When the UK government launched its replacement for EU development grants last year, ministers promised to “slash” bureaucracy and give spending decisions back to communities.
But economic development experts and local leaders have warned that the UK Shared Prosperity Fund — the three-year, £2.6bn pot allocated for regional economies that superseded Brussels grants — is mired in red tape and uncertainty.
Research shows that some councils had spent less than 5 per cent of their 2022-23 allocations by the end of March after Whitehall failed to sign off on their investment proposals until last December — eight months into the financial year.
They are now waiting for further government permission to “roll over” their allocation into this year.
Local authorities also say they have no idea how the fund will operate after March 2025, when the current government spending cycle ends. Previously, EU grants were disbursed over a seven-year cycle, enabling longer-term planning.
Steve Rotheram, Labour mayor for Liverpool City Region, called the situation a “shambles”. Uncertainty over the scheme made it difficult to provide “continuity” of projects, he said, such as schemes designed to help the long-term unemployed.
“Some programmes have a lead-in period, so they don’t immediately hit the ground running because you have to build up the capacity and train the people. We don’t know whether the next time we need funding, it’s going to be available.”
The SPF was launched in April 2022 as a three-year replacement for grants from the EU social development fund and the European Regional Development Fund.
Local authorities and combined authorities — clusters of councils overseen by a mayor — were asked to submit their bids for allocations by the start of last August.
However, delays in Whitehall meant the bids were only signed off shortly before Christmas, leaving local leaders a short window in which to spend the first year’s money.
Local government researcher Jack Shaw found some had spent as little as 1 per cent of that cash by the end of March. Shaw entered Freedom of Information requests to all authorities allocated more than £1mn and of the 23 out of 24 that responded, found £34.6mn out of £101.1mn — 34 per cent — had been spent in total.
“What’s clear is that the government has been too slow to allocate the fund and as a result authorities have been unable to get the money out the door and into communities,” he said.
Martin Gannon, Labour leader of Gateshead council in the north-east — which had used just 1 per cent of its first-year allocation by the end of March — said that once funding was announced, authorities still had to “go through due diligence and procurement”. This made it difficult to spend the money within the timeframe, he added.
In recognition of the issue, the Department of Levelling Up, Housing and Communities said that councils could “roll over” the money into 2023, if they submitted “credible” plans.
Gannon called that process “frustrating”, however, adding that the authority was “still waiting” for a verdict on its rollover plan.
A senior Whitehall insider said it was unclear why the government, having instituted a relatively light-touch process for clearing bids, had then added another layer of bureaucracy to roll over funding into the next financial year. “No one’s sure why they create these odd processes,” the insider added.
The Industrial Communities Alliance, a campaigning network of former industrial areas across the UK, has been lobbying the government to provide all regional development funds over a longer-term period, arguing that the government’s short funding windows make the pots less effective.
In a paper submitted to the government earlier this month, the alliance argued for a “pragmatic compromise” that struck a balance between the need for Treasury control over annual spending and the effectiveness of local investment programmes.
It said the current three-year cycle presented an “obstacle to longer-term projects, including those of a transformative nature” that needed more time to be stood up and take effect.
The alliance’s director, Professor Steve Fothergill, said the delays in expenditure to date underline that “need for commitments to longer-term funding”.
“EU monies, by contrast, were allocated in seven-year spending rounds with the ability to roll on spending on committed projects for a further three years at the end.”
Despite the delays, some councils said they were “cracking on” with their projects while waiting for the official green light from Whitehall.
Louis Gardner, the cabinet member for economy at the Conservative-controlled Cornwall council — which had spent only 5 per cent of its first year’s allocation by the end of March — admitted the first round of the fund had presented a “number of challenges”.
But while the council was still waiting for formal notification that it could roll over the £15.7mn it was handed for 2022-2023, he said it was not allowing the bureaucracy to delay implementation and contracting of projects.
“We’ve had positive conversations with the government, which seems to be fairly relaxed about that in terms of getting that money out the door.
“They accept the scheme was late to start and while we are still waiting for a formal notice it’s not holding anything up. We’re cracking on.”
A spokesman for DLUHC described the fund as a “central pillar” of the government’s “levelling up” agenda to reduce regional economic divides.
The funds had “empowered those who know their areas best to deliver local priorities — and help to reverse this country’s regional inequalities”, it said, adding that “100 per cent of the money can be rolled over providing there is a credible plan for how to spend it”.