Researchers at De Montfort University have found that many third-sector providers of employment and skills support feel that they are ‘shouting into the void’ when it comes to the impact that the loss of European funding and the transition to the UK Shared Prosperity Fund (UKSPF) is having on their services.

A new report by Professor Jonathan Payne and Dr Peter Butler of the People, Organisations and Work Institute (POWI), together with Dr Jonathan Rose, draws upon 14 interviews with third-sector providers and key stakeholders, and follows on from their recent survey results.

Third-sector organisations provide personalised, one-to-one support for individuals with multiple barriers to progress towards employment and improve their self-confidence and well-being. In the past, many benefitted from the European Social Fund (ESF). While this funding has nominally been replaced by the UKSPF, the amounts on offer are significantly reduced, and funding being made available for ‘people and skills’ priorities’ has been delayed.

The report adds to the evidence from the survey results and reveals the deep frustration many providers feel about cuts in funding and the way in which UKSPF has been implemented as commissioning decisions have been devolved to local authorities. Against the backdrop of austerity, too many local authorities are said to be using UKSPF to fund their own in-house employability teams rather than commission services from third-sector providers with a proven track record of delivery. Nor has the promised reduction in bureaucracy associated with the European Social Fund materialised, with some local authorities still using the old ESF forms.

At the same time, short-term funding (typically less than one year) and the relatively small amounts of funding available are posing major problems. Some providers are on a treadmill of applications, having to make multiple bids to different local authorities, while others do not see the available contracts as worth bidding for. UKSPF’s highly fragmented funding and commissioning regime is seen as inefficient, lacking in transparency, and failing to meet the needs of users who need long-term support. It is also exacting a heavy toll on providers who are having to retrench services or close down altogether.

Many providers told us that they feel ignored by Government and that the sector is in crisis, with its capacity being seriously reduced. This is at a time when the services they offer are needed more than ever to address high levels of economic inactivity in the UK.

Prof. Payne commented: “The UK government had a golden opportunity with UKSPF to put in place long-term funding for employability support, free of the bureaucracy associated with ESF. Instead, third-sector providers have faced a perfect storm of reduced funding, short-term commissioning, and rising demand from disadvantaged users, many of whom have been hard hit by the pandemic and cost-of-living crisis.”

He added: “If policymakers want to capitalise on the potential of the third-sector in helping some of most vulnerable in our society into sustainable employment, decisions will need to be made quickly on the future of UKSPF after March 31, 2025, when the scheme is due to end, and give some serious thought to learning the lessons from what has happened to date.”