The government are “struggling” to get the £10bn of levelling up funding “out the door”, with only around 10% being spent by councils so far, a new report has revealed.
The report by the Public Accounts Committee (PAC), which was published today (15 March), found that of the promised £10.5bn from the government’s three levelling up funds authorities have only been able to spend £1.24bn as of September 2023.
Furthermore, the PAC also revealed that by December 2023, the Department for Levelling Up, Housing and Communities (DLUHC) had only given £3.7bn to local authorities out of the total allocation.
The £10.5bn of levelling up funding must be spent between 2020/21 and 2025/26, however the department has provided flexibility to local authorities to extend the deadlines to complete projects under the Levelling Up Fund round 1 and 2 as well as the Future High Streets Fund.
In evidence to the PAC, the department cited the impact of the pandemic and inflation for a lower-than-anticipated level of spending to date.
Meg Hillier, the PAC’s chair, said: “Our committee is here to scrutinise value for money in the delivery of government policy. But in the case of levelling up, our report finds that the government is struggling to even get the money out of the door to begin with.”
‘Optimism bias’
The PAC’s report also found that more impactful bids to the Levelling Up Fund lost out due to optimism bias in favour of so-called ‘shovel-ready’ projects.
It also stated that it is concerned that not enough was done by DLUHC to understand the readiness of schemes and the challenges facing local authorities before funds were awarded. The report highlighted that by March 2024, 60 out of 71 ‘shovel ready’ projects, which were allocated money in the first round of the fund, have had to extend the deadline of completion to 2024/25, with further delays to other schemes expected.
The PAC also stated that it recognises the department’s plans to evaluate these funds in the short term but is concerned that it has no long-term plans to measure impact.
“The levels of delay that our report finds in one of government’s flagship policy platforms is absolutely astonishing. DLUHC appears to have been blinded by optimism in funding projects that were clearly anything but ‘shovel-ready’, at the expense of projects that could have made a real difference,” Hillier added.
Lack of transparency
In addition, the PAC’s report criticised the government’s “lack of transparency” in its approach towards awarding funds.
It was reported in early 2023, that DLUHC implemented a “rule” during the allocation of the Levelling Up Fund (LUF) that prevented councils successful in the first round from receiving money in the second round.
However, local authorities were not informed of this “rule” before applying to round 2 of the fund. The report stated that this meant 55 local authorities bid under changed rules with no chance of being successful, with an average bid for grants costing councils £30,000.
“The department changed the rules for applying for the Levelling Up Fund during the application process, wasting scarce public resources, disadvantaging some local authorities and hindering transparency. The levelling up programme was sub-optimal in this respect and it is important that lessons are learnt,” the PAC’s report said.
The PAC’s report added that it welcomes the government’s intentions to simplify the funding system and streams available to local authorities announced in Summer 2023. But it stated that DLUHC has more to do to implement plans.
“We will now be seeking to keep a close eye on DLUHC’s progress in unclogging the funding system,” Hillier added.
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