Welsh councils with large populations could lose out on tens of millions of pounds from the UK Shared Prosperity Fund (UKSPF), new analysis has concluded.

The Institute for Fiscal Studies (IFS) think-tank said it had uncovered a ‘significant flaw’ in the formula used to allocate funding for the UKSPF, which uses a formula that takes into account deprivation levels but not population.

Under the formula, Rhondda Cynon Taf CBC, for example, will receive a fifth of the funding per person that Merthyr Tydfil CBC does despite having similar levels of deprivation because its population is more than four times larger.

IFS associate director David Phillips said Cardiff and Swansea would also lose out on millions of pounds while councils with smaller populations such as Blaenau Gwent CBC will benefit.

The IFS estimated that compensating councils that have lost out would cost the Government £34m over the next three years.

Mr Phillips added: ‘It’s hard to find any rationale for ignoring population in this way, but it may reflect a too little, too late approach to engagement with the devolved governments by the UK Government.

‘A lack of time to properly consider and reflect on the views of the Welsh Government may have contributed to the strange approach adopted by the UK Government.’

A spokesman from the Department for Levelling Up, Housing and Communities, said: ‘Our UKSPF matches previous EU funding and gives local people control over how the money is spent rather than Brussels.

'The funding formula takes into account local populations and ensures the money goes to those areas that need it most.’