Public sector leaders have called for a radical shake-up of the way regional funding now coming from the EU is shared out after Brexit.

The Brexit Advisory Commission of Public Services says any replacement of the estimated €3.4bn a year now paid out by the EU should be based on need rather than population size.

It says although it is unclear whether EU public service funding will be matched by the UK Government beyond 2020, the money must be given to areas where there is need and directed towards meeting specific outcomes.

The commission, comprising public sector leaders, experts and economists, says the Barnett Formula must be urgently reviewed because it allocates funding based on population size and not need.

The commission's chair, Julia Goldsworthy, director of strategy for West Midlands Combined Authority (WMCA), said: 'Simply cutting and pasting the existing regime into UK administration isn’t ambitious enough.

'The UK should seize this opportunity to reform any future programme by basing its approach on need and meeting specific outcomes.'  

Commission member Rob Whiteman, chief executive of CIPFA, said: 'Although the UK Government has many pressing Brexit negotiation priorities to focus on, the issue of how best to reformulate EU funding schemes is one that cannot be neglected for too long.

'The Government needs to have a vision for Brexit Britain which is built on inclusive growth and giving communities a greater sense of empowerment. That won’t be possible without drastically reshaping the current funding formula.'