Adjournment debate: UK Shared Prosperity Fund, 9 September 2024

• The government should take immediate action to stabilise the growth funding landscape and to build capacity to develop an integrated multi-year growth fund.
• To remove the financial cliff edge and provide this stability, the LGA is calling for a one-year additional revenue, fully flexible funding that equates to the value of year 3 of UKSPF and is revenue.
• In the long-term the LGA is calling for the government to ensure future growth funding cycles are allocated on a six-to-eight-year basis as consolidated pots for councils to invest according to local need.

The UK Shared Prosperity Fund (UKSPF) is the domestic replacement for the European Structural and Investment Fund (ESIF). The fund has been allocated to lead authorities comprising of combined authorities, unitary and district councils in England, who have utilised the opportunity to fund projects and programmes to support local places, people and growth. It has been designed to enable an element of delegated decision making, and allowed local government and their partners to partially design solutions that address local need using a range of interventions and priorities.

The fund runs from December 2022 to March 2025 and comprises of three priorities: Communities and Places, Supporting Businesses and People & Skills, which work adjacently with the Rural England Prosperity Fund and Multiply programmes. This is in comparison with the seven-year ESIF Programme which consists of the European Social Fund (ESF) for employment and skills and European Regional Development Fund (ERDF) for business support.

With the funding ending in March 2025, there is a cliff edge emerging which is having a detrimental impact on some projects, delivery organisations and councils. For the future design of the UKSPF or replacement growth and skills funding, the LGA are calling on the government to ensure future growth funding cycles are allocated on a six-to-eight year basis as consolidated pots for councils to invest in local need. This should be informed by collaborating with the local government sector to learn from our experiences of the UKSPF and other place-based funding.

The LGA is calling on the government to take immediate action to stabilise the growth funding landscape to ensure continued investment and build capacity to develop an integrated multi-year growth fund. With the current round of UKSPF ending in March 2025 and no funding certainty, this is having an impact on the delivery of provision.

The LGA has spoken to lead authorities, and they have told us:

• programmes which support the long-term economically inactive require engagement and trust to be built with residents to help them into stable employment. The lack of funding certainty can jeopardise this, and support cut at a crucial moment. Providers are likely to see staff leave as contracts end. 
• the uncertainty on local business support has meant a reduction in incentives for businesses to invest and increasing business uncertainty. 

We recognise that the government may want to design replacement growth and skills funding differently which will require time to design, build capacity and introduce effectively.  

To remove the financial cliff edge and provide this stability, the LGA is calling for a one-year additional revenue, fully flexible funding that equates to the value of year 3 of UKSPF and is revenue. This will provide:

• stability for long term economic inactive people in their support provision, increasing the likelihood of gaining employment.
• greater certainty for business support provision, which helps support national and local ambitions for economic growth.

If this is not possible, the government should work with lead authorities to identify projects, programmes and delivery partners that are at risk to provide additional funding and reduce the negative impact on local capacity resulting from any funding gap.

Collaboration between central and local government is essential to collectively address some of the biggest growth and workforce challenges. To support local areas to achieve these collective ambitions, the LGA is calling for the government to ensure future growth funding cycles are allocated on a six-to-eight-year basis as consolidated pots for councils to invest according to local need. The replacement for UKSPF should be consolidated or fully aligned with this. 

This should be underpinned by: 

• A clear, long-term and place led economic strategy that builds on local enterprise partnership integration and wider devolution to set out a joint vision for inclusive growth and prosperity across England.
• Joint work to deliver a place-based employment and skills offer to improve outcomes for young people and adults that need to secure and progress into work, supporting employers with their skills need and develop a culture of lifelong learning. Our Work Local model sets out how this can be done.
• A much stronger focus on data to inform local and national strategies around growth and prosperity.
• Investment in local economic development capabilities to boost council capacity and expertise.

There have been many positives from the UKSPF, including the ability for local government to set local priorities and the attempt to remove silos between the three funding pillars. To develop the future funding landscape, central government should engage with local government and learn some of the lessons from the UKSPF funding regime. Based upon conversations with the sector, below outlines some of the key issues with the current UKSPF:

• Short timescales: Lead authorities were given three months to develop investment plans in collaboration with local partners. This created challenges in strengthening and establishing new partnerships and building the capacity needed. Six-to-eight-year growth funding cycles enable places to develop the strategies and delivery plans needed to achieve funding ambitions.
• Impact of single year funding: The annual funding allocation of UKSPF restricts the type of provision that can be commissioned. Without confirmation of allocations for each year means that some lead authorities chose to commission provision for a year to manage the financial risk, reducing the number of interventions that addresses longer term inequalities. Multi-annual long term funding regimes reduces the need to do this.
• Central government restrictions: Central government put some unnecessary restrictions on lead authorities, such as the original restriction on funding new People & Skills provision until year three of the fund. This restriction was dropped eight days before the commencement of year two, making it too late to reprofile funding to bring forward provision. This, and a rather top down, bureaucratic reporting regime has meant it has become difficult to align UKSPF provision with other place-based initiatives. This can be overcome through a light-touch national framework that empowers local decision making, but also provides the assurance central government need.

Archie Ratcliffe, Public Affairs and Campaigns Advisor
Mobile: 07867 189177 | Phone: 020 3838 4868
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