UK Shared Prosperity Fund

Lauren Edwards Excerpts

Thursday 12th September 2024 Commons Chamber

[Lauren Edwards (Rochester and Strood) (Lab)]

Thank you, Madam Deputy Speaker, for the opportunity to hold my first Adjournment debate in this House. I sought this debate because I am conscious that the forthcoming Budget is rapidly approaching and I wanted to raise with Members and Ministers the issue of the cliff edge for funding of the UK shared prosperity fund. Any future funding of the UKSPF is of course a matter for the Chancellor, but I would like to use the debate today to discuss the merits of the fund, how we can learn from the experiences of implementing it over the past few years, particularly in local government, and the approach to local growth funds under the new Labour Government.

We know that the Government’s top mission is to boost economic growth across the UK. It is my firm belief that a new, improved version of the UKSPF could make an important contribution to that while also supporting local communities and boosting regeneration efforts. I thank the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the hon. Member for Nottingham North and Kimberley (Alex Norris), for his attendance today; I know that he cares strongly about local growth and supporting community cohesion, and I look forward to hearing his response at the debate’s conclusion.

The UKSPF was introduced as the domestic replacement for the European structural and investment fund after Brexit. The previous funding provided by the Conservative Government did not match the European structural and investment fund but did provide local authorities with some devolved funding to support local priorities, with particular emphasis on regeneration, business support and skills.

The UKSPF began in December 2022 and is due to end in March 2025. Although it is by no means perfect, I believe it has had a broadly positive impact and I would like to draw on my own experience as a former Medway council cabinet member responsible for distributing the UKSPF. Feedback from Whitehall to officials at the council has been that Medway council’s approach was considered best practice, and hence I am keen that the Minister hears about our experience. I know he is a big supporter of local government and evidence-based policy making, and no doubt he will wish to hear from other Members of this House who also have direct experience of the UKSPF.

In Medway, we used our UKSPF allocation to support local community groups, businesses and charities, which we considered best placed to recognise what their areas needed in order to thrive. Rather than a top-down approach, we asked communities what they needed and functioned as the facilitator to make things happen, using the UKSPF. The feedback we received was that this approach was empowering for local communities and brought people together. An SPF network was established that created a mutually supportive community that led in later years to joint bids for community projects.

The UKSPF’s potential to support broader regeneration efforts to revitalise our town centres is significant. In Medway, small pots of money delivered significant economic and social benefits. One of the ways I was particularly keen to use the UKSPF was to help our town centre forums host high street events, on the basis that this would bring in thousands of extra visitors and benefit local businesses.

A notable example of this is the Chatham Chinese new year festival, held earlier this year in what is now my constituency. I was the biggest such celebration in the UK outside London and led to an approximate 25% increase in footfall on Chatham High Street. The festival was free to attend and saw a parade, street food, a market, traditional dancers and martial arts masterclasses. The Chatham town centre forum partnered with the local Chinese association, the shopping centre, Medway Youth Council, and local schools and charities to deliver the event. Feedback from residents and vendors was unanimously supportive. Materials purchased using the UKSPF will enable the event to run for future years without further financial support from the council, so the UKSPF will leave a lasting impact. This is important because we want schemes like the UKSPF where possible to deliver longer-term benefits.

I will briefly turn to a few other ways that we used the UKSPF to support longer-term improvements in Medway. We offered small feasibility funds—pots of as little as £5,000—to help groups demonstrate that an idea would work. They could then use that proof of concept to go on to attract funding from other sources to make it happen. We helped community groups, such as the Chatham Intra Cultural Consortium, to transition into a charitable incorporated organisation, or CIO. Achieving that new structure means that it can bid for other sources of funding and is less reliant on financial support from the council. That means it can continue its incredibly important heritage work.

Helping groups to get on a more financially sustainable footing is particularly important in the context of years of constrained local government finance. We also used the UKSPF to provide grants to help businesses to grow by purchasing modern technology and equipment. For instance, a gift business specialising in handmade travel keepsakes was able to use the grant to invest in a new fibre laser machine, which significantly enhanced the business’s productivity and efficiency, allowing it to handle larger orders. We also funded net zero audits and green grants for local businesses that wanted to reduce their operating costs by making their premises more energy-efficient, and we helped them get those green certificates that are now needed to bid for many contracts.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does my hon. Friend agree how important the SPF is to areas, including Truro and Falmouth in Cornwall, that lost their funding under the European regional development fund and the European structural fund when we came out of the EU under Brexit? Does she agree how fundamental it is that there is some sort of replacement fund for that?

[Lauren Edwards]

I absolutely agree, and I will be making the case for that replacement fund later. I thank my hon. Friend for her contribution.

In my constituency, more than 30 local businesses have so far been supported under these UKSPF-funded programmes to reduce their costs, to grow their business and to contribute to helping us reach net zero. We would not be able to do that without this replacement funding for the EU structural funds.

I am conscious that in this final funding year the focus of UKSPF spending is on people and skills. It will be important for Ministers and others to assess the impact that these projects have on helping economically inactive people into good-quality training and work. The examples I have given are just a snapshot of how local councils across the UK have used the UKSPF. Overall, I consider that the UKSPF has worked well in my constituency, and I understand that it has worked well in others too, which is great to hear. It has delivered the economic growth and regeneration aims that this new Government are committed to boosting further.

Despite those successes, there have been challenges with the UKSPF, and it is appropriate that we consider them now, as the existing funding cycle comes to a close. Broader feedback from local authorities to the Local Government Association has highlighted a number of issues. The first is short timescales from Whitehall. Local authorities were given just three months to develop UKSPF investment plans in collaboration with local stakeholders. We need to give people more time to get the right approach and to put more emphasis on long-term strategic planning. The LGA has proposed that any future version of the UKSPF considered by the Government should adopt a six to eight-year funding cycle, and I would certainly endorse that approach.

We also need to reflect on the impact of single-year funding. The annual funding allocation of the UKSPF often led to local authorities commissioning services for just 12 months in order to manage the financial risk. For some projects, that is perfectly appropriate, but for those local areas using the UKSPF for business or skills support, for example, it made it more difficult to address some of the longer-term issues and inequalities in our communities.

Another issue is central Government restrictions. The requirement that skills be addressed in year 3 was an unnecessary restriction. We should trust local authorities to collaborate with their local partners in order to address community needs without such restrictions. I also consider that there is scope to improve and streamline the UKSPF reporting process, which some feedback has indicated was overly bureaucratic. It is of course important that the Government receive assurance that funding has been spent appropriately and used effectively. A fine balance will need to be struck in future.

Finally, I am aware that there were some delays in getting money out the door to local authorities to fund agreed projects. It is important that that, too, is considered by the new Minister for any future approach to local growth funding.

I will return to the immediate challenge that we face: the expiration of funding to support the UKSPF at the end of March 2025. Without continued funding of some sort, the types of initiatives that I have highlighted will struggle to continue or be replicated. I am not aware of any existing funding that would help fill the gap. For longer-term services such as business support and employability programmes that rely on establishing trust and employing staff, the cliff edge is of particular concern. Providers are likely to see staff leave as contracts get closer to their end dates, putting at risk efforts to support businesses and help people get back into work and stay in good, stable employment.

For those reasons, I join with the LGA to urge the Minister to work with the Chancellor to include an additional one year of flexible revenue funding for the UKSPF in the forthcoming Budget. The LGA has suggested that such funding should equate to the value of year 3 of the UKSPF programme. I ask the Minister to consider that as part of his discussions with the Chancellor. Doing so would remove the immediate cliff edge and give Ministers time to consider what the new Government’s approach to local growth funds should be. As I have set out, I consider that longer term allocations are needed alongside a more flexible and lighter-touch national framework that supports even greater local decision making. That would also give time to assess the full outputs of the UKSPF and what improvements can be made for a future replacement fund.

I am pleased to say that the outcomes achieved by Medway council already exceed those set out in the original UKSPF investment plan submitted to Whitehall some years ago. That data, alongside data from lots of other local authorities, should be available to Ministers and could provide a valuable steer on what approaches proved successful and what did not work. I am really confident that by learning from the past and working in partnership with local government to deliver a more flexible, longer-term funding scheme, the new Government could provide a real boost to local economies and communities that goes beyond far beyond anything that we have seen in the current UKSPF funding cycle.