Ahead of the chancellor’s Spring Statement on 23 March, London boroughs warn that the capital needs “enough funding and freedom” to tackle its immense unemployment and skills challenges.

With the Spring Statement due to confirm allocations for the multi-billion pound UK Shared Prosperity Fund (UKSPF), the cross-party group London Councils is calling for the capital to receive at least the same amount as under previous EU funding. London Councils is also seeking sufficient flexibility so that London’s share can remain focused on boosting prosperity and spreading opportunity through much-needed employment and skills support.

Boroughs say these resources are vital for addressing the needs of the capital’s young people not in education, employment or training and persistent joblessness among disadvantaged groups. Unemployment in London remains above the UK average. The latest ONS figures show 5% of Londoners are unemployed, compared to the UK-wide figure of 3.9%. This is the second-highest rate in the country, with only north-east England recording higher unemployment. London has the highest number of people receiving universal credit (937,773 – almost one in ten Londoners) among the regions.

Youth unemployment is a particular concern in the capital. Unemployment among Londoners aged 16-24 is 17.4% – which is 5% higher than the pre-pandemic rate. By comparison, the latest youth unemployment rate across the UK is 10.5%.

Due to launch this year, the UKSPF replaces annual funding of £2 billion for regional development from EU Structural and Investment Funds. London received over £1 billion from 2014 to 2023 (including 50% match funding from boroughs and other sources), which has gone towards a range of programmes aimed at helping Londoners into work and boosting their skills.

London spent around 80% of this funding on employment programmes. Achievements include support being provided to over 250,000 people, of whom almost 50% came from an ethnic minority background, 28% were aged 50 or over, and around 20% had a disability. Overall, more than 37,000 Londoners have been helped into employment and around 60,000 gained a qualification.

The capital’s ongoing challenges around employment and skills mean boroughs are pushing for continued provision on these issues as EU funding comes to an end. However, with the Spring Statement expected to outline UKSPF budgets across the UK, there remains considerable uncertainty over how much UKSPF investment will be available in London.

While boroughs welcome the UKSPF as an opportunity to reduce bureaucracy and use economic development funding in different ways, there are concerns about reduced funding coming to the capital and national priorities taking precedence over local and regional needs. Although London’s top priority for economic development funding is addressing joblessness through targeted employment support programmes, the government has stated that the first two years of the UKSPF will focus on boosting pride in place.

Cllr Nesil Caliskan, London Councils’ Executive Member for Skills & Employment, said:

“London is a city of staggering inequalities. As well as growing cost-of-living pressures on low-income Londoners, we’re suffering from some of the highest unemployment rates in the country – especially among young people.

“The launch of the UKSPF is an important opportunity to target resources to where they can make a real difference, and the government must make sure London has enough funding and freedom to tackle our immense employment and skills challenges.

“Any reduction in London’s funding will undermine efforts to get Londoners into jobs, to boost training and skills, and to spread prosperity among those most in need. There are many communities in the capital in desperate need of levelling up, and we hope the government will recognise this as it finalises the UKSPF allocations.”

Boroughs work closely with the government and other key partners across the public, private and voluntary sectors on addressing economic exclusion in the capital. London Councils welcomed the emphasis in the government’s recent levelling up white paper on the UKSPF being used to “provide resource focused investment to support people, boost pride in place, and strengthen communities”, along with the promise of more “local insight and expertise” shaping employment provision.

However, the group also highlights that last year’s allocations for the Community Renewal Fund, which was introduced by the government to support economic development activity ahead of the UKSPF’s launch, saw London receive just £3.8m of funding. London’s allocation represented only 1.9% of the total, despite the capital accounting for 13.4% of the UK population. London received just 42 pence per resident, compared to an average of £3.43 per resident across the rest of the UK and £14.78 in Wales.

Noting the Treasury Select Committee’s analysis suggesting the government’s UKSPF plans represent a sizeable reduction compared to annual budgets under EU funding provision, boroughs fear London missing out on resources – potentially making it harder to reduce unemployment and secure a post-pandemic economic recovery that works for all Londoners.