1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities and Local Government (the Department) about the Towns Fund.
2.In July 2019, the government announced its intention to support a selection of struggling towns across England through the £3.6 billion Towns Fund, which incorporated and built on the £1.6 billion Stronger Towns Fund announced in March 2019. The Towns Fund aims to help towns develop and sustain strong local economies through addressing issues such as ageing populations, limited regional economic opportunities and lack of investment. The Ministry of Housing, Communities and Local Government (the Department) published its selection of 101 towns in September 2019, inviting them to set up a Town Deal Board and to bid for up to £25 million to implement an agreed Town Deal – a plan setting out the town’s investment priorities to drive growth.
3.Departmental officials designed a framework for decision-making to support Ministers to select towns and record their reasons for selection, with scope for Ministers to make qualitative judgements on the mix of towns selected. Officials assessed towns across England against seven criteria: four quantitative measures assessed using data held by the Department, the Office for National Statistics, and the Bank of England; and three qualitative measures based on officials’ assessments. The Department provided Ministers with this information in a prioritised and ranked list of towns, and suggestions on other factors they might consider in their selection. Officials later reviewed the Ministers’ selection of towns against the required tests set out in HM Treasury’s Managing public money. The Comptroller and Auditor General’s report sets out in more detail the process followed by the Department to select the 101 towns.
4.We heard from the Department how it designed a selection process that allowed Ministers discretion to choose from a pool of 541 towns, comprising the 50% most deprived towns in England based on a measure of income deprivation. Departmental officials scored and ranked these 541 towns against a set of seven criteria that measured towns’ local need and growth potential, and then divided the towns into high-, medium- and low-priority groups. This information was provided to Ministers to inform their selection of towns. When challenged on why it did not simply offer all towns in England the opportunity to bid for funding, the Department told us that it decided not to run a competitive bidding process due to concern that such a process would be unfair to towns that lacked capacity and experience to develop a bid; towns which may be most in need of investment.
5.The Department’s view was that it was right that Ministers could apply their qualitative judgment and decisions to the final selection of towns. It argued that by restricting eligibility to these 541 towns, and through Ministers selecting all 40 high-priority towns, Ministers effectively selected from a reduced pool of relatively needy towns—the medium- and low-priority towns—within which ministerial discretion was justified. The Department also contended that Ministers wanted a geographical spread of towns within regions and between different types and sizes of town with different backgrounds, and that ministerial selection enabled this to be achieved. We heard from the Department how Ministers selected towns from the low-priority group with specific investment opportunities, for example, Morley in Yorkshire and the Humber that wanted to invest in transport hubs.
6.We challenged the Department on whether it had concerns over political bias in the Ministers’ selection of towns, not least because 12 low-priority towns were selected over the majority of medium-priority towns. The Department argued that the process included an appropriate safeguard through requiring Ministers to be very clear about their decisions and record very clearly why they made the judgments they did for their selection of the 12 low-priority and 49 medium-priority towns. However, the rationales given for the selection of towns from the medium-priority group are vague and broad-brush. The Department’s Permanent Secretary confirmed that he was satisfied the selection process met the requirements of HM Treasury’s Managing public money, but he would not commit to sharing his Accounting Officer assessment with the committee. He has since written to the Committee with a summary of his assessment provided in confidence, and on which we therefore will not comment. It remains unpublished.
7.The Department argued that it did not reveal the detail behind its selection of towns so as not to raise local expectations about an unsuccessful town’s likelihood of success in the forthcoming competitive round, and so as not to distort local behaviour to enhance their likelihood of success. These are weak reasons that were not accepted by the National Audit Office on the grounds that the public-interest case for transparency justified publishing the details of the process. The Department should have been transparent from the outset.
8.The Department’s lack of transparency fuelled accusations of political bias in the selection process. Furthermore, the Department’s statements to the press, issued after the National Audit Office’s report was published, referred to the report concluding that the selection process had been ‘robust’, whereas the report makes no such statement—which is a clear misrepresentation of the National Audit Office’s report. The Department’s Permanent Secretary said he did not have knowledge of these press statements.
9.Other examples of lack of clarity around the Towns Fund process are also of concern to us. The Department gave a confusing explanation for how and why the risks from a no-deal Brexit were assessed by Ministers, when already included in Departmental officials’ assessment. The Department agreed to write to the Committee on how Bank of England data were used to assess towns’ exposure to Brexit. Furthermore, the Department has yet to decide which towns across England will be eligible for the upcoming competitive round, or when and how it will be conducted. The Department told us it wants to complete its assessment of the first cohort of bids before planning the competitive round, and it hopes to have completed that assessment by the end of October.
10.We heard from the Department that its officials had assessed each town against three qualitative criteria using the knowledge of its area-based teams, rather than consulting directly with local stakeholders. The Department argued that it gave more weight to the quantitative criteria in its assessment, and that its area-based teams have a lot of contact, engagement and dialogue with local areas, which means that their views are informed. Similarly, we heard that Ministers relied on the Department’s area-based teams rather than consult with local stakeholders, including Local Enterprise Partnerships and local MPs. Of particular concern is that directly elected mayors were not consulted, despite officials specifically recommending to Ministers that they do so. Ministers explicitly rejected the recommendation, deciding they wanted to make decisions themselves without seeking local views. The Department clarified that Ministers speak regularly with mayors but that dedicated engagement on the Towns Fund did not take place.
11.We queried why the Department had required a new tier of governance—Town Deal Boards—to be set up, rather than use existing governance structures to plan and implement the Towns Fund at the local level. The Department explained that existing structures, such as mayoral combined authorities and Local Enterprise Partnerships, were not appropriate for overseeing support and interventions for individual towns. It said that government’s original rationale for the Towns Fund was to recognise and respond to issues at the town level, as place-based policies had previously been too focused on cities and resulted in towns being overlooked.
12.The Department told us that it is satisfied that the Town Deal Boards are well constituted, meeting departmental stipulations, and coming together well. Boards are involving the private sector and the wider social sector, with examples of some Boards being chaired by private sector business people and others by chairs of charities. The Department expressed confidence that through the Boards the right local coalitions were being developed to put together successful bids and deliver on their plans. We heard how some towns are consulting with residents as they develop bids, for example Blackpool, which invited comments from residents on draft versions of its plan through the council’s website. We reiterate the vital importance of Boards fully engaging with local stakeholders and consulting with residents as towns develop bids—ensuring this happens will be a key role for the Department’s observers on the Boards.
1 C&AG’s Report, Review of the Town Deals selection process, Session 2019–2020, HC 576, 21 July 2020
2 C&AG’s Report, para 1.1
3 Q 60; C&AG’s Report, para 1.4
4 C&AG’s Report, paras 1.5, 2.2
5 C&AG’s Report, paras 1.5, 2.6
6 Q 40
7 Qq 36–38; C&AG’s Report, paras 2.2, 2.4
8 Qq 34, 40
9 Q 36
10 Qq 35, 40, 102
11 Q 40
12 Qq 40–41
13 Qq 41–45
14 Qq 38–39, 103
15 Q 103; C&AG’s Report, paras 1.5–1.6
16 Qq 41, 52, 102
17 Qq 105–108; and, for example,
18 Qq 04–101
19 Qq 29–30, 32, 46–47, 58–59
20 Qq 31, 59
21 Qq 36, 50, 82–84
22 Qq 82–84
23 Qq 49–55
24 Qq 54–55
25 Qq 98–100
26 Q 91
27 Q 61
28 Q 62
29 Q 85
Published: 11 November 2020