UK Shared Prosperity: The Future of Local Skills Funding across the UK

As with a great deal of official communication concerning the Levelling Up agenda, it can be difficult to find, amidst the broad-stroke ambitions, a sense of how the funding will be accessed in practice; who and what will be eligible for funding, and when will we see the fund in operation? So, let’s begin by diving into the detail surrounding the delivery structure of the fund. As we shall see, one of the complexities of the UKSPF—and one of the ways in which it differs from ERDF and even other UK stimulus packages such as the Levelling Up Fund—is in its revisionary view of the UK’s political geography.

Continuity with EU funding and the New Delivery Geography

Regarding the stated goal of replacing EU structural funds with the shared prosperity fund, there has already been some consternation about what appears to be a reduction in funding levels. You may have already seen some of the complaints from the IFS, the devolved administrations and several English mayors. The Scottish government, for example, reacted to the prospectus by arguing that Scotland’s UKSFP allocations for 2022-23 are £151 million short of the EU funding they are designed to replace. As SPICe, the Scottish Parliament Information Centre, has explained in detail, there are several reasons for the discrepancy between the UK government’s figures and those of the Scottish government. A key issue they note is that behind the UK government’s reduced allocations for 2022-23 and 2023-24 is the expectation that certain EU funds will continue to be available in parts of the UK through to the end of 2024 though, as SPICe point out, the government’s precise assumptions about these remaining funds (i.e., how much remains and where it is available) have not been made clear.

In terms of the experience of grant-seeking, changes in levels of funding are important but perhaps not the most significant factor. Rather, it is the government’s approach to the geography of funding distribution that may well be the key takeaway from the prospectus. One of the government’s stated aims in designing the fund’s delivery structure is to empower local communities to choose how best to invest funding for themselves. The idea, then, is that the funding is distributed for specific initiatives not by central government, but by local government. These initiatives can be in the form of grant programmes aimed at public or private organisations, the commissioning of third-party organisations, procurement activities, in-house provision of services, or loan programmes. Every part of the UK has been allocated a set amount of funding (these amounts have been published with the fund prospectus). In England, Scotland and Wales, these allocations will be granted directly to what the government is calling lead local authorities, while for Northern Ireland, the fund will be directly administered by UK central government.

Lead local authorities in Great Britain will receive their allocations once they have submitted investment plans detailing how they intend to use and distribute the funds. The window to submit these plans closes in August and the first actual allocations will be made in October. In other words, the real launch of the UKSPF is very much still ongoing.

In some places, the lead local authority will be a unitary authority or lower tier authority. In parts of England with Mayoral Combined Authorities (MCAs), the MCA will take the lead, while in London, it will be the Greater London Authority (GLA). Local authorities are also being encouraged to work together to deliver trans-regional initiatives where appropriate. In Scotland, by contrast, individual local authorities are expected to collaborate within Regional Economic Partnerships, such as the Aberdeen City Region and Glasgow City Region, which already operate to a degree as distinct partnerships for the purpose of the Scottish City Region Deals. Similarly, in Wales, four regional partnerships have been designated as delivery vehicles.

One effect of the use of the so-called regional economic partnerships in Scotland and Wales is to ensure that responsibility for funding is located neither simply at the local level (at the level of individual local authorities) nor at the level of the devolved administrations. The UK government is keen to position this decision as the result of collaboration with devolved administrations in the design of the fund; but there has already been some disquiet about the relative marginalisation of devolved governments in the fund’s structure. The charity and think tank, the Institute for Welsh Affairs (IWA) noted, for example, that the UKSPF delivery structure in practice has no formal role either for the Welsh government or for members of the Senedd, going so far as to call the fund a “deliberate retrenchment of devolution to Wales.”

What grant-seekers can expect

What all this means in practice for grant-seekers—and in particular, for grant programmes dedicated to upskilling workers—differs widely depending on specific local authorities’ investment plans; but we can already draw some broad conclusions from the prospectus. The reliance on regional economic partnership areas may be thought of as an attempt to create in Scotland and Wales something similar to the 38 Local Enterprise Partnership (LEP) Areas in England. The English LEP areas overlap multiple local authorities and serve, in a few cases, as inexact corollaries to Mayoral Combined Authorities. By trying to create regional (rather than local) partnership areas in Scotland and Wales, it is possible to argue—if we’re being generous—the government is trying to facilitate the creation of a broader range of support programmes than would be available via a single local authority. Medium-sized businesses interested in collaborative innovation may well benefit, in this situation, from a greater range of potential partners. A potential concern for smaller businesses is that, if their new Regional Economic Partnership Area offers only one open-scope business growth support programme, there will be far more competition than for the equivalent local authority-specific programme. (Although, this issue may well be offset by a greater range of sector-specific small business programmes).

In terms of workforce development funding in particular, the picture is a somewhat complex.  Although the government has said clearly that “People and Skills” are one of the fund’s three key priority areas, in fact they have announced that lead local authority funding plans for the next two years should focus on investment in “Communities and Place” and “Supporting Local Business.” Interventions which address “People and Skills” will only be allowed over the next two years where current EU-funded initiatives addressing this priority area are being delivered by the voluntary or community sector. This does not mean, however, that we won’t see grant programmes or other support schemes aimed at training or workforce development. Among the suggested interventions for local authorities in England that come under the remit of “Supporting Local Business” are funding for new training hubs and support for Made Smarter Adoption programmes. (The latter are government schemes which aim to support manufacturing SMEs within specific English regions—the North West, North East, Yorkshire, and the West Midlands—in adopting digital technology through grant funding, training and expert advice.)

Other suggested UKSPF interventions to support local businesses include, in Wales, funding to enable the “progression of small businesses into productive medium sized firms,” and in Scotland, “support for new and existing businesses and start-ups aligned with local, regional and Scottish policy.” The likelihood is that tailored grant programmes designed to fund training and reskilling will form a part of many local authority investment plans on the grounds that workforce development is a crucial part of the progression and growth of all small businesses and start-ups.

To date, plenty of local authorities and partnerships have successfully run grant programmes with EU structural funds, aimed at helping small and medium-sized enterprises (SMEs) train and upskill their workforce. Consider, for example Business Gateway Fife, who support entrepreneurs and businesses on behalf of Fife council: their Workforce Upskilling Grant currently offers ERDF funding to SMEs for highly specific workforce training to address sectors and topics such as cyber security and project management. This kind of programme will not be the primary focus of the first two years of the UKSPF, but we are likely to see programmes like this, as well as initiatives offering non-grant training workshops, as part of the support package that local authorities end up offering.

For other articles, check out our FUNDED magazine.