Metro mayors have admitted they are racing to spend millions of pounds on skills training before a £2.6 billion funding scheme ends in March.
The Tories launched the three-year UK Shared Prosperity Fund in 2022 to help the economically inactive into work, support businesses, push their levelling-up agenda and improve maths skills through the Multiply programme.
But delays in distributing cash mean some regions are now taking “urgent corrective actions” to spend their funding before contracts finish.
Reports from 10 mayoral authorities – that oversee 43 per cent of England’s £1.6 billion share of the prosperity fund – reveal it has been beset by complexity, cash delivery delays and rule changes.
Authorities also warn the “cliff edge” when the fund’s three years end in March mean key project delivery staff are already looking for new jobs.
Beset by delays
Reports from authorities say the “challenging” three-year spending timeframe was made worse by months of delays in the release of funding.
The Greater London Authority (GLA) said it got its first year’s £17 million payment nine months after the launch in 2022 because the Ministry of Communities, Housing and Local Government (MCHLG) demanded detailed investment strategies it then took months to approve.
West Yorkshire Combined Authority, which underspent its first two years’ £24 million budget by £4.6 million, said the “complexity” of the government’s timeline and reporting requirements made it difficult to manage.
The GLA, which received a £144 million pot, revealed the MCHLG had admitted the “tight timeframe” was an issue and allowed underspends to be carried over into future years.
Then in 2023 the GLA said the MCHLG took a “late decision” to let each area spend more of its share on people and skills in the scheme’s final year.
It also changed rules to “chivvy” authorities along by withholding 30 per cent of their third-year allocation if they failed to spend enough in the first two years. This new rule was punishing as the final year accounts for around two-thirds of the total allocation.
Spending rush
The West Midlands region was yet to spend £65 million of its £88 million budget in July.
As a result it received £39 million from the government for year three, about 30 per cent less than it was eligible for.
Apparently worried about having to hand funds back to the MCHLG, the region’s new Labour mayor Richard Parker asked his team to take “pro-active mitigating actions to maximise spend” before March.
In a bid to spend an average of £5.5 million per month, Parker told staff to “swiftly” redistribute funding to projects that were performing well.
Meanwhile, Liverpool City Region Combined Authority received £5 million less than it hoped for after underspending in earlier years and mayor Steve Rotheram asked senior officers to move funding around to “maximise delivery”.
West Yorkshire Combined Authority secured its full share for the final year after spending £9 million in the five months up to March this year, but mayor Tracy Brabin has now given permission for staff to move money to more effective projects “at speed”.
Provider concerns
Ian Ross, chief executive of Whitehead-Ross Consulting which has several UK Shared Prosperity Fund contracts, said the short spending timeframe was “not practical” for learners and risked authorities wasting money on “pointless schemes”.
And the Learning and Work Institute told FE Week it feared the budget deadline meant projects would “scale down and lose staff”.
It added: “This is vital employment, learning and skills provision and we need both a long-term plan and to avoid the impending cliff edge in provision.”
How much has been spent?
The MCHLG confirmed only 36 per cent of England’s £157 million allocated in the first year was spent – excluding Multiply, which is overseen by the Department for Education.
The majority of the second year’s £314 million allocation was spent, while figures for the final year are not yet available.
In a letter defending the department’s management of the fund in January 2023, the then-minister for levelling up Jacob Young said interim findings on its success would be published “in 2024”.
What now?
It is not known whether Labour will replace the prosperity fund but concerns have been raised by MPs and the Local Government Association (LGA) in the last week.
Labour MP for Rochester and Strood Lauren Edwards called an adjournment debate on Thursday.
Edwards, who oversaw economic development as Medway Council’s cabinet member for economic development, said despite its problems she and others wanted the fund to continue as it is a “really great scheme” for local authorities.
The LGA said: “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. Providers are likely to see staff leave as contracts end.”
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