Guidance

Rural England Prosperity Fund: prospectus

Published 3 September 2022

Applies to England

Guidance for local authorities for funding under the Rural England Prosperity Fund. The Rural England Prosperity Fund is referred to as the ‘Rural Fund’ in this prospectus.

Important dates

Dates are indicative and may be subject to change.

• 3 September 2022 - Rural Fund launch
• 12 September 2022 - Rural Fund addendum platform launch
• September 2022 - engagement sessions with local authorities and local partners to support the Rural Fund process
• 3 October 2022 to 30 November 2022 - Rural Fund addendum submissions window
• November 2022 to January 2023 - Rural Fund assessment period for government
• January 2023 - anticipated date for approval of Rural Fund proposals
• April 2023 - first payments expected to lead local authorities
• April 2023 to March 2025 - funding period

For more information, contact: ruralenglandprosperityfund@defra.gov.uk

1. Introduction

This prospectus builds on, and is complementary to, the UK Shared Prosperity Fund (UKSPF) prospectus. It provides guidance for eligible local authorities to get funding under the Rural Fund.

You’ll have submitted a UKSPF investment plan to the UK Government. The Rural Fund is a top-up to the UKSPF and is available to eligible local authorities in England. It succeeds EU funding from LEADER and the Growth Programme which were part of the Rural Development Programme for England.

Integrating the Rural Fund with the UKSPF aligns with the government’s commitment to streamline the funding landscape. We’ll set out a plan for this later this year.

To access funding under the Rural Fund, we’re asking you to provide specific additional information as an addendum to your UKSPF investment plan. Our intention is to make the process as simple as possible. We’ve aligned as much as we can with what you’re already doing for the UKSPF.

1.1 What is the Rural Fund?

Rural areas often face specific challenges including:

• lower productivity rates
• poorer connectivity
• poorer access to key services

The Rural Fund supports the aims of the government’s Levelling Up White Paper and Future Farming Programme. It funds capital projects for small businesses and community infrastructure. This will help to improve productivity and strengthen the rural economy and rural communities.

The Rural Fund is integrated into the UKSPF which supports productivity and prosperity in places that need it most. For eligible local authorities, the Rural Fund is a rural top-up to UKSPF allocations. It supports activities that specifically address the particular challenges rural areas face. It is complementary to funding used to support rural areas under the UKSPF.

The Rural Fund sits alongside existing Defra schemes, including:

• The Farming in Protected Landscapes programme
• The Farming Investment Fund
• The Platinum Jubilee Village Hall Improvement Grant Fund

Read Section 6.1 Who can the Fund support? for the main objectives of these schemes.

Eligible local authorities qualify for an allocation based on factors developed in line with the scheme objectives. This includes the size of their rural populations. Not all authorities with rural areas are eligible. Read Section 3.1 How the indicative allocations were determined.

Funding is available from April 2023 to March 2025.

2. What to use the funding for

2.1 Aims of the Fund

The Rural Fund objectives sit within the UKSPF investment priorities for:

• Supporting Local Business
• Community and Place

They also relate to 2 of the Levelling Up White Paper Missions:

• Mission 1 – Living standards
• Mission 9 – Pride in place

The Rural Fund provides capital funding to:

• support new and existing rural businesses to develop new products and facilities that will be of wider benefit to the local economy. This includes farm businesses looking to diversify income streams
• support new and improved community infrastructure, providing essential community services and assets for local people and businesses to benefit the local economy

This funding should not replace funding plans for rural areas under the UKSPF. It is a top-up to help address the extra needs and challenges facing rural areas.

2.2 Projects which may be funded

You must use funding on capital projects. This means you must spend grants on lasting assets such as a building or equipment.

Grants must be for business or community purposes. You cannot use grants to fund domestic property improvements or to buy private vehicles. You cannot spend grants on revenue costs such as running costs or promotional activities.

You may be able to use revenue funding from your UKSPF allocations to support the capital from the Rural Fund top-up. This must be consistent with your UKSPF investment plans.

Projects must be in a rural area. For Rural Fund purposes, rural areas are:

• towns, villages and hamlets with populations below 10,000 and the wider countryside
• market or ‘hub towns’ with populations of up to 30,000 that serve their surrounding rural areas as centres of employment and in providing services

To help you identify the types of projects we expect to see funded, we’ve provided a list of interventions, objectives, outputs and outcomes. Most are the same as UKSPF interventions for:

• Supporting Local Business
• Communities and Place

There are 2 extra interventions providing funding for:

• small scale investment in micro and small enterprises in rural areas
• rural circular economy projects

The list of interventions also provides example projects you could fund, such as grants for:

• food processing equipment to scale up from domestic to commercial kitchens (non-farming businesses only)
• converting farm buildings to other business uses
• rural tourism such as investments in visitor accommodation and farm diversification for event venues

Investments should demonstrate value for money and additionality. We’ll provide materials to help support your assessment of projects and to share best practice.

You should also consider how investments contribute to net zero and nature recovery objectives. These include:

• the UK’s commitment to cut greenhouse gas emissions to net zero by 2050
• wider environmental considerations, such as resilience to natural hazards
• the 25 Year Environment Plan commitments

To support green growth, think about how projects can work with the natural environment to achieve objectives. At a minimum, you need to consider the project’s impact on our natural assets and nature.

You should prioritise projects that deliver the greatest economic, environmental and social benefits.

Rural Fund projects can be part of a wider UKSPF intervention. They can provide extra funding where the objectives are the same to add value.

2.3 Case studies: supporting rural businesses

Farm diversification - development of glamping site on farm

A former LEADER farm diversification project received £15,500 for glamping facilities. This capitalised on the growing demand for tourism in natural locations. It led to extra business for local pubs, restaurants, and rural tourist attractions. It also had positive environmental impacts, showing visitors the local wildlife. The accommodation was low impact, using renewable energy and tents made from natural materials. The new stream of income meant the farm employed seasonal workers, supporting the local economy.

Expanding furniture making business

A former Growth Programme project received funding of £40,000. This funded new machinery to meet increasing demand. The furniture making business increased in-house manufacturing and gained new contracts. This led to the creation of 2-3 full-time equivalent jobs.

2.4 Case study: supporting rural communities

Modernising cricket club

A former LEADER project provided £11,500 funding to modernise a cricket club’s facilities. It funded new facilities for sporting and social events. The grant also helped to furnish and equip the new hall and buy staging and a bar area for events. This led to more event bookings and employment of a manager and part-time bar and catering staff.

3. Funding places will receive

A total of up to £110 million is available for financial years 2023 to 2024 and 2024 to 2025. Read the Rural England Prosperity Fund: allocations to check your indicative allocation.

Allocations have been determined at local authority level. The indicative allocations show totals for Mayoral Combined Authorities (MCAs). In MCA areas, you should use allocations to fund projects in rural areas. You do not need to spend them in each local authority where funding is allocated, although we encourage this.

We’ll confirm allocations after considering the additional information you provide in your addendum to the UKSPF investment plan.

3.1 How the indicative allocations were determined

The Rural England Prosperity Fund: methodology describes how we decided the allocations.

It takes account of:

• rural population
• rural businesses and productivity
• the importance of farming in each authority

Authorities that meet the criteria will get an allocation.

4. How to deliver the Fund

4.1 Overview

You’ll receive funding as part of your UKSPF allocation. You’ll agree and contract projects locally in line with the approved additional information you provide.

We expect you to achieve fund investment and outputs in line with each place’s spend profile.

You must spend all UKSPF contributions, including the Rural Fund, by 31 March 2025. You can use other sources of funding, including your own contributions, after this date to complete schemes.

4.2 Role of local authorities

You’ll deliver projects within the UKSPF framework. You’re responsible for submitting Rural Fund additional information to the UK Government for approval. Read Section 5 Rural Fund process for guidance.

You should consult local rural partners to deliver the Fund. You may wish to use your UKSPF local partnership group. You’re also encouraged to speak to MPs.

Once your additional information is approved and funding allocated, you’re responsible for deciding how to award grants. This will involve:

• managing local project calls for selecting projects in line with approved plans
• approving applications
• contracting with successful applicants
• making payments
• day-to-day monitoring

You should conduct due diligence. Ensure Rural Fund beneficiaries have robust business plans which demonstrate the viability and success of projects.

You’re responsible for ensuring there is no duplication of funding. In particular, there should not be duplication with schemes supporting similar activities. Read Section 6.1 Who can the Fund support? for more detail.

You should have means of monitoring duplication.

Reporting, monitoring and evaluation will be part of the UKSPF.

To comply with World Trade Organisation (WTO) reporting obligations, you’ll need to report certain expenditure to us.

Read Section 6.5 Complying with UK law.

4.3 Role of central government

The UK Government implements the UKSPF and the Rural Fund. It will be responsible for assessing and signing off the addendum you submit for funding.

The UK Government will make payments under the Rural Fund to you.

5. Rural Fund process

Our aim is to make the submission process as simple as possible. We’ll use information you’ve already submitted to the UKSPF.

To access the Fund, you must complete a short template. This is an addendum to the UKSPF investment plan. Include additional information outlining how you’ll use the funding and justifying your plans.

The information we’re requesting will build on your UKSPF investment plan. It will show how you’ll spend your rural top-up allocation to support rural businesses and communities.

You should seek opinions from local rural partners and businesses.

5.1 Rural Fund questions

We’ll ask you to set out how you’ll deliver your funding allocation. This should be as complete and accurate as possible at this stage.

In line with UKSPF investment plans, the questions will cover 3 areas.

i) Local context

Include local evidence of challenges, market failures and opportunities. You should link these to the Rural Fund priorities. Challenges may include:

• low productivity in the rural economy
• farms diversifying their business models during the agricultural transition
• deprivation in rural communities

ii) Selection of interventions and outcomes

Identify the interventions and outcomes you want to prioritise. Select each intervention from the menu of subsidy options. You’ll need to justify the interventions selected.

Explain how the interventions selected will address local challenges, market failures and opportunities. You should rank the interventions selected in order of expected value added.

Ensure the proposed intervention demonstrates additionality. Additionality is the extent to which the outcome arising would not have happened in the absence of the intervention selected.

You’ll also need to be sure you could not fund the interventions selected using private finance. This means instead of government funding.

iii) Delivery

This has 2 sections.

a. Expenditure

Detail what you want to deliver with your funding. Include:

• the indicative spend profile for the 2 years of the fund
• how you’ll ensure value for money, including additionality and future private investment that could be unlocked
• why you cannot use private finance

Describe if you’ll collaborate with other places to deliver specific interventions.

We’ll use information on capability and resource from your UKSPF investment plans to assess this.

b. Approach to engagement with rural partners

Describe your consultations with rural partners and your plans for future engagement.

5.2 How to submit your Rural Fund addendum

The Rural Fund platform will launch on 12 September 2022. Your lead UKSPF contact will receive a link to access the platform which has questions to complete.

Submit your addendum using the online platform during the submission window. The submission window opens on 3 October 2022 and closes on 30 November 2022.

5.3 How we will agree your Rural Fund proposals

When assessing your proposals, we’ll consider:

• how well the proposals meet the strategic objectives of the Rural Fund
• how you’ll ensure value for money and additionality, including whether you could fund projects using private finance
• how projects could unlock future private investment
• how you’ve engaged, and plan to engage, with rural partners

We expect your additional information to be coherent and supported by relevant partners. The interventions and outcomes must be deliverable.

If you do not provide enough information, we may ask for more. This includes failure to enter enough rationale in text boxes.

As part of our assessment, we’ll use information in your UKSPF investment plan. This will save you providing it again.

If we cannot sign off the additional information first time, we’ll give you feedback. We’ll work with you to secure sign off.

6. The Fund’s parameters

The Fund will be responsive to local circumstances. It‘ll be flexible on how you design and deliver fund interventions.

You and local partners should consider the Fund’s parameters when deciding on interventions.

6.1 Who can the Fund support?

The Fund operates in rural areas in England.

Any organisation with legal status can get funding to deliver a Rural Fund intervention. This may include:

• local authorities
• public sector organisations
• higher and further education institutions
• private sector companies
• voluntary organisations
• registered charities
• arms-length bodies of government

We cannot support projects that have received funding from other Defra schemes. This includes:

• The Farming in Protected Landscapes Programme - funding for farmers and land managers to work in partnership with National Parks and Areas of Outstanding Natural Beauty bodies to deliver projects on climate, nature, people and place
• The Farming Investment Fund - grants to improve productivity and bring environmental benefits, covering 2 funds - the Farming Equipment and Technology Fund and the Farming Transformation Fund
• The Platinum Jubilee Village Hall Improvement Grant Fund - grant funding over 3 years (to 2025) to support capital improvement projects for village halls, covering extending buildings and modernising facilities. More details on how to apply will be available shortly

We cannot support projects or costs where there is a statutory duty to provide them.

6.2 When can the investment start?

The Rural Fund can support investment in interventions starting from 1 April 2023. Interventions must fit with Fund requirements in this prospectus.

6.3 Maximising other funding sources

Match or co-funding under the Rural Fund is not mandatory. But you should consider match funding and leveraging options from the private, public and third sectors. This will maximise the value for money and impact of the Fund. Consider other funding when designing interventions and agreeing Fund outcomes.

Projects may draw on resource funding from the UKSPF if this is consistent with the UKSPF investment plan and allocation.

We encourage local collaborations and working with other places to deliver Rural Fund interventions.

6.4 Apportioning costs

We expect costs will normally be apportioned on a percentage basis in line with funding contributions, for projects funded by:

• more than one funder
• more than one Rural Fund allocation

Where you apportion costs, the method should be clear and transparent.

6.5 Complying with UK law

Subsidy control

You’re responsible for complying with subsidy control rules for grant funding. Read UKSPF guidance on subsidy control.

You must follow our guidance on reporting requirements. Read UKSPF guidance on reporting and performance management.

You must follow our guidance on WTO rules and reporting requirements.

Public procurement

You must assess all spend associated with the Rural Fund in advance. This will ensure proposed investment is compliant with Public Contracts Regulations 2015. It must follow local constitution and grant rules, processes and procedures where relevant.

6.6 Branding and publicity

Read Section 7.7 Branding and publicity of the UKSPF prospectus and UKSPF additional guidance on branding and publicity.

7. How we will pay each place or project

The UK Government will make an annual payment to eligible local authorities. This will be at the beginning of each financial year using powers in the UK Internal Markets Act 2020.

We may alter payment cycles where there are performance or delivery issues. We reserve the right to withhold or delay payment.

We’ll ask you to return any underspends at the end of each financial year.

8. How we will measure performance

Read Section 9 How we will measure performance of the UKSPF prospectus and the UKSPF additional guidance on reporting and performance management.

The Rural Fund is part of the UKSPF reporting so you’ll only have one reporting obligation.

8.1 Rural Fund indicators

See the list of interventions, objectives, outputs and outcomes for the Fund indicators. Use these as a guide when deciding your Rural Fund interventions.

You must use the common indicators shown for each intervention to measure outputs, outcomes and impacts.

9. Next steps

Using this prospectus, work with your local partnership group to develop your proposals. Submit your Rural Fund addendum during the submission window.

The indicative important dates for the Fund are provided at the start of this prospectus.