Is there a government funding bias affecting coastal communities?

The UK is one of Western Europe’s most divided nations. Central government funding remains a core strategy to tackle the UK’s entrenched geographical, economic and social inequalities. Evidence suggests, however, that decades of spatial policy has had limited impact.

Many of the UK’s coastal communities feel these regional disparities particularly acutely and have historically (and routinely) struggled to tackle and reverse cumulative legacies of deindustrialisation and neglect. Unsurprisingly, some regions and local authorities contend that they receive disproportionately low levels of funding, perpetuating socio-economic disparities.

The Centre for Coastal Communities recently conducted quantitative and qualitative research to investigate whether geography shapes central government funding allocations and, if so, what the implications are for coastal and other disadvantaged areas.

Recently released Levelling Up Fund (LUF) and Future High Streets Fund (FHSF) awards data suggests coastal built-up areas (BUAs) had higher per capita funding than non-coastal counterparts. According to the data, coastal BUAs secured 87.06% of the total available funding whereas non-coastal BUAs secured only 60.16%. This seems to suggest there is no ‘coastal bias’.

The research team triangulated this data with a qualitative analysis exploring the perspectives of local authority economic development officers. Some recurring themes emerged in the interviews and focus groups: an (over)reliance on external expertise, limited internal capacity, the short-term and centrally driven nature of competitive funds, poor data availability, challenges linked to peripherality, and doubts about the Green Book’s suitability for local contexts. The qualitative data suggests that ‘geography’ does indeed influence bid success.

(Over-)reliance on external expertise and internal capacity constraints

Both coastal and non-coastal local authorities’ respondents reported a gradual shift of internal capacity toward bid writing and project management, accompanied by a parallel decline in in-house economic expertise. This shift has created a dependence on (or an ‘addiction to’) costly external consultancy support, especially in the development of business cases compliant with the Treasury’s Green Book.

All coastal authorities, and some smaller non-coastal local authorities, reported internal capacity shortages across bidding, evidence-gathering, and project management. Preparing bids for funding is resource intensive. This puts smaller local authorities at a disadvantage.

Short-term and centrally driven nature of competitive funds

There was almost unanimous agreement that government competitive funds are shaped by national political imperatives, are overly short-term and misaligned with local priorities. The proliferation of small, ringfenced funds, often accompanied by unrealistic timescales, is administratively burdensome. This impacts governance processes, consultation, and engagement with partners. For geographically remote coastal authorities, the challenges are compounded; weaker supply chains and slower planning processes make short spend deadlines particularly difficult.

Data quality

Almost all authorities reported having problems evidencing local need using national datasets. Aggregation at upper geographies can obscure pockets of deprivation or opportunity. This portrays coastal districts as average, masking acute intra-area inequalities and hiding deprivation. There are significant lags and volatility in key datasets such as wages and Gross Value Added (GVA), raising doubts about the validity of evidence used for investment decisions. For smaller local authorities the problem is acute: sample sizes are too small, but commissioning further research would take too long. Whilst some local and sectoral datasets exist, inconsistencies in format and coverage prevent coherent narratives.

Challenges linked to peripherality

Coastal local authorities often suffer from poor transport links and connectivity. Most respondents recognised that peripherality brings structural disadvantages and reduced visibility in investment decisions. Funding models generally favour urban areas with dense populations, robust supply chains, and established transport networks.

All the respondents representing coastal local authorities stated that coastal geography – beaches, cliffs, and flood risk zones – limited developable land. This constrains population and business density and makes it difficult to show sufficient land uplift or GVA growth in Green Book terms. Visitor-dependent economies, in particular, are penalised as seasonal populations are not counted in central assessments. A population of 25,000 people in January, might be a population of 250,000 in July.

Low residential and business densities weaken the benefit-cost ratios (BCRs) used in Green Book appraisals. Low business density limits access to funds that require private-sector match funding; micro and SME-dominated economies struggle to meet the match funding levels expected of larger urban areas.

Attractiveness to private investors

Decades of underinvestment have rendered peripheral areas unattractive to private capital. Securing match funding from investors is another challenge in a place that is not considered ‘investable’. Competitive funds such as LUF and FHSF have been insufficient to catalyse major change.

Suitability of the Green Book

Many respondents, and all those representing coastal local authorities, questioned the applicability of the Treasury’s Green Book to local projects. With its complexity, data demands, and reliance on metrics that are ill-suited to low-population or peripheral contexts, understanding of the Green Book was reported to be low, even amongst those responsible for project appraisal.

Authorities with low population density or dispersed deprivation found it difficult to demonstrate favourable BCRs. Seasonal pressures, high land values, and limited footfall made investments appear poor value for money relative to urban comparators. The research participants representing coastal authorities argued for a more nuanced appraisal model that recognises social, environmental, and long-term outcomes.

There are difficulties with the operationalisation of the Green Book’s methodologies used to demonstrate value for money. These methodologies tend to favour projects in high productivity, high density regions. One element of BCR calculations, anticipated land value uplift, systematically disadvantages coastal areas. Bounded by the sea, such areas have less developable land over which uplift can be realised. The presence of designated landscapes or protected habitats further limit development options. Rural/coastal areas have lower land values as well as environmental and geographical constraints such as coastal erosion. Projects in wealthier regions often generate stronger monetised returns, through higher wages, land values and agglomeration effects. These are more likely to meet or exceed certain thresholds, creating a structural bias in favour of already prosperous areas such as the south-east.

Operationalising the Green Book presents further challenges for less-resourced authorities and reinforces advantages held by better resourced localities. The absorptive capacity of local councils often determines the ease with which they navigate the appraisal regime. This reinforces long standing concerns about the uneven geography of institutional resources, notably how policy instruments often privilege city-regions, with existing absorptive capacity, thereby amplifying divergence under competitive allocation regimes.

This resonates with contemporary debates on local government austerity and council resilience. Cuts in central grants have fallen most heavily on already deprived, grant-dependent councils, particularly in the North of England, reducing their resilience and ability to invest in strategic capacity and transformative investment.

Procedural conditions have also contributed to the creation of a hidden architecture of spatial inequality. This appears to disproportionately affect coastal areas. A recent Treasury review of the Green Book found no conclusive evidence that its methodology biased certain regions, arguing that low BCRs do not make projects un-fundable. Funding decisions are determined by the operationalisation of Green Book guidance however, and funding allocations based on need assessments are also highly controversial. Critics argue that they are constructed, contested and politically embedded instruments that can both illuminate and reproduce spatial inequalities. Recent Fair Funding Reviews have initiated an urgent revision of the outdated formulae used to calculate funding allocations. Much depends on whether these revised assessments of need are truly reflective of actual need.

Coastal places may be over-represented among winners per capita, but they face a systematically harder route to winning and scaling investment relative to need. Respondents’ perspectives unearthed a complex picture in which coastal disadvantage was not expressed as exclusion from funding altogether, but as a systematically harder route to success. ‘Allocation’ does not necessarily equate to ‘access’. Geography is seen as an appraisal and bidding handicap via BCRs, land value uplift assumptions, density-dependent metrics, seasonal population invisibility, and match-funding expectations in low-business-density economies. Distinguishing between distributional outcomes (who got money, how much per head), from procedural and epistemic access (who can credibly bid, evidence, and clear appraisal thresholds) is crucial.

The time has come to rethink the value of competitive funding programmes. MHCLG’s 2025 Fair Funding Review 2.0 has highlighted the need to rebalance local government finance in England by aligning central grant funding more closely with relative need, costs and the capacity to raise revenues and tying this into long-term more stable funding and devolved decision-making. Systemic weaknesses in the current government funding system prevent it from addressing entrenched spatial disadvantage. Whilst objective need plays a significant part in funding allocations, so do political, structural and administrative factors. England’s highly centralised funding architecture constrains local autonomy and encourages standardised top-down programmes. This inhibits genuinely place-based strategies that reflect distinct local assets and constraints. The current funding system encompasses a set of ‘invisible’ structural and epistemic conditions; these shape what kinds of projects are fundable under competitive, appraisal-driven regimes triggering debates about procedural fairness, appraisal validity, and capacity as the hidden architecture of spatial inequality.