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Local economies

Is the UK Shared Prosperity Fund reaching England’s most disadvantaged neighbourhoods?

Sarah Stearne, policy officer at Local Trust, introduces new research from the APPG for ‘left behind’ neighbourhoods into the UK Shared Prosperity Fund (UKSPF) and how it is being spent.

In 2020, the UK Government announced that the European Union Structural Funds, which aimed to reduce economic inequalities between and within EU member states and regions, would be replaced in the UK with the UK Shared Prosperity Fund (UKSPF) in 2022.

Like the preceding EU funding, this £2.6 billion plank of the government’s levelling up agenda is designed to tackle geographic inequalities. The ‘communities and place’ strand of the UKSPF specifically aims to strengthen the social fabric and build local pride, resilience and health in neighbourhoods. All areas of the UK received a UKSPF allocation.

The UKSPF is a welcome development in the government’s approach to tackling place-based inequalities, marking a shift away from competitive funding pots towards allocative targeting.

This is important. The bidding process dominating other schemes such as the Levelling Up Fund and Future High Streets Fund proved unnecessarily burdensome on local authorities’ already stretched capacity and resource. Research by Northumbria University revealed it took 270 hours of office time for Sunderland City Council to prepare a single bid, without certainty of a successful outcome.

Since the UKSPF was announced, the government has launched a new Long-Term Plan for Towns and made progress towards a Community Wealth Fund – each underpinned by non-competitive funding.

But new research by the APPG for ‘left behind’ neighbourhoods into the distribution of UKSPF funds, and how they are being spent, has highlighted key recommendations for the rollout of future funds designed at tackling place-based inequalities.

The new report, Sharing Prosperity: The UK Shared Prosperity Fund and Neighbourhood Renewal, examines whether the UKSPF is reaching England’s most disadvantaged neighbourhoods.

It finds that the UKSPF’s focus on maintaining a like-for-like replacement of EU structural funds has led to a weak emphasis on deprivation within its allocation formula.

While this has been important to prevent funding gaps in the wake of Brexit, it also means the neighbourhoods that have been furthest ‘left behind’ have not received the levels of funding needed to tackle disparities in life outcomes and improve pride in place – the fund’s primary aim.

What needs to change?

Oxford Consultants for Social Inclusion (OCSI) developed the Community Needs Index (CNI) as an objective measure of social capital based on the presence of civic assets; physical and digital connectivity; and levels of community engagement.

Overlaying the CNI with the Index of Multiple Deprivation identifies the neighbourhoods that experience the most barriers to prosperity: both economically deprived and lacking the social infrastructure that underpins healthy civic life. These are the former industrial areas, deprived towns, and rural and coastal ‘places in need’ that levelling up funds are geared at in theory. But this doesn’t show up in practice.

Future funds designed to tackle inequalities should be targeted hyper-locally, at these ‘left behind’ neighbourhoods. This would pay dividends in efficiency terms, not only ensuring that funding is targeted proportionately where it is most needed, but also guaranteeing that pockets of deprivation in otherwise affluent areas are not overlooked.

A roadmap for transformation

In addition to tackling geographic inequalities, the UKSPF was framed as an opportunity for communities to be “handed control” of local investment.

This is another positive step – we know from our experience of running the Big Local programme that giving local people power and agency is the key to building more resilient, engaged and connected communities.

But the APPG’s report finds that there has been very limited community involvement in UKSPF in practice, dependent largely on the discretion of each lead authority.

Where community representation did feature on ‘local partnership groups’ responsible for identifying investment priorities, this often consisted of high-level Voluntary, Community and Social Enterprise (VCSE) groups. In other words, the people around the table were the ‘usual suspects’.

Much like the need to co-produce services with service users, funds designed to tackle geographic inequalities, improve life outcomes and build pride in place must engage the people that they are designed for in practice. Inevitably, when we’re talking about tackling systemic disadvantage, this means building routes for participation with those whose seat may currently be the furthest from the table.

Some local authorities took the initiative to create these routes – Boston ran an extensively advertised public consultation, and others devolved funding down to community-led initiatives. But many didn’t. And the overall UKSPF programme lacked a focus on empowering and engaging the communities most in need.

Key recommendations from the APPG report

The APPG’s report makes a series of recommendations on how to reform the funding model to ensure outcomes are improved in the places most in need.

  1. Adapt the UKSPF to include the CNI in combination with the Index of Multiple Deprivation, to ensure funding is targeted at the neighbourhoods experiencing both socio-economic deprivation and a lack of the social infrastructure that underpins civic life.
  2. Confirm UKSPF funding over the long-term, at a minimum for the same seven-year period as the EU structural funds it replaces, although we know that truly transformational community-led change requires 10 to 15 years of patient investment.
  3. Delegate UKSPF down to the community level, with residents empowered to direct investment in line with their local knowledge and expertise.
  4. Build in a ring-fenced capacity-building budget to the ‘communities and place’ strand of the UKSPF, as part of the areas’ revenue allocation, helping to build the capacity of residents to steer local regeneration.
  5. In the absence of devolution, make community involvement in ‘local partnership groups’ mandatory, in the form of open invitation, advertised local partnership group meetings and mandatory representation of community organisations on local partnership groups.

The Big Local programme has taught us that the key to achieving the required culture shift in regeneration is investment to build community capacity and confidence over the long-term. It builds grassroots resilience, leadership and stronger communities in the process.

This requires patient investment, beyond the scope of the UKSPF’s confirmed three-year funding window, and beyond electoral cycles too.


Read the APPG’s report and recommendations in full on the APPG for ‘left behind’ neighbourhoods’ website.

About the author
Sarah Stearne

Sarah Stearne is a policy officer at Local Trust.