Levelling up funding to local government – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Author: Committee of Public Accounts

Related inquiry: Levelling up funding to local government

Date Published: 15 March 2024

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“Levelling up” is a government-wide policy to reduce geographical inequality in a broad range of economic and social measures across the UK. Of the £10.47 billion total funding across three significant funds from central government to be spent over the period 2020–21 to 2025–26, by December 2023 local authorities (the recipients of the funds in most cases) had received only £3.70 billion and, furthermore, £1.24 billion had actually been spent and was therefore making a difference on the ground (as of the latest data for September 2023). Also, of the projects actually underway, many have been delayed despite being picked for funding because they were supposedly “shovel-ready”: over 80% of the Levelling Up Fund Round 1 projects are already set to miss their March 2024 completion deadline. The Department for Levelling Up, Housing and Communities, or DLUHC (“the Department”) is the lead Department for the three Levelling Up funding streams, but could not give us any compelling examples of what had been delivered so far. The Department cited project specific issues and the impact of the pandemic and inflation for a lower-than-anticipated level of spending to date, but that its spending was now more aligned to its budgets than in the earlier years of the funds.

As we have found before, optimism bias has meant impactful bids to the Levelling Up Fund may have missed out at the expense of so-called ‘shovel-ready’ projects, some of which have nevertheless been affected by delays. As a result, the Department has extended the deadline for local authorities to spend their government funds for the Future High Streets Fund and Rounds 1 and 2 of the Levelling Up Fund, which demonstrates problems with the original assessments.

We are concerned that there is as worrying lack of transparency in the Department’s approach to awarding funds. This approach has wasted scarce public resources and caused some local authorities to miss out. The Department changed the rules for the Levelling Up Fund as it went along, for example only after submitting their bids for Round 2 of the Levelling Up Fund did local authorities learn that they had no chance of being successful if they had already secured Round 1 funding. Also, only after Round 3 had launched did the Department decide that, rather than consider new bids, it would only allocate Round 3 funding to unsuccessful bids from Round 2, meaning those local authorities that had waited to submit bids in Round 3 missed out. The Department claimed that, on balance, this approach to Round 3 was the best way to remove the significant effort from local authorities of bidding. In future, the Department must give organisations applying for funds more assurance of the principles and implications for awarding funds under different scenarios and not change them once published, in order to save considerable time and money in preparing and submitting ineligible bids.

It is right that the Department is working to simplify the funding system and reduce the administrative burdens on local authorities, including simplifying the variety and complexity of multiple funding streams and reducing the burden of data collection. In order to make this a success, the Department needs to continue to do more to embed the changes it has started to make.

The Department is providing focused support to a small number of local authorities, but it remains to be seen how it will spread the learning across all local authorities. We recognise the Department is now putting in place plans to carry out evaluations of these levelling-up funds. However, we are disappointed that it has no long-term plans to measure the impact of these funds into the future.