MPs are urging the government to put in place a swift replacement to the European Social Fund (ESF) when the UK leaves the European Union, saying any gap in provision would be “disastrous”.
The fund currently provides £500m a year to charities and other organisations for supporting the employment prospects and skills of people in disadvantaged communities.
However, a House of Commons work and pensions committee report details fears from MPs that this support may suffer if there is a gap between the end of the ESF Fund and the launch of its replacement.
The government has pledged to set up a UK Shared Prosperity Fund as a replacement, but MPs are concerned that details of this have not yet emerged.
The committee’s report praises the strengths of the ESF as offering funding to communities that are currently “poorly served or neglected by mainstream employability services”.
But it also details “weaknesses” such as the current funding structure creating funding siloes that can hinder the effectiveness of support.
The committee urges the government to create a new arm’s length organisation to ensures the replacement fund work alongside existing funding streams to meet the needs of local communities.
The report states: “The UK has a historic opportunity to redesign the ESF entirely in its national interests: plugging skills gaps, increasing productivity and lifting up disadvantaged communities. But there is still much detailed design work to be done.
“Government does not have time on its side to complete this and ensure a seamless transition. The consequences of a gap in provision - for providers, for local areas, and for individuals - would be disastrous.
“The UK could create a truly world-leading successor fund that is the envy of Europe - but it must act fast.”
MPs also want the replacement fund to be flexible, offering money for both long-term and short-term programmes. Red tape for charities and other providers should also be minimised, they add.
"We now have an historic opportunity to create a truly fit-for-purpose successor to the ESF,” said committee chair Frank Field.
“The government must act quickly so that those excellent existing suppliers are not bankrupted. Effective reform here offers the government an important new chance to begin to fill our skills gap from the community upwards, instead of having a top-down approach."