The UK Shared Prosperity Fund: What needs to happen next

The UK Shared Prosperity Fund (SPF) was first mentioned in the 2017 Conservative Party manifesto. It was designed to replace EU structural funding, which aimed to support regional economic development across the UK.

While many support organisations were pleased to see the government’s commitment to replacing EU structural funds, the original funding is now rapidly coming to an end. This is causing significant concerns about the design and delivery of the SPF, which is due to launch in the spring.

People experiencing the greatest disadvantage will lose essential support and access to opportunities if the SPF does not quickly and meaningfully replace EU funding. Many organisations will be unable to sustain the capacity, expertise and infrastructure that currently support places and communities.

Alongside the Levelling Up white paper, the government published pre-launch guidance for the SPF. Positively, funding will be allocated to all places and by formula, rather than competition. We also welcome the focus on local decision making and partnerships.

However, the fund’s prospectus is not expected until the spring, and it’s not clear how funding will be allocated, or how local plans will be assessed. Funding will likely not be delivered until autumn 2022 at the earliest, and will be much less than previously allocated. From 2014 to 2020, the UK received an average of £2bn per year in EU structural funds, whereas the SPF will provide £2.6bn over the next three years.

It’s also concerning that the chosen delivery geographies, specifically lower tier and unitary authorities, will result in ineffective procurement, fragmented and duplicated services, and delays in responding to need.

We’re deeply concerned about the impact that this delay will have on the opportunities available to people and communities, especially as the SPF does not intend to focus on employment and skills in England until 2024/25. By then, programmes and organisations working in this area may well no longer exist.

Over the past four years, NCVO has worked with the Employment Related Services Association (ERSA), the membership body for the employment support sector, and many other organisations to develop a vision for how the SPF can contribute to economic recovery and tackling regional inequality.

We’re now calling on the government to:

• immediately commit to investment in people and skills – do not delay this to 2024/25
• engage specialist organisations and communities as critical partners in levelling up
• share learning from other levelling up funds to inform the design and delivery of the SPF
• involve the devolved nations in decisions about the SPF
• address inequalities and protect and promote human rights through the design of the SPF.

Immediately commit to investment in people and skills

We want to see the SPF supporting people and skills in England starting this year, rather than delaying this to 2024/25. It’s critically important to get people into suitable employment to support social and economic recovery from the pandemic.

However, funding that’s supported communities for decades is about to be cut off, with little information about what will replace it.

Voluntary and specialist organisations have strong relationships with communities experiencing disadvantage. They bring significant expertise of supporting those who cannot be reached by mainstream provision. While we welcome government’s commitment to funding voluntary organisations whose services are at risk due to EU funding tailing off, this is not a strategic approach to meeting the ever-evolving needs of communities in the long term.

Communities’ needs have grown significantly, and pre-existing inequalities have been exacerbated due to the unequal impacts of the pandemic. The SPF must focus on addressing these complex inequalities and barriers to employment if levelling up is to create equitable opportunities across the country.

Engage specialist organisations and communities as critical partners

In September 2020, we published six key design principles for the SPF. These include the need to develop cross-sector community partnerships.

The government must build the SPF on these principles if it’s to truly level up the UK, but levelling up so far seems to have just focused on allocation. The real hard work is using funding effectively to bring about change. Building trust and developing partnerships that truly involve all stakeholders requires time and effort. The ambitions of the Levelling Up white paper will be difficult to achieve without the expertise of specialist and voluntary organisations.

Share learning from other levelling up funds

We also want to see government rigorously evaluating the design, delivery, and outcomes of new levelling up funding streams. Although the first round of funding has finished for many of these streams, it’s impossible to tell – as noted by the National Audit Office – what has been learned from delivering these funds and how lessons will inform future funding.

NCP’s analysis shows that, of the £5.08bn that’s been allocated so far, only 2% will go towards supporting programmes that aim to reduce complex social issues such as homelessness, poverty and crime.

Involve the devolved nations

Voluntary and specialist organisations are key design and delivery partners for programmes tackling poverty and structural inequality in the devolved nations. If previous funding had continued, those organisations would already be engaged in inclusive dialogue about identifying the needs and priorities of their communities. For example:

• WCVA’s Active Inclusion Fund supports organisations that work with people who experience complex barriers to employment. Since October 2015, the Fund has supported 175 organisations, 475 projects and 22,150 participants and has awarded £48m of European funds. This activity has levered in an additional £12m in match funding, provided by the grant recipient organisations.
• In Northern Ireland, programmes backed by the European Social Fund (ESF) have supported over 77,000 people to overcome major obstacles to social inclusion and employment. Current ESF funding will end in March 2022, and voluntary organisations have called for urgent action from both the UK and Northern Ireland governments.
• SCVO’s National Third Sector Fund is a seven-year ESF-supported project that has worked with almost 7,000 people in Scotland with multiple intersecting barriers to employment. If no replacement funding is forthcoming, the project will end in December 2022.

The government must meaningfully engage key stakeholders in decisions about designing and delivering the SPF in all four nations of the UK, including the voluntary sector and devolved departments, to maximise targeting of local need and to avoid duplication and fragmented service delivery.

Address inequality and protect and promote human rights

There must be clear participation targets for all SPF-funded projects to ensure they reach the people most in need. Weakening the requirements for funds to target groups who face discrimination and other employment barriers would undermine the SPF’s potential impact.

Reducing inequality is not just the right thing to do, but will also bring economic benefits. For example, bridging the gender employment gap could create an extra £150 billion in GDP by 2025. In addition, a 5% rise in the employment rate of working-age disabled people would increase GDP by £23 billion by 2030.

If delivered effectively, the SPF will be a critical pillar of levelling up. Delivery partners with decades of experience stand ready across England, Scotland, Wales, and Northern Ireland to continue their support for people experiencing disadvantage and inequality, but this requires funding and information from the government. The people and communities supported by EU structural funding will be further disadvantaged if the government fails to take action on the design and delivery of the SPF.

We want to hear from you about whether EU structural funds have helped you support people into work. Our SPF working group with ERSA is also open to new members.

Contact us at policy@ncvo.org.uk if you would like to discuss your experiences or find out more about the working group.