Autumn Budget 2024: Analysis on the UK Shared Prosperity Fund and digital connectivity

Although Chancellor Rachel Reeves spoke for 77 minutes, there were several issues that she either skated over or didn’t raise at all. These ‘other bits’ were contained in the Red Book, the budgetary document released as soon as the chancellor finishes speaking. This blog looks at how two of these ‘other bits’ – digital connectivity and the UK Shared Prosperity Fund – could affect CLA members.

The UK Shared Prosperity Fund (UKSPF), which includes the Rural England Prosperity Fund (REPF), replaced the structural funds that the UK previously received from the European Union for regional and social policy. Under the REPF, rural businesses can apply for capital grants to expand the non-agricultural side of their business or begin a diversified enterprise.

In the Red Book, the government states that the UKSPF (and therefore, the REPF) will continue for another 12 months from April 2025 to March 2026, but with reduced funding of £900m. Compared with this year’s allocation of £1.5bn, it amounts to a sizeable reduction of £600m.

The government also announced that it will review future funding mechanisms for the allocation of grants to local authorities as part of wider local growth reforms.

While we welcome the continuation of the UKSPF and the REPF for another year, the reduction in the total budget of £600m is alarming.

However, as we have seen over the last 18 months since the REPF came into operation, delivery of the UKSPF and the REPF by local authorities has been poor. There have been breakdowns in communication, misunderstandings of the rules and guidelines on the REPF and a complete failure of some local authorities to properly engage with external stakeholders. It must improve if rural businesses are going to be able to diversify.

The concern remains that government policy is prioritising urban areas, with rural businesses and communities being marginalised. If rural development is to be effective, the government needs to put in place clear rural growth plans, delivered through a devolved approach that considers the views and needs of rural businesses. This can only be achieved through a rural development policy that comprehensively understands the dynamics of the rural economy and that can deliver and work in the interests of rural businesses and communities.

In the lead up to the Budget, there were numerous rumours that the government wanted to redirect Project Gigabit funding to urban areas where it had previously been targeted at remote rural areas. We sought clarification from ministers and officials about what was actually happening. Former Culture Secretary Sir John Whittingdale, supported by 54 other MPs, wrote to the secretary of state for science, innovation and technology asking for information on where the money will be spent and reiterating that rural areas need to be prioritised.

Buried in the Red Book, the government reconfirms that £500m would be used in 2025/26 to fund future digital deployment in Project Gigabit and the Shared Rural Network.

This fails to answer the various questions we have posed and fails to provide the certainty that the telecoms industry needs.

For context:

• Some £1.9bn has already been spent in deploying gigabit-capable broadband (fixed line) through Project Gigabit with a further £750m allocated to live projects. This is out of a budget of £5bn, set by the previous government.
• The government provided £500m for the Shared Rural Network to fix total not spots in mobile coverage. These are areas in the UK with no mobile signal at all.

If we assume that £350m of the £500m announced for 2025/26 will be spent through Project Gigabit, this still leaves some £2bn in the fund. And we know that none of the original £500m of taxpayers’ money for the Shared Rural Network has been spent, so it is possible that £150m could be allocated. That leaves £350m still in the Shared Rural Network pot.

We still don’t know how the remaining funds will be used. If the goal remains universal coverage for both fixed line and mobile broadband by 2030 (which is the government’s ultimate objective), we need a far better financial projection of how these funds will be spent after 2026. Now is an opportunity for the government to provide the telecoms sector with the clarity it needs.

If rural businesses are to benefit from the digital revolution as espoused by government, it is crucial to know how this money will be spent in the future.