The UK Shared Prosperity Fund: End of an Era — What It Achieved, Where It Failed, and What Comes Next

A Fundability Reflection | March 2026

Introduction

This month marks the end of the UK Shared Prosperity Fund (UKSPF) — one of the most ambitious, frustrating, and ultimately unfinished experiments in post-Brexit regional funding policy. Launched as the domestic replacement for European Structural and Investment Funds, the UKSPF aimed to build pride in place and increase life chances across the UK, becoming a central pillar of the previous government's Levelling Up agenda. As it closes its doors on 31 March 2026, it's worth asking the question that too few in government have been willing to answer honestly: was it a success?

The short answer is: partially. And that matters enormously for the hundreds of thousands of SMEs, community organisations and local councils that have been navigating its complexity since 2022.

Origins and Timeline

The fund was a long time coming. The UKSPF was first announced in 2017, but details were slow to emerge. It was finally launched with the publication of its full prospectus on 13 April 2022. In the intervening years, the UK Community Renewal Fund was deployed as a stopgap.

First payments were expected to reach lead local authorities from October 2022 meaning many areas did not begin delivering projects until well into the 2022-23 financial year — a delayed start that would prove problematic for the pace of spending throughout the programme's life.

How Much Funding Was Provided?

The headline numbers are significant, even if they fall short of the EU structural funding they replaced. The UKSPF provided £2.6 billion of new funding for local investment by March 2025, with all areas of the UK receiving an allocation via a funding formula rather than a competition. This formula-based approach was a notable departure from the EU model — in theory, simpler and faster; in practice, not always.

The Autumn Budget then announced a further £900 million of funding for local investment by March 2026 meaning total UKSPF investment across the programme's full life reached approximately £3.5 billion — including the transitional 2025-26 year.

The Government allocated that £2.6 billion over two years and three months, with at least £1 million guaranteed to every lead authority, alongside supplementary Multiply Programme numeracy funding. Additionally, DEFRA launched the Rural England Prosperity Fund, a top-up to the UKSPF worth up to £110 million for 2023/24 and 2024/25 — a domestic replacement for the EU's LEADER programme used to support rural economies.

Three Pillars, One Fund

The UKSPF channelled funding through three investment priorities, each broad enough to allow local flexibility but structured enough to provide national accountability:

1. Communities and Place — investing in physical and social infrastructure, high streets, green spaces and community cohesion.

2. Supporting Local Business — grants and business support for SMEs, helping with productivity, innovation, equipment and market development.

3. People and Skills — employment support, skills training and pathways back to work.

The fund invested in building pride in place, supporting high quality skills training, supporting pay, employment and productivity growth and increasing life chances.

What Types of Businesses Received Funding?

The UKSPF was broadly accessible to SMEs, though the reality of who actually secured grants varied significantly by geography and local authority. The fund was decidedly not a programme for fast-growth tech startups — it was targeted at the backbone of local economies.

Small and medium-sized enterprises were the primary target for business support, with funding delivered through local scheme partners providing fully funded one-to-one guidance and support.

Grant schemes typically supported:

• Manufacturing and production businesses investing in new machinery and equipment

• Retail and hospitality businesses improving premises or digital capability

• Rural enterprises through the Rural England Prosperity Fund, including farm business diversification

• Social enterprises and third sector organisations delivering community outcomes

• Early-stage growth companies — particularly in London, where the Grow London Early Stage programme supported early-stage growth companies in high growth sectors, with a strong focus on underrepresented founders.

In terms of grant sizes, the range was wide. Grant thresholds in many areas were between £5,000 and £50,000, with larger applications of up to £100,000 considered on a case-by-case basis. Other councils offered grants of between £2,000 and £7,000 with up to 40% match funding required.

Typical grants averaged around £20,000, with individual councils anticipating supporting at least 24 businesses per allocation cycle — illustrating just how hyper-local the distribution of funds became.

Grant Application Success Rates

Granular national success rate data for the UKSPF as a whole has never been published centrally — a transparency gap that has drawn its own criticism. What we know is that grant windows were frequently short, oversubscribed and geographically inconsistent.

Applications for grants were on a competitive basis, subject to availability of funds, and distributed at the discretion of individual councils. That discretion was broad — and unevenly applied across the country. Many grant windows closed within weeks of opening due to demand. Businesses in areas with smaller overall allocations faced far fewer opportunities.

Where It Worked: The Wins

When the UKSPF worked well, it worked genuinely well — and it's important to acknowledge that. The formula-based allocation removed the inherently unfair competitive dynamic of predecessor funds, meaning every local authority received something.

North Yorkshire alone funded 791 projects, reaching more than 50,000 people, safeguarding or creating 2,000 jobs, and directly supporting more than 1,020 businesses. The export and investment programme added £170 million to the county's economy. In London, between 2022 and 2025, £30 million was invested into 28 local business projects, with a further £8 million extended in 2025-26 to continue 26 of those projects. Between April 2024 and March 2025, £25 million was allocated to four Sub-Regional Partnerships and their London boroughs, supporting nearly 10,000 economically inactive and unemployed Londoners with employment pathways.

These are real outcomes. Real businesses supported, real jobs retained, real community spaces restored. The fund's flexibility was its genuine strength.

Where It Fell Short: The Criticisms

Underspending

One of the programme's most persistent problems was underspending. Underspends from the 2022-25 programme were offset against 2025-26 payments suggesting many local authorities had not fully deployed their allocations — a recurring issue that undermined the fund's impact and effectiveness. The bureaucratic monitoring and audit requirements imposed by central government slowed delivery at local level, often meaning the most deprived communities — which needed the most support — were the last to see funding arrive.

A Significant Cut from EU Levels

The UKSPF never truly replaced EU structural funding in scale. The £2.6 billion over three years compares poorly to the roughly £1.5–2 billion per year the UK received annually from EU structural funds — and that doesn't account for the match funding leverage those EU funds generated. The 2025-26 UKSPF allocation was itself a significant reduction of 40% from UKSPF funding prior to March 2025, which campaigners argue has already created real damage to regeneration activities, including redundancies.

Inconsistency Across Geographies

The hyper-local delivery model, while empowering in principle, created a postcode lottery in practice. A business in one local authority area might access a £50,000 productivity grant, while an equivalent business three miles away in a neighbouring authority found its local scheme had already closed. There was no national portal, no standardised eligibility framework, and no meaningful way for a business to compare what was available across the country.

Lack of Transparency

National-level data on grant allocations, success rates and outcomes has been frustratingly difficult to access. While the government commissioned an evaluation strategy, final reporting covering process, impact and value for money was not delivered until Autumn to Winter 2025 — just months before the fund is due to close. For a programme of this scale, that timeline represents a failure of accountability.

What Comes Next: The Replacements

Nationally, the picture across public grant schemes is bleak. With rejection rates around 90%, it is our view that grant funding represents more mirage than oasis for many desperate businesses seeking funding.

From 1 April 2026, the UKSPF will be replaced — but not with a like-for-like successor. Instead, the UKSPF will be replaced by two funds: the Pride in Place Programme and the new Local Growth Fund, with effect from 1 April 2026.

The Pride in Place Programme

The Pride in Place Programme was announced by the Labour government on 25 September 2025, with the aim of addressing some of the most pressing issues within 339 of the UK's most deprived neighbourhoods. In both phases of the programme, places will receive up to £20 million over a ten-year period. It is a longer-term, place-based programme — more akin to the old Towns Fund in character. It is not a business grant scheme. It is a neighbourhood regeneration vehicle, and SMEs should not expect to access it directly as applicants. Programme delivery funding is scheduled to be released from spring 2026.

The Local Growth Fund

The Local Growth Fund is the more substantial of the two replacements — but comes with a significant sting in the tail for many areas. The government has decided that the Local Growth Fund will be delivered in areas with an existing Mayoral Strategic Authority and a GDP per head below the UK average.

In England, the Local Growth Fund is worth £0.9 billion, calculated across four years, with each Mayoral Strategic Authority directed to invest allocations towards infrastructure, business support and skills development.

The controversial element? The Local Growth Fund is very narrowly targeted to specific mayoral city regions in the North and Midlands with the highest productivity catch-up and agglomeration potential — meaning some parts of the country that previously received large public funding allocations under ERDF and UKSPF, such as Cornwall, will not be covered by the Local Growth Fund.

This represents a fundamental philosophical shift. The UKSPF was universal — every area received something. The Local Growth Fund is selective, and the selection criteria are openly metropolitan. For rural England, for the South West, for Scotland's Highlands and Islands, and for many coastal communities, this transition will be deeply damaging. Moray Council, for example, has had to implement mitigation measures to manage the impact of UKSPF ending, including redeploying staff to alternative funding streams and exploring future service redesign options.

Tips for Businesses Affected by the UKSPF Closure

If your business has been receiving UKSPF support — or was hoping to — here is what you should do now:

1. Check your current project deadlines urgently. All activity must take place on or before 30 September 2026, and no UKSPF funding will be provided for activity after that date. If you have an active grant, ensure your project is on track to complete within that window.

2. Exhaust remaining local grant windows. Some local authorities still have underspent allocations to deploy. Check your lead local authority's website immediately. Many windows are closing without fanfare.

3. Understand whether your area qualifies for the Local Growth Fund. If you are based in one of the 11 Mayoral Strategic Authority areas in the North or Midlands, your Combined Authority will be administering Local Growth Fund programmes from April 2026. Contact them to understand what business support schemes will be available.

4. Don't wait for Pride in Place. This is a long-term neighbourhood fund, not a business grant scheme. It will not replace the direct SME grant support that UKSPF provided.

5. Explore alternative funding routes now. Innovate UK (despite its own turbulence), the British Business Bank, sector-specific growth programmes, and your local Growth Hub all remain active channels. If you are in a rural area, watch for any successor to the Rural England Prosperity Fund.

6. Build relationships with your Growth Hub. Growth Hubs — funded through local economic partnerships — often have advance visibility of incoming funding schemes. They are your best early-warning system for what comes next.

7. Consider private funding. With public grant funding contracting, angel investment, revenue-based finance and even community share offers deserve serious consideration for businesses that have relied on public support to fund growth.

Final Verdict

The UKSPF was imperfect, under-resourced relative to what it replaced, and delivered inconsistently across the country. But it was also genuinely useful for thousands of SMEs and communities that would otherwise have had nothing. Its formula-based allocation model was fairer than competitive bidding. Its flexibility gave local areas genuine agency. And its three-pillar structure — businesses, communities, skills — was a coherent framework for locally-led regeneration.

The transition to the Local Growth Fund and Pride in Place Programme represents a retrenchment, not a reinvention. Funding is being concentrated in metropolitan areas with mayoral structures, while rural and coastal communities — historically among the most dependent on structural funds — are being asked to make do with less. That is a political choice, and not one that should pass without scrutiny.

For UK SMEs navigating this landscape, the message is clear: the era of broadly distributed public grant funding for local businesses is drawing to a close. Adapt your funding strategy accordingly — and make your voice heard in the policy conversations that will shape what comes next.

Fundability.org.uk advocates for fair, accessible and transparent funding for UK SMEs. If you have been affected by the closure of the UKSPF or want to share your experience, we want to hear from you.