Briefing on the UKSPF prospectus

Following the publication of the pre-launch guidance, the Government has now published the UKSPF prospectus and allocations. The Government has allocated £2.6 billion over three years, with at least £1 million to every lead authority, as well as the allocations for the Multiply Programme. Lead authorities will access their allocation by submitting a local investment plan by 1 August 2022. Each investment plan will contain the local output and outcomes for the fund.

The LGA has consistently called for the domestic replacement for EU funding, the UK Shared Prosperity Fund (UKSPF), to be a locally determined fund driven by democratic accountable councils and combined authorities. While we welcome the direction of travel towards local control of funds, there are a number of issues that the Government will need to address to reach the potential of the fund.

This briefing summarises the guidance and some of the key issues councils and combined authorities will need to consider while developing their investment plans, and offers an LGA view on some key issues. It is not intended to replace the prospectus and councils and combined authorities should still review any published Government information and guidance.

The prospectus sets out the Government’s ambitions for the fund – to build pride in place and increase life chances across the country. This is to support the ambitions of the Levelling Up White Paper. The UKSPF intends to achieve this through the three priorities of:

• Community and Place
• Supporting Local Business
• People and Skills

The funding for the first two priorities will commence in 2022/23, while the ‘People and Skills’ priority will commence in 2024/25. The prospectus encourages lead authorities to work across boundaries and with different levels of local government to agree and commission provision across a wider geography, especially for employment and skills provision.

While the priority does not commence until 2024/25, lead authorities will be able to fund provision earlier in certain circumstances. They will be able to allocate resources if community and voluntary sector organisations are at risk as the European Social Fund (ESF) programme tails off between now and the end of 2023.

While this will bridge some of the gap between the end of the ESF programme and the commencement of the People and Skills priority, it does not recognise that local authorities and other organisations lead ESF programmes. For the financial year of 2023/24, there will be 54 programmes being delivered that local government organisations are the direct recipients of ESF funding. Based on the average annual grant received for each programme, this represents at least £58.8million of ESF funding going directly to employment and skills programmes run by local government. The LGA has raised concerns of the potential gap and will be continuing to press the Government to address this funding gap.

Lead authorities will need to consider the aims and objectives of the Multiply programme when developing their investment plans.  The Multiply programme, aimed to improve numeracy, will operate across the three years and will be led by upper tier authorities in two-tier authorities.

Lead authorities will also have to consider how UKSPF will align with other funding streams, including:

• Levelling Up Fund
• Community Ownership Fund
• Freeports
• Project Gigabit
• National Employment support programmes supplied through the JobCentre
• Existing adult skills provision
• European Structural and Investment Fund Programmes
• Further rural funding streams
• Any other funding streams available through devolution.

Lead authorities should take account of the Adult Education Budget and remaining European Social Fund investments, which may operate at larger geographies. They should also engage with relevant employment and skills bodies and stakeholders, including Jobcentre Plus and Skills Advisory Panels, even where the decision is taken not to deliver interventions at the strategic scale.

The guidance makes explicit that the UKSPF should not duplicate or replace existing funded provision. The LGA is keen to work with Government to highlight the implications of short term, fragmented funding streams, rather than the desired longer term funding settlement where different funding pots are better aligned.

The role of central government

The Department for Levelling Up, Housing and Communities (DLUHC) has collaborated with other departments, to develop the overarching framework that will monitor investment and overall performance. They will work with other departments approve any bespoke interventions lead authorities may want to propose. They

The Department for Education will lead the Multiply Programme, with the Department for Work and Pensions expected to collaborate in the development of employment and skills interventions. The Department for Business, Energy and Industry Strategy will play a key role in matters relating to the Supporting Local Businesses priority.

The role of local government – lead authorities

Lead authorities have been given the responsibility of developing local investment plans, recognising the role of local government and places in increasing pride of place and improving life chances.  Lead authorities will develop improvement plans which have to be submitted by 1 August 2022 in order to receive their allocation of the fund.

They will have responsibility for managing the fund, assessing and approving applications, processing payments and day-to-day monitoring. In partnership with local stakeholders, they will determine the scale of each intervention. Lead authorities can use competition, commissioning, procurement or in house delivery.

The role of local government – collaboration with other local authorities

While each place will have its own investment plan, collaboration with different local authorities is heavily encouraged by national government. This could be used to deliver, larger strategic projects or to reduce the burden or complexities of commissioning. This especially applies to activity related to business as well as employment and skills.

The Greater London Authority (GLA) and Mayoral Combined Authorities (MCA) areas will receive £40,000 and other lead authorities will receive £20,000 to prepare investment plans. Lead authorities will take responsibility for the fund over their strategic and council area and four percent of the fund can be allocated for administration. However, if a different level of local government is chosen to take responsibility for a particular policy or intervention, that four percent can be allocated to that authority.

As part of the investment plan process, Government is surveying lead authorities to understand capacity issues in delivering the fund. The LGA welcomes this, as we have previously raised the local government sector concerns about the need to build capacity in the sector to manage and run the UKSPF.

Lead authorities will be expected to bring together a range of partners to develop investment plans. The prospectus sets out the types of organisations expected to be included in partnership working. These include:

• representatives from the lead local authority (this may also include neighbouring authorities or constituent authorities where relevant and to maximise alignment)
• local businesses and investors (large employers and small and medium sized employers)
• business support providers or representatives, including sectoral representatives relevant to the place (for example – cluster bodies, tourism organisations)
• local partnership boards and strategic bodies where relevant (for example, Local Enterprise Partnerships or Local Skills Improvement Partnerships in England, City and Growth Deal partners in Scotland, Wales and Northern Ireland)
• regional representatives of arms-length bodies of government where appropriate
• prominent local community & faith organisations
• voluntary, sector social enterprise and civil society organisations, including Third Sector Interface Groups in Scotland
• rural representatives unless there are no rural communities within the area
• education and skills providers – for example higher education institutions and further education colleges, adult learning providers
• employment experts and providers – for example Jobcentre Plus representatives and employment related service providers
• nature, environmental or associated representatives
• public health representatives
• police and crime representatives (such as Police and Crime Commissioners where relevant)
• officials of devolved administrations or their agencies in Scotland, Wales and Northern Ireland
• Members of Parliament where appropriate.

The prospectus implies flexibility can be used on who should be included as representatives, as groups such as housing providers or trade unions have not been included in the list. We understand lead authorities can use their own discretion on who to include but should aim to include as wide a range of stakeholders and partners as possible.

Members of Parliament are expected to be included in the discussions around the design of the investment plans and are expected to be kept up-to-date on delivery. In the GLA and MCA areas, there is an expectation that lead authorities convene MPs separately to gather their feedback.

To access local allocations, lead authorities will need to develop an investment plan in partnership with the local partnership group identified above. The plans will need to be signed off by both lead authority and DLUHC.

The plans will consist of three aspects:

1. Local context

This will set out the local challenges and opportunities using local evidence.

2. Selection of outcomes and interventions

Lead authorities will identify the outcomes they want to achieve and the interventions they wish to prioritise using the evidence from the local context section.

3. Delivery

Lead authorities will set out details to:

• approach to delivery and governance
• expenditure and deliverables
• capability and resource.

If lead authorities want to use innovative interventions, they will be able to choose a bespoke option, which will need approval from DLUHC.

To access the portal to write and submit investment plans, lead authorities will need to complete a registration form. In addition to the investment plans, the portal also includes a questionnaire about longer term capacity, which includes questions that will help inform DLUHC on future capacity issues they will need to address. If there are any issues in accessing the portal, contact [email protected].

The window for submitting investment plans is 30 June to 1 August 2022. The LGA is concerned that this is a very tight to undertake the partnership working to develop effective plans, especially in council areas which have local elections. We have consistently called for a longer period with longer term funding settlement to ensure funding is effectively targeting some of the biggest inequalities that exist in our communities.

Lead authorities will need to demonstrate how their investment plans will contribute to the Government’s net zero strategy and 25 year environmental plan, as well as how the investment plans will work with the natural environment. Lead authorities will be required to understand the impact the plans will have on nature, as well as their duties under the Equality Act.

Organisations that can receive funding can include local authorities, public sector organisations, higher and further education institutions, private sector companies, community and voluntary sector organisations and registered charities. Lead authorities can also work with international partners if they can demonstrate the benefits for local communities.

Funding investment can commence from 1 April 2022. However, interventions that commence before investment plan sign off will be done at risk. Administrative and preparations costs can be incurred from 1 April 2022. Interventions should be delivered by March 2025 or have a break clause allowing for closure by March 2025.

The LGA has been clear that a longer-term funding arrangement is needed. This applies especially for the ‘People and Skills’ priority, which will only operate one year programmes. It will make programmes which target those furthest away from the jobs market more difficult to deliver effectively. This is yet to achieve the Government’s Levelling Up ambition of providing areas with a simplified, long-term funding settlement.

Interventions can be funded through:

• grants to public organisations
• commissioned third party organisations
• procurement of service providers
• in-house provision.

Consideration of the Cabinet Office’s Grant Standards will need to be made in deciding which model to adopt. It is positive that lead authorities have been offered the flexibility to choose which model suits them. The LGA will continue to work with Government to ensure any guidance is consistent and beneficial for lead authorities.

Unlike the majority of the European Structural and Investment Programme, match funding is not a requirement for the UKSPF, but is recommended. Lead authorities who do obtain match funding to supplement their UKSPF interventions will be required to provide updates.

Lead authorities will need to ensure they set out how their interventions will be delivered within the subsidy control regime and their capacity and capability to manage the regime. Following requests from the LGA, the Government will be publishing further guidance on state aid.

The Government will pay each lead local authority in advance. In 2022/23, funding will be paid once the local investment plans are signed off, while payments of the remaining two years will occur at the start of the financial year. Each lead authority will receive a grant determination letter and Memorandum of Understanding setting out funding requirements and obligations. Underspend will be asked to be returned at the end of each financial year. The LGA has concerns that this is likely to mean shorter term interventions will therefore be prioritised and does not provide the longer term, stable funding regime needed to level up local communities.

Lead authorities will be reporting key milestones and providing DLUHC with information demonstrating projects are delivering outputs and outcomes every six months. There will be more regular qualitative reporting as well.  Lead authorities will be reporting outputs and outcomes by UK constituency level. This does not reflect the natural reporting geographies that local authorities have tended to do.

Part of the intention of the fund is to increase understanding of which interventions will deliver the wider social change to deliver the ambitions of pride in place and improving life chances through evaluation. The prospectus makes reference to the What Works Centre for Local Growth, which has a range of toolkits and information for analysis.

The Government will be undertaking fund level process evaluations and exploring causal impact evaluation at both the national and local level. Further details of evaluation processes as well as key indicators will be published in the summer.

• Monitoring benefits and evaluation
• Assurance
• Subsidy control guidance
• Branding and publicity

The delay in the additional advice to support the development of local investment planning reduces lead authorities’ ability to develop the detailed investment plans needed to deliver the ambitions of the fund. The LGA will continue to monitor the implications of any delays and will raise with Government accordingly.

Paul Green

Policy Adviser

Mobile: 07787154047

Email: [email protected]