A failure by the government to immediately replace the European Social Fund after Brexit would be "disastrous", the Work and Pensions Select Committee has said.
In a report of its inquiry into the future of the ESF, published today, the group of MPs says the fund, which provides £500m worth of employment and skills support to disadvantaged communities in the UK annually, much of which goes to voluntary sector organisations, had many strengths, but in creating a replacement programme the government had the chance to improve it.
But the report says there should be no gap between the ESF provision and its replacement.
Aidan Warner, senior external relations officer at the National Council for Voluntary Organisations, said the umbrella body believed that, at a conservative estimate, about £150m a year of ESF funding went to voluntary sector organisations.
The government has pledged to create a UK Shared Prosperity Fund to replace the ESF, but the committee describes the future of this fund as "uncertain" and says there is "still much detailed design work to be done" on it.
The report says the ESF is a vital resource, offering dedicated funding for people and communities poorly served by mainstream employability services and allowing local areas both to fund long-term strategies and react to local crises. It calls for government to commit to maintaining both of these features within the UKSPF.
But it also says the ESF had "real weaknesses", such as structures that created "funding siloes", preventing organisations from providing a comprehensive package of different kinds of support, and too much bureaucracy, which could prevent smaller organisations from accessing the fund at all.
"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," the report says.
It calls for the government to create a new arm’s-length body to integrate existing funding streams so programmes can effectively meet all of their participants' needs while retaining a separate fund within the UKSPF for employment support for disadvantaged groups and communities.
"Government does not have time on its side to complete this and ensure a seamless transition," the report says. "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."
Elizabeth Chamberlain, head of policy at the NCVO, who gave evidence to the committee, said it was right to highlight the need for urgency.
"There is a great opportunity to build on the work of the European Social Fund by continuing to invest in training and employment support to vulnerable groups that often fall through the gaps of mainstream public services," she said.
"With less than a year to go before Brexit, the government needs to explain its plans for continuing and improving this support as soon as possible."
ESF projects are often co-funded by the Big Lottery Fund. In the year to March 2017, the two organisations co-funded 90 projects worth a total of £224m, a BLF spokeswoman said. She declined to comment on the report.