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Five ways the UK Shared Prosperity Fund can rebalance the economy

Executive director of the Institute of Economic Development, Nigel Wilcock, argues that the UK Shared Prosperity Fund should address imbalances in localities that affect prosperity.

Whilst government may have missed its latest deadline for publishing the promised consultation on the UK Shared Prosperity Fund (UKSPF), we reached out to Institute of Economic Development (IED) members to run our own consultation on the fund. Here’s what came back:

Reducing inequality and addressing imbalance

The fund should reduce inequalities between communities. However, if the ethos is to ensure that all areas of the UK can prosper, funding should be targeted at areas which need a helping hand to get there. It should cover major strategic initiatives with resources assigned (aligned to the UK’s Industrial Strategy), but also those that address local economic issues (and clearly link to the needs of the area it serves). The UKSPF should address imbalances in localities that affect prosperity and help set the foundations for a level playing field between regions.

Clear remit to ensure effectiveness of funding

The UKSPF should focus on increasing productivity, inclusive and sustainable growth, economic development and employment/skills support, and widening the remit could dilute the effectiveness of the funding. Specific initiatives should include: business start-up and growth services; sector-specific support; employability targeted for local opportunities; capital infrastructure to unlock development in lagging areas; capital funding for modern business accommodation; as well as programmes incentivising universities to develop presence in smaller towns, encouraging organisations to employ workforce directly and invest in skills development, and delivering high-wage jobs for women.

Prioritising initiatives regionally and locally

One suggestion was to assess by locality what is causing a lack of prosperity in certain areas and what the benefits and outcomes of targeted intervention would be, together with consultation with industry. A focus on district level lagging areas in terms of salary, productivity and business growth was another idea. Above all, the criteria for allocation used should be fair and generally not be competitive as this would not support the objective of rebalancing the economy. The UKSPF should enable collaboration between geographies that could maximise the benefits to those areas and potentially secure better value for money.

Much easier to access than EU funding

The UKSPF should be delivered within a ‘single pot’ for areas, thus removing unnecessary complexity, bureaucracy and the plethora of rules and eligibility conditions that emerge from separated and fragmented funding. EU funding can be over-prescriptive, leading to unintentional consequences. On occasions, the rules prevent funds joining together, resulting in lost opportunities. The fund should have an assumption that activity can be funded as long as it leads to the impacts the programme wants to deliver, alongside local priorities, jointly agreed between government and local areas.

Place-based administration and distribution

Funding should be allocated initially only at the strategic level, leaving local authorities and areas free to allocate to programmes according to local priorities. The ability to deliver sustainable and inclusive growth will require a commitment to appropriate devolution of both the funding and the powers for decision-making providing maximum local discretion. The UKSPF should be set in seven to ten-year funding periods (unlike the current seven-year ESIF programme). A move to an outcome-driven funding model, including quality and innovation measures as well as outputs, was also proposed.

In conclusion, the UKSPF’s success should be measured on its impact rebalancing the UK economy. It should make a genuine difference to local, regional and national economies – delivered by targeting according to need. It should achieve a narrowing of the gap in terms of average salaries, productivity and business growth between the best and worst performing local authority districts, and it should reduce rural isolation.

Image credit - nicolamargaret