UK Shared Prosperity Fund: design and development

Following the UK’s exit from the EU, the Government has said that it will create a UK Shared Prosperity Fund (UKSPF) to replace the structural funding that the EU previously allocated to the nations and regions of the UK. This Fund was first announced in 2017, but details have been slow to emerge.

The Library’s briefing The UK Shared Prosperity Fund explains how the Fund works in practice and compares it with the structural funding from the EU that it is intended to replace.

This briefing looks more closely at the history of the development of the Fund, from its initial announcement in 2017 to the publication of its funding profile in the Autumn 2021 Budget and Spending Review.

Replacing EU structural funding

As a member of the European Union, the UK received structural funding worth about £2.0 billion per year. This funding has been used for boosting several aspects of economic development, including support for businesses, employment and agriculture, and is administered by the different nations of the UK.

Now that the UK has left the EU and the transition period has ended, new funding from the EU has ceased. In order to replace it, the Government has pledged to set up a Shared Prosperity Fund to “reduce inequalities between communities”.

Designing the Fund

The Government considered several issues when designing the Fund. These included:

• the priorities and objectives of the Fund;
• the amount of money to be allocated;
• the method of allocating it between the countries and regions of the UK, and whether this is based on need (and what measure is used to determine need);
• the model by which funding will be allocated, whether pre-allocating an amount for a country or region or inviting competitive bids from across the UK;
• the length of the planning period and the way in which this could conflict with domestic spending priorities;
• who administers the funds (whether they are controlled from Westminster or by the devolved administrations) and the degree to which local authorities are involved;
• the implications of the Fund for state aid rules.

Opinions on the Fund’s design

A number of organisations have already made comments about the possible design. Although these vary in their emphasis (for example, the Welsh Government is strongly opposed to the idea of administering the Fund from Westminster), most organisations seem to agree that the level of funding should be at least maintained at its current level, it should largely be allocated based on need, and local authorities and partners should be closely involved.