The Conservative Party’s plans to abolish the UK Shared Prosperity Fund (UKSPF) to finance its national service scheme would represent a “significant downgrading of the levelling up policy”, the Institute for Fiscal Studies (IFS) has stressed.
Ahead of the UK general election on 4 July, prime minister Rishi Sunak announced last week his party’s scheme that would require 18-year-olds to take part in a form of national service if elected. The scheme will cost £2.5bn annually, of which £1.5bn will come from abolishing the UKSPF from 2028/29 and a further £1bn will come from tackling tax avoidance and evasion.
The UKSPF is a programme set up following the UK’s departure from the EU, providing councils and regional mayors with funding aimed at improving local, social and economic outcomes as part of the ‘levelling up’ agenda. The funding is often targeted at disadvantaged parts of the UK.
According to the IFS, abolishing this funding would “redistribute hundreds of millions of pounds from the poorest parts of the UK”, representing a “significant downgrading of the levelling up policy”.
David Phillips, an associate director at the IFS, said: “The Conservatives’ plan to wind up the UKSPF and use the resources instead to help pay for a new national service scheme would represent a major shift in how funding is allocated across the country.
“The scheme may therefore create opportunities for young people across the UK but would mean hundreds of millions less in funding for community and economic development in Wales, Cornwall and the North and Midlands of England.”
The IFS’s research revealed that Wales could lose £275m per year, Cornwall £72m and the Northeast and Tees Valley mayoral areas a combined £46m. This is after accounting for the potential national service spending on local young people that would be funded by abolishing the UKSPF, the think tank added.
“That said, if it were to remain in place, the UKSPF is in need of significant reform, not least to the funding allocations which are based to a large extent on data from the mid-2000s and contain a big ‘cliff edge’ which means areas whose characteristics differ just a little can get vastly different amounts of funding,” Phillips added.
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