The UK Shared Prosperity Fund: Strengthening the union or undermining devolution?

The UK government’s post-Brexit UK Shared Prosperity Fund (UKSPF) – replacing EU ‘structural funds’, to be launched in April 2022 – risks damaging trust between the UK and devolved administrations and undermining the UK government’s key objective of binding the four nations of the UK closer together.

This report sets out how the UKSPF can work in a way that respects the devolution settlements, takes into account the devolved governments’ existing role in administering EU structural funds, and delivers the UK government’s goals of a less bureaucratic and more-targeted fund. It calls on the UK government to ensure greater consultation with the devolved nations, introduce clear spending criteria and set up a governance structure that allows the devolved nations to work as partners.

As EU members the UK was allocated a total £11bn in budget transfers between 2014–20. More money was sent to the devolved nations than to England, with the administrations in Edinburgh, Cardiff and Belfast determining how and where to spend their allocations.

By contrast, the UKSPF will be operated through a single UK-wide framework administered by the UK government, with a limited role for the devolved administrations. This approach will empower UK ministers to direct investment, including within the devolved nations, and to argue that the fund is working in the interest of the union. But from the perspective of the devolved governments the plans represent an unwelcome encroachment.

After Brexit it is legitimate for the UK government to take a different approach to structural funding and to seek to strengthen the union through UK-wide investment initiatives. There is also a clear opportunity to design a system for supporting poor regions that is less bureaucratic and better targeted than the notoriously process-heavy EU structural funds.

Ahead of autumn’s expected publication of the framework for the UKSPF, the UK government should:

• improve its approach to consultation with the devolved governments, share more information, and refrain from making announcements without prior notification
• establish transparent criteria for the allocation of funds based on an assessment of relative need at the local, as well as regional, level
• clarify how it will ensure that spending under the new fund complements rather than duplicates spending programmes managed by the devolved governments
• set out how it will engage with devolved counterparts at each stage of funding allocation, and how disputes will be resolved
• explain how it will meet its manifesto commitment that devolved nations will receive “at least as much” funding to support economic development as previously
• ensure that the UKSPF operates over a period of at least five years to allow devolved governments and recipients of funds to plan and budget effectively
• clarify how the fund will work in Northern Ireland, and especially how funding allocations will take account of the need for cross-community support.