One of the challenges of an incoming government is to deal with rapidly approaching cliff edges for funding. We face one at the end of this fiscal year when the UK Shared Prosperity Fund (UKSPF) ends. This is important because of its relevance to our mission to boost economic growth in every part of the UK.
The UKSPF was introduced as the domestic replacement for the European Structural and Investment Fund (ESIF) after Brexit. The funding the Conservative government allocated to the UKSPF was not as generous as the ESIF, but it did provide local authorities with some devolved funding to partially support local priorities, with particular emphasis on regeneration, business support, and skills.
How Labour in government responds to this looming cliff edge will be the subject of an adjournment debate I lead in the House of Commons yesterday.
‘We must learn from the UKSPF and commit to an improved version under Labour’
Labour in government must engage with local authorities to learn lessons from the previous three years implementing the UKSPF. We have also been lucky to have an influx of new Labour MPs who have very recent experience of local government, and who can share best practice from Labour administrations to help shape future policy.
At Medway Council, where I was formerly the Cabinet Member for Economic and Social Regeneration and Inward Investment, we used our UKSPF funding to support local community groups, businesses, and charities who we considered were best placed to recognise what their areas needed to thrive. The feedback we received was that this was empowering for local communities and brought people together.
The UKSPF was used to help our town centre forums host high street events, which brought thousands of extra visitors and benefited local businesses. We offered small “feasibility funds” to help groups show that an idea would work and allow them to go on to attract funding from other sources.
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We provided grants to help businesses grow by purchasing modern technology and equipment. And we funded net zero audits and green grants for local businesses who wanted to reduce their costs by making premises more energy efficient and get the green certificates that are now needed to bid for many contracts.
I am pleased to say the outcomes achieved already exceed those set out in the approved investment plan submitted to Whitehall.
However, broader feedback from local authorities to the Local Government Association (LGA) demonstrates there have been some problems with the UKSPF. These include challenging short timescales from Whitehall, annual funding restrictions that limited long-term planning, and a rather bureaucratic reporting regime.
But as Medway’s experience indicates, an improved replacement fund for the UKSPF could help us achieve Labour’s central economic growth mission and deliver on manifesto commitments such as town centre regeneration and working with the business community to reach net zero.
‘The forthcoming Budget should include a short-term funding fix while we plan longer term’
Together with the LGA, I am urging the Chancellor to include an additional one year of flexible revenue funding for the UKSPF for 2025/26 in the October Budget. This would affirm our commitment to local economic growth and community support and provide stability for many schemes currently facing the cliff edge, such as those providing business support.
It would provide the breathing room we need to consider what Labour’s broader approach to local growth funding should look like now that we are in government. Longer term allocations are needed – the LGA suggests future growth cycles be allocated on a six-to-eight-year basis. And we need a more flexible and lighter touch national framework that supports even greater local decision-making. But this must of course be balanced against the need to give government assurance that funding has been spent appropriately and used effectively.
By reflecting on previous experience and working in partnership with local government to deliver a longer-term funding scheme, the new Labour government has the opportunity to provide a boost to local economies and communities far beyond anything we have seen through the UKSPF.
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