County councils face a ‘cliff edge’ in their attempts to boost economic growth locally, authorities say.

Jane Merrick inews.co.uk

Funding to revive local communities and high streets is being drastically cut back or removed altogether in some council areas by the Labour Government, it has emerged.

The UK Shared Prosperity Fund (SPF), which was launched under the previous Conservative government, has been worth around £900m for county council areas to boost economic growth since 2022.

But that pot of money will be replaced in March by two new funding streams which will fall short for some areas and fail to reach others, forcing many authorities in largely rural areas facing a “cliff edge” for economic growth funding next year, the County Councils Network (CCN) said.

These cuts will jeopardise their ability to support small businesses and create jobs and entrench inequality between urban and rural areas, the group said.

The new schemes are Pride in Place, which is a more targeted £2m annual fund focused on certain neighbourhoods within areas, and a Local Growth Fund, which the Government has said will be diverted to 11 mayoral city regions in the Midlands and the North.

A survey of the CCN’s 38 authorities reveals real concerns over Pride in Place’s scope and amount of money available.

In many cases, Pride in Place yearly funds are less than CCN areas received via the SPF, and can only be spent in an area of the government’s choosing, and at the neighbourhood level.

Councils will not be able to spend the money on county-wide business support such as job creation.

And the Local Growth Fund, for those who receive it, will be smaller than the SPF, the CCN said.

Shropshire, Devon and West Northamptonshire councils all said they will receive no money at all under the new schemes.

One local authority said the cuts would lead to “the total collapse of the post-EU settlement for growth funding for local areas”.

No council surveyed by the CCN said Pride in Place was an adequate replacement for the SPF, which has been used over the last few years to fund “growth hubs” supporting local businesses including startups or those in emerging industries.

Nine in 10 councils were concerned their areas will not receive any money from the Local Growth Fund.

All but one area said they will be unable to continue local business support services without adequate replacement funding.

Eight in 10 areas said the ending of the SPF would have a significant impact on job creation and business support, while several were beginning to shut down growth hub programmes, with some already beginning to make redundancies.

Four in 10 respondents said their job losses could reach up to 50 people in their areas, with one even saying that it could be over 200, while seven in 10 councils say they will no longer be able to fund employment support programmes and upskilling.

Seven in 10 councils said they would no longer be able to fund high street improvements and community projects, and six in 10 said it would impact tourism.

The CCN, whose members provide more than half of England’s jobs and businesses, said cutting funding would hold back Britain’s productivity, with national economic growth already sluggish.

The group said the shift under the Local Growth Fund, targeting mayoral city regions in the Midlands and the North risked creating a “lopsided system” that prioritises urban areas at the expense of rural and county communities.

Councillor Steven Broadbent, finance spokesperson for the CCN, said: “At a time when the Government has made economic growth its key priority, it is concerning that the Government’s actions suggest it believes growth can only happen in urban and city areas, creating a lopsided system of ‘have and have-nots’. On the contrary, counties are the backbone of the English economy and vital to its prosperity.”

Councillor Rob Wilson, cabinet member for economic growth at Shropshire Council, said not receiving any money under the Pride in Place or Local Growth Fund puts the authority, local businesses and residents at a “major disadvantage”.

He added: “Over the past four years, Shropshire has used approximately £20m from the UK SPF to deliver around 60 projects including business advice, training, tourism, and cultural measures, that have benefited communities across the county. These projects will end in March, and without new funding, many cannot continue.

“Shropshire, as a rural area, already receives less funding per person compared to other more urban places, and focusing the new fund on cities will make this inequality worse.”

Councillor Simon Clist, cabinet member with responsibility for the economy at Devon County Council, said: “The end of this fund, with no replacement for large counties like ours, creates a cliff edge at precisely the moment when economic inclusion and business resilience need greater support, not less.”

Councillor James Petter, deputy leader of West Northamptonshire Council, said: “At a time when economic growth is a national priority, it is concerning that county areas currently have no equivalent replacement funding. Without a clear route forward, valuable business support and economic development activity may be difficult to sustain.”

A Ministry for Housing, Communities and Local Government spokesperson said: “We’re putting power into the hands of local communities so we can reverse years of decline.

“Through our Pride in Place Programme we’re investing to £5 billion to rebuild thriving communities across Britain, while our Local Growth Fund will empower local leaders to boost regional productivity.”