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Academics at Â鶹ӰԺ Leicester (Â鶹ӰԺ) who previously exposed the fragile state of third sector employability providers in England have followed up with a new report painting a similar picture in Scotland of funding reductions and problems with local authority commissioning.

Professor Jonathan Payne, Dr Peter Butler and Dr Jonathan Rose of the Faculty of Business and Law have found that the effects of losing European funding and transitioning to the UK Shared Prosperity Fund (UKSPF) have led to a decrease in employability funding in Scotland in recent years.

 While the Scottish Government’s No One Left Behind (NOLB) policy has partly mitigated the effects of this funding decrease, Scottish Government funding for employability support has also declined. A survey of sector leaders has revealed that 44 per cent of organisations have experienced cuts in funding as a result of the loss of European funding that are not compensated by other sources. 17 per cent of organizations have already made redundancies and, of those that have not, 65% anticipate future layoffs. Organisations view the expiry of the UKSPF in spring 2025 as a "cliff edge" for the sector.

The report also reveals that while there are examples of positive collaborative working between local authorities and the third sector in certain areas such as Fife and Glasgow, the picture across Scotland is very patchy. Key problems include funding delays, lack of long-term funding, and inefficient local authority commissioning, with large providers expected to make multiple bids for small pots of short-term funding. This makes it hard to retain staff as well as support vulnerable users in need of long-term support. Some local authorities act as ‘poacher and gamekeeper’, using funding to support their own ‘in-house’ employability support rather than make use of proven third sector providers. This is compounded by a lack of transparency and accountability in how local authorities use employability funds, engrained local authority ‘mindsets’, and the funding challenges many cash-strapped local authorities are themselves having to grapple with.

Professor Payne said: “Devolving employability support to Scotland’s 32 local authorities through UKSPF and NOLB has not been without its problems. There is a need for a public audit of local authority commissioning to ensure that funding reaches organisations with a proven record of supporting those furthest from the labour market. Scotland has some good examples of local authority/third sector partnership working, but much more needs to be done. Blending national and local commissioning might offer one way forward, but long-term funding of at least three years remains key."

The report can be read here

For more information the team can be contacted on jpayne@dmu.ac.uk