Only the UK’s most deprived areas will benefit from a post-Brexit fund for local skills, business and community projects – cutting hundreds of councils off from money to help marginalised people.
The UK Shared Prosperity Fund (UKSPF), which ends on March 31, was launched by the Conservative government in 2022 to compensate for the loss of £1.5 billion per year in EU regional social and development funding.
But details published alongside last month’s budget revealed the extent of Labour’s “new approach” to regional investment, splitting funding into two programmes and sidelining the UKSPF’s “people and skills” priority.
It follows the end of the Multiply numeracy programme for adults in March, which was estimated to have cost about £250 million since 2022-23.
Councillor Tom Hunt, chair of the Local Government Association’s inclusive growth committee, said the end of UKSPF would impact councils’ ability to deliver skills and employment support.
He urged ministers to provide programmes that “combine support for local employability, skills, and health initiatives to replace relevant parts of UKSPF before it comes to an end.”
Although Labour’s new approach to regional investment was confirmed in broad terms in June with the 2025 spending review, details of how funding would be distributed were only fully revealed in recent weeks.
Local Growth Fund
The largest programme, the Local Growth Fund (LGF), accounts for an average of about £225 million per year until 2029-30, shared out between 11 mayoral strategic authorities in England’s north and midlands.
From March, the LGF will follow the same principles as UKSPF, with mayors asked to spend the funding on people and skills initiatives, local infrastructure or business support.
However, the fund’s overall budget is 75 per cent less than the £915 million available via UKSPF in England in 2024-25, and its focus on 11 strategic authorities will mean more than 150 local authorities are cut off from annual allocations of £327,000 to £61 million, depending on their size and deprivation levels.
The government has also dictated that from 2026-27 to 2028-29 the share of LGF cash that can be spent on revenue will fall from 75 to 42 per cent.
The Industrial Communities Alliance, a group representing local authorities in industrial areas of the UK, said the change “runs contrary” to the government’s objectives of promoting jobs and will have “knock-on consequences” for the estimated 4,000 jobs the UKSPF supports in England.
The geographical spread of LGF has also disappointed politicians outside the north and midlands, including mayor of Cambridgeshire and Peterborough Paul Bristow, who criticised the government’s “spreadsheet-driven approach”.
He said leaving his region out of the LGF was a “mistake” that denied investment which would help drive local growth.
Bristow added: “The funding criteria includes being under the UK average for GDP per capita, which sees Cambridgeshire and Peterborough just miss out.
“This spreadsheet-driven approach fails to recognise the reality on the ground where the relative affluence of Greater Cambridge skews regional averages.
“We have areas in Cambridgeshire and Peterborough which come well under national average metrics for health and wealth and need investment to change the story.”
A spokesperson for the Greater London Authority (GLA), which will lose out on about £63 million a year, told FE Week that the mayor’s team is developing options to continue supporting businesses.
Pride in Place
The second programme, Pride in Place, will invest £5 billion over the next 10 years in 350 of the “most deprived” neighbourhoods, doling out about £400 million per year in England once it is up and running.
Pride in Place claims to be a “new way” for government to work with neighbourhood boards in “left behind” communities, promising to spend £20 million in each area over a decade, with the core objectives of building stronger communities, creating “thriving places”, and empowering people to “take back control”.
While this programme could fund skills and employment-focused initiatives, its other priorities threaten to “squeeze out these vital activities,” the Industrial Communities Alliance warned.
The association criticised Pride in Place for its “top-down” approach to distributing funding that focuses on statistical boundaries that “don’t match neighbourhoods on the ground” and were decided without consulting local authorities.
The Treasury and Ministry of Housing, Communities and Local Government did not respond to repeated requests for comment.
‘At odds’ with government priorities
Sam Avanzo Windett, deputy director of the Learning and Work Institute, said the new programmes had put “vital” support for marginalised people outside mainstream services “in question”.
She added: “With the move from the [European Social Fund], combined into UKSPF, and now rolled into plans for a Local Growth Fund only in specified areas, the future of these services is uncertain.
“With a patchwork of initiatives in place, some organisations will be facing a cliff edge and vital frontline expertise will be disappearing.
“At a time when economic inactivity is a pressing concern, any decision to reduce funding to help groups with more complex barriers into employment seems at odds with the government’s aim to reach an 80 per cent employment rate.”
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