Do you believe in life after leave? The EU Social Fund and welfare conditionality

August 3, 2016     Leave a Comment

In the aftermath of the EU referendum result, Jed Meers from the University of York argues that the vote’s potential implications on the domestic welfare system should not be ignored.

Before the EU referendum, Iain Duncan Smith – then the Secretary of State for Work and Pensions – clarified his priorities: “my big passion is welfare reform, but Europe goes over everything.” Though intended at the time to indicate the weighting of his personal opinion, this statement aptly describes post-Brexit manoeuvres. As the unpicking commences (or perhaps more accurately given concerns over Article 50, plans in advance of it) it is clear that our membership of the EU is indeed all over everything, welfare reform included.

Most discussion of the potential impact on social security has clustered around three key issues. First, anticipated changes to the principles of the free movement of people and associated provisions handling EU member state social security coordination. Second, analysis which links lower forecasted economic growth with associated tax rises and spending reductions, with the implication that some of this money may be found through further ‘austerity’ induced welfare reforms. Third, concerns about current EU protections within the European Social Charter and elsewhere no longer providing a ‘backstop’ to the potential lowering of standards in the UK, particularly in the field of labour market protections, with associated knock-on effects for the social security system.

There is little material which looks at the potential for Brexit to impact on domestic welfare arrangements. Perhaps this is due to its relative insularity in comparison to other areas. A member state’s social security system, providing it is administered in a non-discriminatory manner, is not mandated by EU law; member states can decide who is insured, the conditions of entry, and what benefits are granted.

It is important to emphasise, however, that despite this apparent separation, domestic arrangements on social security do not escape the effects of Brexit. Leaving the EU has the potential to damage ongoing work, particularly by local authorities and third-sector organisations, if adequate safeguards are not put into place.

This short blog highlights one aspect of this: our access to the European Social Fund (ESF). This is an EU-wide pot which makes separate contributions to member states, worth €3.5billion* to the UK across the current 2014-2020 funding period (and more if including associated match-funding arrangements). It is the strand of the European structural and investment funds focused on improving employment opportunities and social inclusion. This jolly cartoon by the European Commission outlines its overall aims:

The UK’s pot has been allocated to ‘reduce inactivity among young people and the long-term unemployed,’ with awards already having been made to a range of local organisations, including a number of local authorities. Herein lies the problem: in a context of a ‘cut-and-devolve’ approach to welfare reform, the activities the ESF is supporting are not simply supplementary projects offering one-off support. Many play an important role in the mitigation of current welfare reforms and some even directly contribute to the supplementation of UK social security provision.

A couple of examples of currently funded projects can serve to illustrate this. Oxford City Council’s ESF funded project seeks to expand the function of its welfare support team into the private rented sector, particularly as a means to support those affected by the so-called ‘benefit cap’ to address their shortfall in housing benefit. Importantly, EU funds are supporting dedicated staff to work on the provision of discretionary housing payments to top up benefit provision and for caseworkers to assist and signpost struggling tenants to debt advice, budgeting support or other referral agencies. Pertinently, their report on the pilot project notes: “In many cases, support services we wanted to refer customers to were already funded by the ESF.”

Another example is Lewisham Council. It has used ESF grant money to launch an ‘Understanding the Language of Work’ programme, which provides language tuition and targeted work support to those affected by welfare reforms who struggle with their English language skills. Within Lewisham, approximately 18% of residents “do not speak English well or at all,” with a lack of proficiency associated with both problems finding employment and associated susceptibility to reforms such as the benefit cap. The ESF supported programme provides 11 weeks of English language tuition, coupled with the opportunity for work placements.

These two projects are illustrative of the type of activity currently at threat. It is clear the fund does not simply support the provision of one-off satellite projects. Reports examining the importance of ESF funding to domestic welfare arrangements, such as Universal Credit and the European Social Fund or the London Councils European Social Fund Poverty Programme, and the breadth of projects currently receiving funding, detailed online here, demonstrates the importance of activity currently funded under the programme in mitigating the effects of government reductions in working-age welfare provision. These projects are spread across the country. The last ESF funding period (2007-2013) allocated more than £2.5 billion across all English regions, and an interactive map, provided by the Department of Communities and Local Government, plots those projects currently being supported.

There are two points to underscore here. The first is the obvious one: these funds are directly threatened by the UK leaving the EU, including monies already earmarked. In addition to the UKs pending forfeiture of member state status, the regulations already allow for the decommitment of funds when participating states do not meet the requisite criteria – see paras.65-58 and para.74 of the preamble and Chapter IV (Articles 86-88) of Regulation (EU) No 1304/2013. This money needs to be safeguarded or otherwise replaced by the UK Government.

The importance of the ESF money also highlights a more fundamental structural issue in the UK social security system. The nature of the projects funded through the ESF, particularly those designed to assist local authorities in the mitigation of key welfare reforms such as the benefit cap or to prepare for Universal Credit, demonstrates the problems caused by a cut-and-devolve approach to welfare reform. The sink-or-swim localism adopted in the face of the restructuring of the welfare system, where centrally administered cuts are passed to the local level for mitigation without adequate financial support, has resulted in a partial reliance on EU allocated money at the local level to help supplement core welfare provision and diminish the effects of reforms.

Going forward, the effects of Brexit on the UK welfare state are likely to be subject to increasing debate and discussion. Despite initial appearances of relative insularity, these ongoing arguments need to include an assessment of how our EU membership, and access in particular to certain funds, will interact with our domestic welfare state. As part of this, the government should ensure that these important local projects funded by the ESF will continue to be supported.

*A total of £2.5 billion at the time of award (Now the equivalent of nearly £3 billion in the post-Brexit pound).

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