National service plan ‘could take millions in funding from Wales and Cornwall’

Areas like Merthyr Tydfil in South Wales, Cornwall and the Tees Valley are among the areas with the most to lose, according to research by the Institute for Fiscal Studies (IFS).

The plan to close the Government’s flagship UK Shared Prosperity Fund (UKSPF) by 2028 and use £1.5 billion to support military and volunteering opportunities for 18-year-olds could result in wealthier areas across southern England receiving “a substantial increase in net funding”, researchers found.

But Prime Minister Rishi Sunak has said he is “absolutely committed” to levelling up in Cornwall, on a visit to Penzance on Wednesday.

The Department for Levelling Up, Housing and Communities previously announced plans to spend £2.6 billion on local authorities between 2022 and 2025, to offer councils a “flexible approach” towards three primary areas: communities and place, supporting local business, and people and skills.

With the UKSPF figure set to reach £1.5 billion per year by March 2025, the Government claimed it could deliver on its “commitment to match EU structural funds for each nation” after Brexit.

The Conservative Party has costed its national service plan at £2.5 billion, with the remaining £1 billion to come from a crackdown on tax avoidance and evasion.

David Phillips, IFS associate director, 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.

“Rather than being targeted at poorer areas and aimed at levelling up, the funding would be spread across the country based on where 18-year-olds are undertaking their military or community service.

“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.”

According to the IFS, the UKSPF is worth £145 per person in Cornwall and the Isles of Scilly, rising to £246 in Blaenau Gwent in South Wales and £273 in Merthyr Tydfil.

Merthyr Tydfil County Borough Council has a series of initiatives on its Shared Prosperity Fund webpage, including a start-up grant scheme, up to a maximum project cost of £2,000 to help eligible new businesses grow, a decarbonisation scheme for up to £50,000, and a tourism attraction capital scheme for up to £20,000.

The UKSPF is worth £6 or less per person in areas of southern England including Oxfordshire, Windsor and Maidenhead, Medway in Kent and Brighton and Hove.

Mr Phillips said the UKSPF “is in need of significant reform” because funding allocations “are based to a large extent on data from the mid-2000s and contain a big ‘cliff edge’ which mean areas whose characteristics differ just a little can get vastly different amounts of funding”.

The national service plan would mean all 18-year-olds would be legally required to take up either a 12-month placement in the armed forces or cyber defence or give up the equivalent of one weekend a month to volunteer in their communities.

Mr Sunak was asked by reporters in Cornwall if regions receiving UKSPF cash would miss out as a result of funding being repurposed for his scheme.

The Prime Minister replied: “I am absolutely committed to levelling up in Cornwall and you can see our track record.”

He pointed to investment in high streets, hospitals and transport infrastructure in Cornwall, and added: “Those are all examples of the investment that is going into levelling up here in Cornwall and that will always continue under a Conservative government led by me.”

Mr Sunak has previously said: “This modern form of national service will mean that young people get the skills and the opportunities that they need which is going to serve them very well in life.”