An analysis by the Institute for Fiscal Studies (IFS) has found a “significant flaw” in the UK Shared Prosperity Fund (UKSPF) allocations for Welsh councils, which has cost some authorities millions.
The analysis determined that the formula used to allocate the funding to Welsh councils is flawed as the element linked to local deprivation levels doesn’t take population into account.
The UKSPF is the government’s post-Brexit successor to European structural funds and is aligned to the outcomes sought by the levelling up white paper.
David Phillips, associate director at the IFS, said: “This is a significant flaw in a formula that the UK government had several years to work on given it first mooted the UKSPF in 2017.”
The research said the flaw is shifting “tens of millions of pounds” from Welsh councils with large populations to those with small populations.
It stated that if the deprivation element accounted for population differences and all other parts of the formula remained the same, areas such as Cardiff and Swansea would have received £15.5m and £5.8m more funding respectively over the next three years.
Phillips added: “Councils with large populations and areas of significant deprivation such as Rhondda Cynon Taf, Cardiff and Swansea are set to lose out on millions of pounds of funding, that is instead set to go to councils with smaller populations like Merthyr Tydfil and Blaenau Gwent.”
He said it may be possible to fix the flawed formula, but it could cost the UK government £34m over the next three years.
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