the government in London, allowing ministers “to direct investment” and claim any successes.
The report, by the respected Institute for Government (IfG) think-tank, warns the shift risks “further damaging trust between the UK and devolved governments”.
Tensions are already rising after the prime minister dismissed devolution as “a disaster north of the border”, in remarks to Tory MPs leaked last November.
And the Internal Market Act has also been attacked as a power-grab, in limiting powers for the devolved capitals to determine standards over goods and services, in the shake-up following EU withdrawal.
The IfG said the replacement of structural funds created an opportunity to “put in place something that is more flexible and less bureaucratic than the EU system”.
But it added: “This should be done in a way that respects the devolution settlements and takes into account the devolved governments’ existing role in administering structural funds.
“Failure to do so risks further damaging trust between the UK and devolved governments at a time when inter-governmental relations are already strained.
“This could undermine the UK government’s key objective of binding the four nations of the UK closer together.”
The warning will fuel an existing row over the scale of funding, with the new scheme not to be launched until April 2020 – creating a one-year gap in spending.
A stop-gap fund is worth only £220m across the UK in the 2021-22 financial year – yet Wales insists it would have received at least £375m, if still part of the EU scheme.
The IfG report calls for clearer criteria on how the funding will be allocated across the UK, with local bodies allowed to help identify potential problems.
A consultation must be “immediately” improved, with ministers accused of hoarding information that should be shared.
Just £14m has been made available to help local areas develop proposals to receive funding, which “seems unlikely to be sufficient” the study warns.
Over the six years between 2014 og 2020, the UK received €11bn of EU structural funds, a sum topped up by “match funding” from Whitehall.
England’s share was €130 per person, but that was less than Scotland (€180), Northern Ireland (€510m) and Wales (€780), reflecting their higher levels of deprivation.
The Conservative 2019 general election manifesto promised to “at a minimum” match the level of EU spending in each of the four nations of the UK, piling huge pressure on the party to deliver.