In a new report, the Institute for Government said that the UKSPF, which will replace EU ‘structural funds’ and will be launched in April 2022, could also undermine the UK government’s key objective of binding the four nations of the UK closer together.

The 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 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 an EU member, the UK was allocated a total £11 billion 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 aims to 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.

Ahead of autumn’s expected publication of the framework for the UKSPF, the report states 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.

Report co-author and IfG senior fellow Akash Paun said: “There is a clear opportunity to put in place something that is more flexible and less bureaucratic than the EU system, and that demonstrates to voters the value of UK-wide action.

“But the government appears to be proceeding with its plans for the UK Shared Prosperity Fund with almost no meaningful engagement with the devolved governments or other stakeholders. Unless they change course, and begin to work in partnership, ministers risk undermining their own objectives.”

A UK government spokesperson said: “We reject these conclusions. We will ensure that the government and its institutions continue to collaborate effectively with the four nations to realise the benefits of working together as one United Kingdom.

“We have been engaging with a wide range of key stakeholders in Scotland and across all parts of the UK since 2016, and this has helped identify the opportunities for UKSPF policy, learning lessons from EU funding.

“We will ramp up UK-wide domestic funding to at least match what the EU currently offers - reaching around £1.5 billion a year.”